[Senate Report 106-49]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 109

106th Congress                                                   Report
 1st Session                     SENATE                          106-49

=======================================================================


 
                 BANKRUPTCY REFORM ACT OF 1999--S. 625

                                _______
                                

                  May 11, 1999.--Ordered to be printed

                                _______


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

                              R E P O R T

                             together with

                     ADDITIONAL AND MINORITY VIEWS

                         [To accompany S. 625]

    The Committee on the Judiciary, to which was referred the 
bill (S. 625) to amend title 11, of the United States Code, to 
provide for reform of the bankruptcy laws, having considered 
the same, reports favorably thereon, with amendments, and 
recommends that the bill, as amended, do pass.

                                CONTENTS

                                                                   Page
   I. Background and need for the legislation.........................2
  II. General overview of the current bankruptcy system...............4
 III. The history of ``means-testing'' in bankruptcy..................4
  IV. The current legislation.........................................6
   V. Enhanced consumer protections...................................9
  VI. Reducing abusive uses of the bankruptcy code...................10
 VII. Enhanced protections for child support.........................10
VIII. Business provisions............................................11
  IX. Additional bankruptcy judgeships and miscellaneous provisions..12
   X. Major differences between S. 625 and H.R. 3150 conference repor13
  XI. Committee consideration in the 106th Congress..................14
 XII. Committee markup...............................................15
XIII. Committee and subcommittee consideration of S. 1301 in the 105th 
      Congress.......................................................19
 XIV. Subcommittee hearings..........................................19
  XV. Committee and subcommittee markup..............................21
 XVI. Section-by-section analysis....................................22
XVII. Cost estimate..................................................66
XVIII.Regulatory impact statement....................................75

 XIX. Additional views of Senator Kohl...............................76
  XX. Additional views of Senator Feinstein..........................78
 XXI. Additional views of Senators Torricelli and Kohl...............80
XXII. Minority views of Senators Leahy, Kennedy, Feingold, and Schume85
XXIII.Changes in existing law.......................................123


               I. BACKGROUND AND NEED FOR THE LEGISLATION

    The bankruptcy system is currently in a state of crisis. In 
recent years, America has witnessed a dramatic explosion in the 
number of bankruptcy filings. According to the Administrative 
Office of the U.S. Courts, there were 1,442,182 bankruptcy 
filings in 1998, of which 1,398,182 were consumer bankruptcies. 
Moreover, this record high number of bankruptcies follows three 
consecutive years of increases in bankruptcies. Surprisingly, 
the explosion in bankruptcy comes at a time of unprecedented 
prosperity, with low unemployment and high wages. For March 
1999, unemployment was at its lowest point since 1970. Consumer 
confidence is high and the stock market has recently risen 
above the 10,000 mark. Thus, the bankruptcy crisis is not due 
to recession, depression, inflation or high unemployment.
    This state of crisis has a significant negative impact on 
the American economy. According to the Department of Justice, 
creditors lose 3.22 billion dollars annually as a result 
chapter 7 bankruptcies filed by individuals who could repay 
their debts. Obviously, the existence of multibillion dollar 
losses attributable to bankrupts who could repay their debts 
requires Congress to act.
    Given the strong performance of the economy, many feel that 
the recent explosion in personal bankruptcy filings is at least 
partly attributable to the decreased moral stigma associated 
with declaring bankruptcy. See testimony of Professor Todd 
Zywicki, joint hearing of the Subcommittee on Administrative 
Oversight and the Courts and the Subcommittee on Commercial and 
Administrative Law, March 11, 1999; Testimony of Tahira Hira, 
Subcommittee on Administrative Oversight and the Courts 
Hearing, ``S.1301, The Consumer Bankruptcy Reform Act: Seeking 
Fair and Practical Solutions to the Consumer Bankruptcy Crisis' 
(March 11, 1998); Testimony of Kenneth R. Crone, Subcommittee 
on Administrative Oversight and the Courts Hearing, ``The 
Increase in Personal Bankruptcy and the Crisis in Consumer 
Credit,'' (April 11, 1997); Lee Flint, ``Bankruptcy Policy: 
Toward a Moral Justification for Financial Rehabilitation of 
Consumer Debt,'' 48 Wash. & Lee L. Rev. 515 (1991); David Gross 
and Nicholas Souleses, ``Explaining the Increase in Bankruptcy 
and Delinquency: Stigma Versus Risk-Competition'' (Preliminary, 
1998); F.H. Buckley and Margaret F. Brinig, ``The Bankruptcy 
Puzzle,'' 27 J. Legal Stud. (1998); Scott Fay et al., ``The 
Bankruptcy Decision: Does Stigma Matter?'' (Jan. 1998)(working 
paper). A decreased moral stigma associated with bankruptcy 
means that filing for bankruptcy is not viewed as a last resort 
for financially troubled Americans who need debt 
forgiveness.1 As bankruptcy filings have become a 
more common part of American life, individuals seem more 
willing to use bankruptcy to solve their debt problems than 
ever before. Individuals who would have struggled to meet their 
financial obligations in the past are filing bankruptcy today 
in record numbers. See Judge Edith H. Jones and Todd J. 
Zywicki, ``It's Time for Means Testing,'' 1999 B.Y.U. L. Rev. 
177. For example, two recent studies suggest that almost half 
of filers learned about their option to file for bankruptcy 
from friends or family. See Vern McKinley, ``Ballooning 
Bankruptcies: Issuing Blame for the Explosive Growth,'' 
Regulation, Fall 1997, at 38. At the same time, there have been 
strong expressions of concern from the Federal Trade Commission 
that attorney advertising is leading consumers to file 
bankruptcy unnecessarily.
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    \1\ While some opponents of bankruptcy blame the explosion of 
bankruptcies on too much credit, the Committee has strong reservations 
about the detrimental effect on poor and minority communities of 
reducing the availability of credit. If credit lending practices are 
restricted as these opponents suggest, the result will be less credit 
available to women, minorities, and others who need to borrow money to 
pay tax various necessities and emergencies. The proper venue for such 
considerations is the Banking Committee.
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    It is the strong view of the Committee that the bankruptcy 
code's generous, no-questions-asked policy of providing 
complete debt forgiveness under chapter 7 without serious 
consideration of a bankrupt's ability to repay is deeply flawed 
and encourages a lack of personal responsibility.
    S. 625 responds to the bankruptcy crisis by amending 
section 707(b) of the bankruptcy code to require bankruptcy 
judges to dismiss a chapter 7 case, or convert a chapter 7 case 
to chapter 13 if a bankrupt has a demonstrable capacity to 
repay his or her debts. Under S. 625, a presumption arises that 
a chapter 7 bankrupt should be dismissed from bankruptcy or 
converted to chapter 13 if, after taking into account secured 
debts and priority debts like child support as well as living 
expenses, the bankrupt can repay 25 percent or more of his or 
her general unsecured debts, or $15,000, over a 5-year period. 
The bankrupt can rebut this presumption by demonstrating 
``special circumstances'' which would show that the bankrupt in 
fact does not have a meaningful ability to repay his or her 
debts. The Committee notes that, in the prior Congress, the 
Department of Justice supported a substantially similar 
judicially administered means-test. See Letter to the Hon. 
Orrin G. Hatch, Chairman, Committee on the Judiciary, May 7, 
1998 (on file with the Committee). In advance of Committee 
consideration of S. 625, the Department of Justice, by letter 
dated April 9, 1999, reiterated the support of the Clinton 
Administration for strengthening section 707(b) as a way to 
means-test chapter 7 debtors. SeeLetter to the Honorable Orrin 
G. Hatch, Chairman, Committee on the Judiciary, April 9, 1999 (on file 
with the Committee).
    As discussed below in greater detail, the concept of 
``means testing'' bankruptcy filers so that higher income 
filers are steered into repayment plans is the culmination of 
many Congressional efforts, by Republicans and Democrats, over 
5 decades. Most recently, during the 105th Congress, the 
Committee reported S. 1301, a bill which means-tested chapter 7 
bankrupts. Also during the 105th Congress, the full Senate 
passed S. 1301.
    The Committee recommends S. 625, which will steer 
individuals with repayment ability to Chapter 13, and promote 
balanced reform of the bankruptcy laws while providing 
important new protections against abusive or deceptive creditor 
practices.

         II. GENERAL OVERVIEW OF THE CURRENT BANKRUPTCY SYSTEM

    Under current law, individuals considering bankruptcy often 
proceed under chapter 7, where the bankrupt will surrender all 
assets which do not qualify for an exemption to a bankruptcy 
trustee. The bankruptcy trustee then sells the bankrupt's 
property and distributes the proceeds to the creditors. Any 
deficiency which remains after the sale of these assets is 
simply erased (or ``discharged''), and the bankrupt cannot be 
required to repay debts which have been erased during 
bankruptcy. Chapter 7, often referred to as ``straight 
bankruptcy,'' is the oldest and most commonly used type of 
bankruptcy proceeding.
    Individuals may also declare bankruptcy under chapter 13 of 
the bankruptcy code. Chapter 13 provides for the development of 
a repayment plan that allows a debtor to repay some portion of 
his or her debts. At the end of the repayment period, the 
unpaid portion of debt is erased, and a debtor cannot be 
required to repay the unpaid portion of the discharged debt. 
Unlike chapter 7, the purpose of chapter 13 is to rehabilitate 
financially-troubled consumers by using future earnings to 
repay debts in exchange for a discharge of the unpaid portions 
of those debts.

          III. THE HISTORY OF ``MEANS-TESTING'' IN BANKRUPTCY

    The idea of requiring bankrupts to repay their debts when 
they have the ability to do so is not new. This topic has been 
the subject of many proposed amendments, from the early 1930's 
to the current Congress. S. 625 is merely an extension of this 
longstanding effort to ensure that bankruptcy is reserved for 
those truly in need of debt forgiveness. See oversight hearing 
on Personal Bankruptcy, Committee on the Judiciary, 
Subcommittee on Monopolies and Commercial Law, 97th Cong. 2nd 
Sess., (1982) (Statement of Frank Kennedy).
    The general structure of the present Federal bankruptcy 
code is the result of the Bankruptcy Reform Act of 1978, Pub. 
L. 95-598.2 The 1978 Act was the first major 
overhaul and attempt to update comprehensively the bankruptcy 
law since passage of the Chandler Act in 1938. 52 Stat. 840 
(1938). Prior to the Chandler Act, individuals in serious 
financial trouble had no choice but to file for ``straight 
bankruptcy'' under chapter VII.3 However, the 
Chandler Act contained a new, alternative procedure, the 
Chapter XIII Wage Earner's Plan, which allowed an individual to 
retain nonexempt assets by proposing a plan to pay his or her 
existing debts from future income, after which the wage earner 
would receive a discharge of any unpaid balances of his debts. 
See generally, Dvoret, Federal Legislation, Bankruptcy Under 
the Chandler Act: Background, 27 Geo. L.J. 194 (1938).
---------------------------------------------------------------------------
    \2\ The Constitution gives Congress the authority to enact 
``uniform laws on the subject of bankruptcies throughout the United 
States.'' Art. I, Sec. 8, cl. 4 (1787). Since 1898, bankruptcy 
protections have been a permanent part of Federal law. Prior to 1898, 
Congress either declined to enact bankruptcy laws or enacted temporary 
laws which were allowed to lapse.
    \3\ One feature of the 1978 revision of bankruptcy laws 
redesignated the bankruptcy chapters so that they are now identified by 
Arabic, rather than Roman, numerals.
---------------------------------------------------------------------------
    The debate over chapter XIII occurred years earlier in 
joint hearings before the House and Senate Judiciary Committees 
in 1932, during the 77th Congress. By the time it was enacted 
in 1938, Chapter XIII codified informal practices which had 
developed without explicit statutory authorization. In the mid 
1930's in Birmingham, AL a former special referee in 
bankruptcy, Valentine Nesbitt, first developed a ``repayment 
option'' which was the model for Chapter XIII. See Weinstein, 
The Bankruptcy Law of 1938 (1938).
    In 1932, Congress conducted hearings on S. 3866. Section 75 
of this bill would have established a repayment plan for wage 
earners. Section 75 would have provided a method for an 
indebted wage earner to come into court without being labeled 
``a bankrupt,'' and get the benefit of a court injunction to 
fend off creditors while the wage earner arranged to repay his 
pre-bankruptcy debts in installments.4
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    \4\ During the consideration of the 1932 proposal, Congress 
received testimony on bankruptcy practices in England. In 1888, an 
English bankruptcy statute gave the power to the bankruptcy judges to 
condition debt forgiveness on the repayment of some debts. Douglas 
Boshkoff, Limited, Conditional, and Suspended Discharges in Anglo-
American Bankruptcy Proceedings, U. Pa. L. Rev. 69 (1982). With the 
conditional or suspended discharge, English courts are given broad 
discretion to condition debt-forgiveness on the making of payments to 
creditors from future earnings or other post-bankruptcy acquisitions, 
or to suspend the discharge while such payments are being made. The 
British experience shows that bankruptcy courts can, with proper 
guidance, play an important role in limiting bankruptcy relief to those 
who truly need it.
---------------------------------------------------------------------------
    Proponents of the 1932 amendment believed that most 
Americans were makingenormous efforts to avoid bankruptcy, and 
that most wage earners who were deeply in debt genuinely wanted to pay 
their debts, if given time, and if they were not harassed by their 
creditors.
    Since the 1938 amendments, there have been several 
proposals to limit bankruptcy relief to those who lack genuine 
repayment capacity. In the 1960's, Congress considered several 
such proposals. See H.R. 12784, 88th Cong., 2d Sess. (1964); 
H.R. 292, 89th Cong., 1st Sess. (1965); S. 613, 89th Cong., 1st 
Sess. (1965); H.R. 1057 and H.R. 5771, 90th Cong., 1st Sess. 
(1967). Under these proposals, an individual debtor seeking 
relief under the liquidation provisions of the bankruptcy laws 
would be denied relief if the court concluded that he or she 
could pay substantial amounts of debts out of future earnings 
under a chapter XIII plan.
    Importantly, one of these proposals, S. 613, was introduced 
by Senator Albert Gore, Sr., the father of the current Vice 
President. When he introduced S. 613, Senator Gore indicated 
that chapter 7 resembled a special interest tax loophole, which 
the wealthy could use to avoid paying their fair share. Senator 
Gore, Sr. also commented on the moral consequences of a lax 
bankruptcy system:

          I realize that we cannot legislate morals, but we, as 
        responsible legislators, must bear the responsibility 
        of writing laws which discourage immorality and 
        encourage morality; which encourage honesty and 
        discourage deadbeating; which make the path of the 
        social malingerer and shirker sufficiently unpleasant 
        to persuade him at least to investigate the way of the 
        honest man.

Cong. Rec. 905, January 19, 1965. Given the current bankruptcy 
crisis, Senator Gore's words from over 30 years ago seem 
prescient.
    Following the 1978 amendments, in the early 1980's, Senator 
Dole introduced S. 2000 during in the 97th Congress. In the 
House of Representatives, Congressman Evans introduced H.R. 
4786, which eventually garnered 269 co-sponsors. Congress did 
not pass either proposal in the 97th Congress, so these 
measures were reintroduced in the 98th Congress as H.R. 1169 
and S. 445. As a result of these efforts, Congress created 
Section 707(b) of the Bankruptcy Code in 1984 to allow judges 
to dismiss chapter 7 cases if granting relief would constitute 
a ``substantial abuse'' of the bankruptcy code. The focus of 
the effort was to require bankrupts who had the ability to pay 
a significant percentage of their debts ``without difficulty'' 
to proceed under chapter 13 instead of chapter 7. However, the 
term ``substantial abuse'' was not defined and creditors and 
trustees were expressly forbidden from presenting evidence to a 
judge that granting relief in a particular case would result in 
a ``substantial abuse.'' Further, Section 707(b) specifies that 
courts must presume that substantial abuse does not exist. 
Under a minority view, the debtor's ``ability to pay'' debts 
out of future income, standing alone, can qualify as 
substantial abuse. See In Re Koch, 109 F. 3d 1285 (8th Cir. 
1997). The prevailing view, however, is ``ability to pay'' is 
but one factor a court may consider in assessing whether there 
is a substantial abuse. See In Re Green, 934 F.2d 568 (4th Cir. 
1991). Some courts even take the position that ``substantial 
abuse'' is not demonstrated when a debtor has the clear ability 
to pay, but there is no additional showing that the debtor 
acted dishonestly or in bad faith. In re Adams, 209 B.R. 874 
(Bankr. N.D. Tenn. 1997); In re Braley, 103 B.R. 758 (Bankr. 
E.D. Va. 1989).
    In sum, from its inception, section 707(b) was designed 
with serious defects which have rendered the section unusable.

                      IV. THE CURRENT LEGISLATION

    S. 625 amends section 707(b) to cure the defects which have 
made it unusable. Section 102 of S. 625 provides that a chapter 
7 case will be presumed to be an ``abuse'' of chapter 7 if the 
debtor has the ability to repay, in a 5-year repayment plan, 25 
percent of the debtor's nonpriority unsecured claims, or 
$15,000, whichever is less. For purposes of determining the 
debtor's repayment ability, section 102 provides that the 
debtor's monthly expenses shall be the applicable monthly 
(excluding payments for debts) expenses under Internal Revenue 
Service (``IRS'') standards issued for the area in which the 
debtor resides. The IRS standards applicable under section 102 
are the IRS ``National Standards,'' ``Local Standards,'' and 
``Other Necessary Expenses.'' These Internal Revenue Service 
standards are currently used to determine appropriate living 
expenses for taxpayers who are required to repay delinquent 
taxes. These standards have been developed by the Treasury 
Department and can be revised from time to time, as needed. 
These expense categories allow expenses for housing, food, 
transportation, and ``other necessary expenses.'' The ``other 
necessary expenses'' category is broad and makes the means- 
test responsive and flexible to the individual circumstances of 
each debtor.
    In order to protect debtors from rigid and arbitrary 
application of a means-test, section 102 also provides that in 
some cases where the presumption applies the debtor may be able 
to demonstrate ``special circumstances'' that justify 
additional expenses or an adjustment to the debtor's income. 
The Committee adopted the ``special circumstances'' standard, 
rather than the ``extraordinary circumstances'' standard 
included in the Conference Report to accompany H.R. 3150 to 
provide a different standard of when a debtor may overcome the 
presumption of abuse.
    In applying the ``special circumstances'' test, it is 
important to note that a debtor who requests a special 
circumstances adjustment is requesting preferential treatment 
when compared to other consumers, and it is those other 
consumers who, by paying their debts, must assume the cost of 
the debts discharged by the debtors seeking the preferential 
treatment.In order to ensure fairness with respect to the 
consumers who must pay the cost when others discharge debts in 
bankruptcy, it is essential that the ``special circumstances'' test 
establish a significant, meaningful threshold which a debtor must 
satisfy in order to receive the preferential treatment. The debtor's 
ability to overcome the presumption of abuse must be based solely on 
financial considerations (i.e., adjustments to income or expenses 
required by special circumstances) and not on factors unrelated to a 
chapter 7 debtor's ability to repay his or her debts. The Committee 
believes that the relief sought by a debtor who files for bankruptcy is 
financial in nature and the debtor's right to obtain preferential 
relief under the special circumstances provision should be assessed 
based on financial considerations only. In addition, special 
circumstances adjustments must not be used as a convenient way for 
debtors to choose a more expensive lifestyle. The special circumstances 
provision must be reserved only for those debtors whose special 
circumstances require adjustments to income or expenses that place them 
in dire need of chapter 7 relief.
    Under S. 625, a legal presumption arises that a chapter 7 
bankrupt should be dismissed from bankruptcy or converted to 
chapter 13 if, after taking into account secured debts and 
priority debts like child support as well as living expenses, 
the bankrupt can repay 25 percent or more of his general 
unsecured debts, or $15,000, over a 5-year period.5 
The bankrupt can rebut this presumption by demonstrating 
``special circumstances'' which would show that the bankrupt in 
fact does not have a meaningful ability to repay his or her 
debts.
---------------------------------------------------------------------------
    \5\ Under S. 625, someone considering bankruptcy can enter a 3 year 
repayment plan if a debtor simply files directly in chapter 13, rather 
than filing under chapter 7 and being converted to chapter 13 or 
dismissed from bankruptcy as a result of the means-test. It is hoped 
that this will encourage debtors with repayment capacity to bypass 
chapter 7 entirely and to file under chapter 13.
---------------------------------------------------------------------------
    Under S. 625, the Office of U.S. Trustee is required to 
file a motion to dismiss or convert a chapter 7 case if the 
bankrupt's income for the year prior to declaring bankruptcy 
equaled or exceeded the higher of the state or national median 
income and the presumption of abuse applies. If the Office of 
U.S. Trustee believes that such a motion is not warranted, then 
it must file an explanatory statement with the bankruptcy court 
explaining why a motion to dismiss or convert is not 
appropriate. However, to protect low-income filers, creditors 
are prohibited from filing such motions if the filer's income 
is below the national or state median.
    Importantly, under S. 625, creditors and private trustees 
are now explicitly given the power to present evidence of abuse 
to the bankruptcy judge. Moreover, S. 625 gives trustees 
important new financial incentives for ferreting out bankrupts 
who have repayment capacity and provides for appropriate 
penalties for bankruptcy attorneys who recklessly steer 
individuals with repayment capacity to chapter 7 bankruptcy. S. 
625 contains penalties for creditors who attempt to harass or 
intimidate bankrupts by filing, or threatening to file, motions 
under section 707(b). Thus, contrary to the assertions of some, 
there are real and meaningful reasons why creditors will not 
use their right to file 707(b) motions to harass or coerce 
debtors.
    Once a motion to dismiss or convert has been filed under 
the new section 707(b), the bankrupt is given the opportunity 
to rebut the presumption by demonstrating that there are 
``special circumstances'' which reveal that the bankrupt does 
not, in fact, have the ability repay his or her debts. If the 
presumption is rebutted, the bankrupt may obtain a full 
discharge under chapter 7. If the presumption is not rebutted, 
the bankrupt must either convert his or her case to chapter 13 
or leave the bankruptcy system entirely.
    The new section 707(b) thus contains a tightly-focused 
mechanism for identifying bankrupts who have repayment capacity 
and sorting them out of chapter 7. At the same time, the new 
section 707(b) contains numerous procedural safeguards in order 
to ensure that the individual circumstances of each bankrupt 
will be considered before he or she is dismissed or converted 
to chapter 13.
    S. 625 also adds clarifying language in section 707(b) to 
make clear that, among the considerations in applying the 
``totality of the circumstances'' test for ``abuse'' is whether 
an individual debtor seeks to reject a personal services 
contact and the financial need for such rejection as sought by 
the debtor. This is intended to remedy problems brought to the 
attention of Congress involving bankruptcy filings that were 
motivated in material part in order to reject executory 
contracts for personal services so that the debtor could 
negotiate a new and better contract with a different company. 
This problem was initially addressed in the 105th Congress in 
section 212 of H.R. 3150, and the solution contained in that 
provision was targeted at this particular form of abuse of the 
bankruptcy process. With the new standard for ``abuse'' in 
section 707(b)(2)(C). The Committee has determined that the 
specific provisions of section 212 are no longer necessary, as 
the bankruptcy court will now have the authority to identify 
and remedy such abuses. Under the ``totality of the 
circumstances'' test an ``abuse'' of chapter 7 exists when 
rejection of the personal services contract was a material 
reason for commencing the bankruptcy case, and economic 
rehabilitation of the debtor's finances can be achieved absent 
rejection of the contract. The committee also intends that 
application of the the existing judicially-determined ``bad 
faith'' standard now be used in these circumstances in chapter 
7 cases and chapter 11 and chapter 13 cases, in which the 
debtor or debtors are parties to a single personal services 
contract.

                    V. ENHANCED CONSUMER PROTECTIONS

    In addition to the ``means testing'' provisions discussed 
earlier, S. 625 contains several important reforms which will 
protect individuals who face unnecessary and unfair harassment 
from creditors. Much attention has been paid to the practices 
of some retailers in seeking reaffirmations of otherwise 
dischargeable debts. See In Re Latanawich, 207 BR 326 (Bankr. 
D. Mass. 1987); Sears Will Repay Bankrupt Patrons; Consumers: 
It Agrees to $273-Million Settlement in Class Action Filed by 
Cardholders Pressured to Continue Paying Bills, LosAngeles 
Times D-3. (October 29, 1997); General Electric Capital Corp.; Company 
to Pay $70 Million Towards Credit Card Holders, Chicago Tribune N-2 
(August 8, 1998). S. 625 requires the Attorney General to designate 
prosecutors and investigators to enforce current criminal statutes 
designed to protect debtors in bankruptcy court from deceptive or 
coercive collection practices. Surprisingly, the Department of Justice 
opposes committing new resources to the enforcement of current laws to 
protect consumers from abusive or deceptive reaffirmation practices 
while instead arguing that ``existing protections'' against such 
reaffirmation practices are ``inadequate.'' See Letter to The Hon. 
Orrin G. Hatch, Chairman, Committee on the Judiciary, April 9, 1999. 
The Committee is of the view that the Department of Justice should 
vigorously enforce current laws, as it did with regard to one retailer, 
before concluding that existing laws are not adequate. When enforced, 
current laws have proven highly effective in punishing illegal creditor 
conduct. By committing substantial new resources to fighting abusive 
creditor practices, the Committee intends for the Department of Justice 
to step up enforcement of these under-used statutes. S. 625 (section 
203) also makes it a violation of the automatic stay when creditors 
engage in such extreme conduct as threatening debtors in bad faith with 
motions they don't intend to file or as to which they have no 
reasonable expectation of success just to coerce a reaffirmation, as 
opposed to normal communications or negotiations. Section 204 permits a 
bankruptcy court to refuse to approve a reaffirmation if it is the 
result of a threat of action the creditor could not take or did not 
intend to take.
    S. 625 also provides that State law enforcement officials 
can enforce State consumer protection laws. This provision is 
necessary as some State law enforcement officials have voiced 
concern that the remedies provided in the bankruptcy code could 
be construed to preempt these State laws.
    S. 625 contains a provision (section 201) which penalizes 
creditors who refuse to negotiate reasonable repayment 
schedules outside of bankruptcy. Under this provision, the 
amount that a creditor may collect in bankruptcy can be reduced 
if a debtor makes a reasonable offer of repayment at least 60 
days prior to declaring bankruptcy and the creditor rejects 
this offer. Interestingly, the Department of Justice supports 
promoting alternative dispute resolution in this way but 
suggests that the 60 day requirement is ``too restrictive'' 
while at the same time suggesting that the provision be 
``clarified'' in such a way that it will not apply to 
governmental creditors. See Letter to The Hon. Orrin G. Hatch, 
Chairman, Committee on the Judiciary, April 9, 1999. Thus, if 
the Committee were to accept the suggestions of the Department 
of Justice, nongovernmental creditors would be subject to a 
tougher standard than currently contained in S. 625, but the 
Internal Revenue Service would be free to avoid alternative 
dispute resolution. Given its checkered history in dealing with 
taxpayers, the Committee cannot support a special exemption for 
the Internal Revenue Service.
    In sum, S. 625 contains tough new penalties to punish and 
deter unethical or illegal collection activities.

            VI. REDUCING ABUSIVE USES OF THE BANKRUPTCY CODE

    As the National Bankruptcy Review Commission correctly 
noted, many of the worst abuses of the bankruptcy system 
involve individuals who repeatedly file for bankruptcy with the 
sole intention of using the automatic stay (i.e., a court 
injunction which arises whenever a bankruptcy case is filed). 
National Bankruptcy Rev. Comm. Rep., Bankruptcy the Next Twenty 
Years, October 20, 1997 vol. 1, at 262. Accordingly, S. 625 
contains restrictions on repeat filers. Under S. 625, if a 
bankrupt has filed for bankruptcy before, and that case was 
dismissed, the bankrupt will not get the benefit of the 
automatic stay. The Committee feels that this change will 
dramatically reduce the number of frivolous bankruptcy cases.
    S. 625 also contains new protections for secured lenders 
such as forbidding ``ride throughs'', and requires random 
audits of bankruptcy petitions to verify the accuracy of 
information contained in bankruptcy petitions. The Committee is 
concerned that there is little incentive for individuals to 
list all of their assets or fully disclose their financial 
affairs, including their income and living expenses, when they 
file for bankruptcy. Of course, such laxity fosters an 
environment in which the overall financial condition of the 
bankrupt is likely to be inaccurate, with the result that 
creditors may receive less than they could when a bankrupt's 
financial affairs are accurately disclosed. Accordingly, the 
random audit procedures will restore some integrity to the 
system, since all material misstatements are required to be 
reported to the appropriate authorities.

              VII. ENHANCED PROTECTIONS FOR CHILD SUPPORT

    Balanced bankruptcy reform must protect the status of child 
support. According to some estimates, more than one-third of 
bankruptcies involve spousal and child support orders. And in 
about half of those cases, women were creditors trying to 
collect court-ordered support from their former husbands. These 
support orders are a lifeline for thousands of families 
struggling to maintain self-sufficiency.
    S. 625 contains all of the provisions of the H.R. 3150 
Conference Report which enhanced the position of child support 
and alimony claimants in bankruptcy proceedings. In addition, 
S. 625 contains a new provision in section 219 which requires 
bankruptcy trustees to notify child support creditors of their 
right to use State child support enforcement agencies to 
collect outstanding amounts due. Section 219 also permits 
general creditors to disclose the last known billing address of 
bankrupt who owes child support or alimony to child support 
claimants. In response to concerns that a new category of 
nondischargeable debts could pit child support and alimony 
(both of which are not dischargeable under current law) against 
aggressive creditors in a post-bankruptcy environment, section 
314 provides that the new category will not apply to bankrupts 
who owe child support or alimony.
    Last year, Senator Hatch offered an amendment during 
Committee consideration of S. 1301 to assure that certain child 
support creditors would always be paid before other 
creditors.The Hatch amendment then was adopted by the Conference 
Committee on H.R. 3150. During this year's markup of S. 625, Senator 
Torricelli offered an amendment that complemented Senator Hatch's 
previous amendment by extending similar protections to families with 
court-ordered child support or other child support arrangements where 
the State is not the collector. This is an important improvement as 
many families, perhaps as many as half, do not have their child support 
orders enforced by a State child support agency. At the same time, the 
Committee recognizes that enforcement of child support by the State 
agency is often the cheapest and most effective means of collecting 
essential support for families who do not qualify for welfare but are 
still dependent on child support for basic needs.
    Some argue that requiring State agencies be paid in full 
may have the unintended consequence of injuring the family 
because such a requirement may make it more difficult to 
complete a chapter 13 repayment plan and receive a discharge of 
other debts. The amendment adopted in Committee would elevate 
the family above the State agencies, but still leave the State 
agencies in a better position than under current law. It would 
require that a plan provide for full payment of all amounts 
owed to both the State and family that become payable after the 
petition is filed. This would put both families and States in a 
better position than they are under current law. In addition, 
the amendment adopted in Committee would ensure full payment of 
arrears to the family unless the family agrees otherwise (this 
would permit the family as noted above to let the plan be 
completed if that was in their best interest). The State would 
still have a nondischargeable claim for child support 
arrearages that it could collect at the conclusion of the plan.
    Taken together, the Committee believes that child support 
and alimony claimants are in a far better position under S. 625 
than under current law.

                       VIII. BUSINESS PROVISIONS

    S. 625 largely retains the business provisions contained in 
the H.R. 3150 Conference Report. Although business bankruptcy 
filings are low at this time, the Committee feels that several 
changes to chapter 11 should be made. S. 625 will speed up 
chapter 11 for small business debtors, enact recommendations of 
the United Nations Commission on Internal Trade Law regarding 
transnational bankruptcy and clarify the treatment of tax 
claims in bankruptcy.

   IX. ADDITIONAL BANKRUPTCY JUDGESHIPS AND MISCELLANEOUS PROVISIONS

    S. 625 requires the Administrative Office of the U.S. 
Courts to provide special procedures and safeguards to ensure 
the confidentiality of tax information which bankrupts are 
required to file with their court papers.
    Furthermore, S. 625 authorizes 18 new temporary bankruptcy 
judgeships around the country, and extends five other ones. In 
considering whether to create new bankruptcy judgeships, the 
Committee has emphasized that the judiciary bears the burden of 
demonstrating the need for new judgeships. Although not 
satisfied that this burden has been completely met, the 
Committee is willing to agree to most of the Judicial 
Conference's request at this time with the understanding that 
future requests will be subject to more thorough scrutiny.
    The Subcommittee on Administrative Oversight and the Courts 
held a hearing on this matter on September 22, 1997. Following 
the hearing, the Judicial Conference took many months to supply 
information requested by the Subcommittee. In fact, to date, 
some of the requested material has never been provided. For 
instance, the Subcommittee requested documents related to 
special task forces the Judicial Conference dispatched to 
districts requesting new judgeships to evaluate these districts 
and make recommendations regarding the effective use of 
resources. The Subcommittee was initially informed that no 
written documents existed. The Subcommittee then requested that 
the observations and recommendations be put in writing and 
submitted to the Subcommittee for review. The Judicial 
Conference responded that if this information was given to 
Congress, judges would be less candid and open about their 
respective district's shortfalls and needs. See letter from 
Senator Grassley to the Hon. David Thompson (requesting 
information on the actions taken to avoid adding new 
judgeships), October 23, 1997, (on file with the Subcommittee 
on Administrative Oversight and the Courts); Letter from the 
Hon. David Thompson to Senator Grassley, November 6, 1997, (on 
file with the Subcommittee on Administrative Oversight and the 
Courts). The Committee views access to such information 
necessary in order for Congress to determine judgeship needs.
    The Judicial Conference, and supporters of its judgeship 
request, have argued for their case by referring to the overall 
rise in bankruptcy filings. The Committee feels that focusing 
merely on increased filings misses the mark.
    Importantly, the Judicial Conference uses a weighting 
system to determine when new bankruptcy judgeships are needed. 
This means that since not all bankruptcy cases require the same 
amount of judge time and effort, some cases are weighted more 
than others, with the more complex cases being given a much 
greater weight than the simpler cases. The recent increase in 
bankruptcy filings has been due almost entirely to consumer 
bankruptcy cases--in particular consumer cases filed under 
chapter 7 of the bankruptcy code. Laura Castaneda, ``Issuers of 
Credit Cards Get Tougher,'' San Francisco Chronicle, Sept. 15 
1997. Unlike complex corporate reorganizations under chapter 
11, these cases require little effort from a bankruptcy judge. 
As a result, they are not weighted heavily in the formula used 
to assess the need for new judges. In most of the districts 
which are requesting new judgeships, the weighted case-filings, 
relied upon in making judgeship requests, have either decreased 
or remained about the same since 1993. Ed Flynn, ``Chapter 7 
Case Processing Speed'', American Bankruptcy Institute Journal 
(1994). Thus, the Committee questions the pressing need for new 
judgeships since the weighted case filings appear either to 
have remained stable or decreased in most requesting districts.
    The amendment includes a modest reporting requirement for 
noncaseload related travel. In recent years, a troubling 
question has arisen regarding the amount of noncase related 
travel engaged in by bankruptcy judges in those districts which 
are requesting new judgeships.
    The Committee has been very reluctant to create new 
judgeships unless the need for such judgeships are fully 
justified. Moreover, the reforms contained in S. 625 should 
further control the need for more bankruptcy judges. Means 
testing will likely reduce administrative costs and court time, 
and by reducing the incentives to file bankruptcy, the rapid 
escalation in consumer bankruptcies we have witnessed in the 
last 5 years should slow significantly. At the request of 
Subcommittee Chairman Grassley, the General Accounting Office 
examined the noncaseload related travel of bankruptcy judges in 
districts which are requesting new judgeships. GAO Rep., 
Federal Judiciary: Information on Noncase-Related Travel of 
Bankruptcy Judges in 14 Bankruptcy Districts, GGD-97-166R at 1, 
Aug. 8, 1997. The nonpartisan GAO study raised certain 
questions regarding noncase related travel.
    The Committee agrees that bankruptcy judges should engage 
in some noncase related travel. However, the Committee is of 
the view that bankruptcy judges should give first priority to 
their caseloads. In the 14 districts requesting new judgeships, 
there were 416 noncase related trips taken in 1995 and 406 
taken in 1996, GAO Report at 4.

X. MAJOR DIFFERENCES BETWEEN S. 625 AND THE H.R. 3150 CONFERENCE REPORT

    As noted earlier, the Senate passed a bankruptcy reform 
bill (S. 1301) in the 105th Congress. Prior to Senate passage 
of S. 1301, the House of Representatives passed H.R. 3150, a 
similar reform bill. A House-Senate Conference Committee 
reported a Conference Report, which was passed by the House of 
Representatives but was never voted on in the Senate.
    As the Justice Department noted in its letter to the 
Committee regarding S. 625, S. 625 differs from the H.R. 3150 
Conference Report in several significant respects. See Letter 
to the Hon. Orrin G. Hatch, Chairman, Committee on the 
Judiciary, April 9, 1999 (on file with the Committee). Under 
the means-test in S. 625, judges are given more flexibility in 
considering the individual circumstances of each debtor by 
requiring a showing of ``special circumstances,'' rather than 
``extraordinary circumstances,'' for chapter 7 debtors with 
apparent repayment ability to avoid dismissal or transfer to 
chapter 13. Additionally, S. 625 raises the minimum dollar 
amount in the means-test from $5,000 to $15,000, with the 
effect that debtors without significant repayment capacity will 
not be affected by the means test.
    S. 625 also greatly expands the number of consumer 
protections. Under the bill, the Attorney General and FBI 
Director are required to designate one prosecutor and one agent 
in every district to investigate reaffirmation practices which 
violate current Federal criminal laws. Abusive or deceptive 
reaffirmation practices violate current laws, and the Committee 
strongly believes that the Department of Justice has an 
obligation to enforce current laws designed to protect 
consumers. S. 625 also specifically authorizes State attorneys 
general to enforce State criminal laws against abusive 
reaffirmation practices and State unfair trade practices laws 
which govern credit collection practices. The prohibition in 
the Conference Report on class action lawsuits arising from 
reaffirmation violations is not included in S. 625. S. 625 
contains a provision making it a violation of the automatic 
stay to threaten to file motions for the specific purpose of 
coercing reaffirmations. S. 625 contains a provision penalizing 
creditors who refuse to acknowledge payments received in 
chapter 13 plans and thereafter seek a ``double payment.'' In 
sum, S. 625 contains numerous provisions which will protect 
consumers from abusive or deceptive creditor practices.
    S. 625 also expands on the considerable child support 
protections contained in the H.R. 3150 Conference Report. Under 
the bill, bankruptcy trustees are required to notify 
appropriate State agencies of a debtor's address and location 
if the debtor owes child support, effectively turning 
bankruptcy courts into locator services which will help to 
track down ``deadbeat parents.'' Additionally, S. 625 permits 
State agencies which enforce payment of child support 
obligations to request that creditors who hold reaffirmed or 
nondischarged debts provide the last known address and phone 
number of the debtor, again, effectively turning bankruptcy 
courts into locator services which will help to track down 
``deadbeat parents.'' The bill also requires bankruptcy 
trustees to notify child support claimants of their right to 
enforce payment through an appropriate State agency. Finally, 
S. 625 provides that debts incurred to pay nondischargeable 
debts will continue to be dischargeable if the debtor owes 
child support or alimony.

           XI. COMMITTEE CONSIDERATION IN THE 106TH CONGRESS

    During the 106th Congress, the Subcommittee on 
Administrative Oversight and the Courts conducted an 
unprecedented joint hearing on bankruptcy reform with the 
Subcommittee on Commercial and Administrative Law of the House 
Judiciary Committee on March 11, 1999. At this hearing the 
following witnesses testified: Dean Sheaffer, vice president 
and director of credit, Boscov's Department Store, Inc., Laurel 
Dale, PA, representing the National Retail Federation; Bruce L. 
Hammonds, senior vice chairman and chief operating officer, 
MBNA America Bank, N.A., Wilmington, DE, the Hon. Judge Carol 
J. Kenner, U.S. Bankruptcy Judge, District of Massachusetts, 
Boston, MA; Larry Nuss, chief executive officer, Cedar Falls 
Community Credit Union, Cedar Falls, IA, representing Credit 
Union National Association, Inc.; Gary Klein, Esquire, senior 
attorney National Consumer Law Center, Boston, MA.
    As noted earlier, the Committee reported legislation 
substantially similar to S. 625 in the 105th Congress. In 
addition to the joint hearing House-Senate hearing conducted in 
1999, the Committee has at its disposal the extensive hearing 
record established in the 105th Congress regarding bankruptcy 
reform. Thus, the Committee record on bankruptcy reform 
consists of nine hearings involving 78 witnesses.

                         XII. COMMITTEE MARKUP

    On April 15, 1999, at 10 a.m., with a quorum present, the 
Judiciary Committee met in executive session to consider S. 
625. At that time the Committee only considered opening 
statements.
    On April 22, 1999, at 10 a.m., with a quorum present, the 
Committee beganconsideration of amendments to S. 625. Four 
amendments were acted on, and discussion was held on an additional five 
amendments for which votes were stacked until the next executive 
business meeting of the Committee.
    Senator Grassley offered an amendment to make technical 
changes. The amendment was agreed to by unanimous consent.
    Senator Sessions offered an amendment to modify the 
judicial discretion allowed under the Needs-Based Test. The 
amendment was defeated by a rollcall vote of 5 yeas to 13 nays.
        Yeas                          Nays
Kyl                                 Thurmond (by proxy)
Ashcroft                            Grassley
Abraham (by proxy)                  Specter (by proxy)
Sessions                            DeWine
Smith (by proxy)                    Leahy (by proxy)
                                    Kennedy
                                    Biden
                                    Kohl (by proxy)
                                    Feinstein
                                    Feingold
                                    Torricelli
                                    Schumer
                                    Hatch

    Senator Sessions offered an amendment to provide special 
procedures for assurances of payment of utility service for 
cases filed under chapter 11 of title 11. The amendment was 
agreed to by a rollcall vote of 9 yeas to 8 nays.
        Yeas                          Nays
Thurmond (by proxy)                 Leahy (by proxy)
Grassley                            Kennedy
Kyl                                 Biden
DeWine                              Kohl (by proxy)
Ashcroft                            Feinstein
Abraham (by proxy)                  Feingold
Sessions                            Torricelli
Smith (by proxy)                    Schumer
Hatch

    Senator Feingold, for himself and Mr. Specter, offered an 
amendment to modify a provision relating to the payment of a 
panel trustee. The amendment was defeated by a rollcall vote of 
9 yeas to 9 nays.
        Yeas                          Nays
Specter (by proxy)                  Thurmond (by proxy)
Leahy (by proxy)                    Grassley
Kennedy (by proxy)                  Kyl
Biden                               DeWine
Kohl (by proxy)                     Ashcroft
Feinstein (by proxy)                Abraham (by proxy)
Feingold                            Sessions
Torricelli                          Smith (by proxy)
Schumer                             Hatch

    Senator Feingold offered an amendment to amend certain 
provisions relating to credit counseling. The vote was stacked 
until the next executive business meeting.
    Senator Hatch offered an amendment to amend subtitle B of 
title II. Senator Hatch agreed to accept a second degree 
amendment by Senator Torricelli. The vote on the Hatch 
amendment, as amended, was stacked until the next executive 
business meeting.
    Senator Hatch offered an amendment to provide for the 
protection of retirement savings in bankruptcy. The amendment 
was withheld, pending further discussion.
    Senator Sessions offered an amendment to make amendments 
with respect to discouraging abuse of reaffirmation practices. 
The vote was stacked until the next executive business meeting.
    Senator Schumer offered an amendment to provide for the 
dismissal or conversion of a case under chapter 7 of title 11, 
United States Code, for abuse or ability to repay creditors. 
The vote was stacked until the next executive business meeting.
    On April 27, 1999, at 10 a.m., with a quorum present, the 
Committee resumed consideration of amendments to S. 625.
    The following amendments were agreed to, en bloc, by 
unanimous consent:
          Senator Feinstein's amendment to modify the period 
        during which a debtor is required to receive credit 
        counseling;
          Senator Hatch's amendment to subtitle B of title II 
        (Domestic Support Protection), as amendedby Senator 
Torricelli's amendment;
          Senator Hatch's amendment to provide for the 
        protection of retirement savings in bankruptcy;
          Senator Feinstein's amendment to section 110, to 
        discourage abusive bankruptcy filings;
          Senator Sessions' amendment to title 11, United 
        States Code, to prevent double payments to secured 
        creditors in chapter 13 cases; and
          Senator Feinstein's amendment to strike section 416.
    Senator Feingold's amendment to effectively remove 
provisions relating to credit counseling was defeated by a 
rollcall vote of 9 yeas to 9 nays.
        Yeas                          Nays
Specter (by proxy)                  Thurmond (by proxy)
Leahy (by proxy)                    Grassley
Kennedy (by proxy)                  Kyl
Biden                               DeWine (by proxy)
Kohl (by proxy)                     Ashcroft (by proxy)
Feinstein                           Abraham
Feingold                            Sessions
Torricelli                          Smith
Schumer                             Hatch

    Senator Sessions withdrew his amendment to make amendments 
with respect to discouraging abuse of reaffirmation practices.
    Senator Schumer offered an amendment at the last meeting, 
to provide for the dismissal or conversion of a case under 
chapter 7 of title 11, United States Code, for abuse or ability 
to repay creditors. The amendment was defeated by a rollcall 
vote of 7 yeas to 11 nays.
        Yeas                          Nays
Specter (by proxy)                  Thurmond (by proxy)
Leahy (by proxy)                    Grassley
Kennedy (by proxy)                  Kyl
Kohl                                DeWine (by proxy)
Feinstein                           Ashcroft (by proxy)
Feingold                            Abraham
Schumer                             Sessions
                                    Smith
                                    Biden
                                    Torricelli
                                    Hatch

    Senator Grassley offered an amendment to require that 
certain earnings of an individual who files a voluntary case 
under chapter 11 of title 11, United States Code, be considered 
to be property of the estate of that individual. The amendment 
was agreed to by a rollcall vote of 12 yeas to 5 nays.
        Yeas                          Nays
Thurmond (by proxy)                 Leahy (by proxy)
Grassley                            Kennedy (by proxy)
Kyl                                 Biden
DeWine (by proxy)                   Kohl (by proxy)
Ashcroft (by proxy)                 Feingold
Abraham
Sessions
Smith
Feinstein
Torricelli
Schumer
Hatch

    Senator Feingold offered an amendment to provide for an 
exception to a limitation on an automatic stay under section 
362(b) of title 11, United States Code, relating to evictions 
and similar proceedings to provide for the payment of rent that 
becomes due after the petition of a debtor is filed. The 
amendment was withdrawn, to be worked on further.
    Senator Schumer offered an amendment to amend the Truth in 
Lending Act to provide for disclosures to consumers relating to 
late payment deadlines and penalties, ``teaser rates,'' and 
Internet-based solicitations. The amendment was withdrawn, to 
be worked on further.
    Senator Feingold offered an amendment, on behalf of Senator 
Specter and himself, to provide for a waiver of filing fees in 
certain bankruptcy cases, and for other purposes. The amendment 
was defeated by a rollcall vote of 9 yeas to 9 nays.
        Yeas                          Nays
Specter (by proxy)                  Thurmond (by proxy)
Leahy (by proxy)                    Grassley
Kennedy (by proxy)                  Kyl
Biden                               DeWine
Kohl (by proxy)                     Ashcroft (by proxy)
Feinstein                           Abraham (by proxy)
Feingold                            Sessions
Torricelli                          Smith
Schumer                             Hatch

    Senator Schumer offered an amendment to ensure that debts 
incurred as a result of clinic violence are nondischargeable. 
The amendment was defeated by a rollcall vote of 9 yeas to 9 
nays.
        Yeas                          Nays
Specter (by proxy)                  Thurmond (by proxy)
Leahy (by proxy)                    Grassley
Kennedy (by proxy)                  Kyl
Biden                               DeWine
Kohl (by proxy)                     Ashcroft
Feinstein (by proxy)                Abraham (by proxy)
Feingold                            Sessions
Torricelli (by proxy)               Smith
Schumer                             Hatch

    The following amendments were discussed, but withheld, to 
be worked on further:
          Senator Feinstein's amendment to provide for the 
        treatment of high risk loans;
          Senator Torricelli's amendment to ensure that the 
        creditor has the burden of proving allegations that a 
        debt was incurred by fraud; and
          Senator Feinstein's amendment to make an improvement 
        to audit requirements.
    By a rollcall vote of 14-4, the Committee favorably 
reported S. 625, as amended.
        Yeas                          Nays
Thurmond (by proxy)                 Leahy (by proxy)
Grassley                            Kennedy (by proxy)
Specter (by proxy)                  Feingold
Kyl                                 Schumer
DeWine
Ashcroft (by proxy)
Abraham
Sessions
Smith
Biden
Kohl (by proxy)
Feinstein
Torricelli
Hatch

XIII. COMMITTEE AND SUBCOMMITTEE CONSIDERATION OF S. 1301 IN THE 105TH 
                                CONGRESS

    As noted earlier, the work of the Committee in the 106th 
Congress built upon the foundations established by the work of 
prior Congresses, especially the passage of S. 1301 during the 
105th Congress. During the 105th Congress, the Subcommittee on 
Administrative Oversight and the Courts held the following 
hearings.

                       XIV. SUBCOMMITTEE HEARINGS

    On May 19, 1998, the Subcommittee held a hearing to review 
business bankruptcy issues. The witnesses consisted of three 
panels. The first included Linda E. Stanley, U.S. Trustee for 
region 17; Philip J. Hendel, Hendel, Collins, and Newton, P.C., 
on behalf of the Commercial Law League of America; Jere W. 
Glover, Chief Counsel for Advocacy, Office of Advocacy, U.S. 
Small Business Administration; and Stephen H. Case, Davis, 
Polk, and Wardwell, former Senior Advisor, National Bankruptcy 
Review Commission. The second panel consisted of Ann C. Stern, 
chairman and chief executive officer, Financial Guarantee 
Insurance Corporation, on behalf of the Association of 
Financial Guaranty Insurers; David Warren, managing director, 
Mortgage Department, Morgan Stanley Dean Witter and Company, on 
behalf of the Bond Market Association; and Randal C. Picker, 
National Bankruptcy Conference; H. Elizabeth Baird, senior 
counsel, Nationsbank, on behalf of the American Bankers 
Association; Joyce Kuhns, Weinberg and Green, on behalf of the 
International Council of Shopping Centers; Grant W. Newton, 
professor of accounting, Pepperdine University, on behalf of 
the Association of Insolvency Accountants; Kathleen J. Cahill, 
assistant chief, Tax and Bankruptcy Division, Office of the 
Corporation Counsel, National League of Cities; James D. 
Newbold, assistant attorney general, Office of the Illinois 
Attorneys General; and Damon Silvers, associate general 
counsel, American Federation of Labor and Congress of 
Industrial Organizations. A fourth panel was heard on June 1, 
1998 consisting of Thomas R. Prince, professor of health 
services management and accounting and information systems, 
J.L. Kellogg Graduate School of Management Northwestern 
University; Keith J. Shapiro, Holleb and Coff, American 
Bankruptcy Institute; Deborah L. Fish, Allard and Fish, P.C.; 
Charles N. Kahn, III, chief operating officer and president-
designate, Health Insurance Association of America.
    On December 7, 1997 a hearing regarding international 
bankruptcy laws in Washington, DC. The first panel consisted of 
Harold S. Burman, Executive Director, Advisory Committee on 
Private International Law, State Department; Tina L. Brozman, 
chief judge, Bankruptcy Court for the Southern District of New 
York; Jonathan L. Flaxer, Winick and Rich, P.C.; Edward G. 
Moran, banking consultant; and Jay Lawrence Westbrook, Benno C. 
Schmidt, chair of business law, University of Texas School of 
Law. The second panel included David Narigon, senior vice 
president of claims, EMC Insurance Companies; Stephen P. Cane, 
chief operating officer, Zurich Reinsurance Limited, 
International Insurance and Reinsurance Market Association; 
Franklin W. Nutter, president, Reinsurance Association of 
America.
    On October 21, 1997, the Subcommittee held a hearing in 
Washington, DC to review therecommendations of the National 
Bankruptcy Review Commission. The witnesses testifying on behalf of the 
Commission included Brady C. Williamson, chair; Hon. Robert E. 
Ginsberg, vice-chair, U.S. Bankruptcy Judge; M. Caldwell Butler; Jim 
Sheppard; Hon. Edith Hollan Jones; John Gose; Babette Ceccotti; and Jay 
Alix.
    On September 22, 1997 the Subcommittee held a hearing on 
the bankruptcy code's effect on religious freedom and a review 
of the need for additional bankruptcy judgeships. The first 
panel of witnesses included Stephen Paul Goold, senior pastor, 
Crystal Evangelical Free Church; Richard E. Flint, attorney at 
law, Pearson & Price, PLC; Steven T. McFarland, director, 
Center for Law and Religious Freedom, Christian Legal Society; 
Douglas Laycock, University Of Texas Law School; Todd J. 
Zywick, Mississippi College of Law; Donald S. Bernstein, Esq., 
Davis, Polk & Wardwell; and Kenneth D. Whitehead, Board Member, 
Catholic League for Religious and Civil Rights. The second 
panel consisted of Hon. David R. Thompson, circuit judge, ninth 
circuit, chairman, Committee on the Administration of the 
Bankruptcy System, Judicial Conference of the United States; 
and Richard M. Stana, Acting Associate Director, Administration 
of Justice Issues, Government Accounting Office.
    On August 8, 1997 the Subcommittee held a hearing regarding 
bankruptcy laws for family farmers. The Subcommittee heard from 
two panels of witnesses. The first panel included Joseph A 
Peiffer, attorney at law; Ross River, owner and operator of 
River Family Farm; Steven P. Wandro, attorney at law, Wandro & 
Gibson, P.C.; Lyle and Lila Alfred, farmers; David Losure and 
Mary Schaeffer, livestock farmers. The second panel included 
Michael L. Thompson, attorney at law; Prof. Patrick B. Bauer, 
University of Iowa College of Law; Carol F. Dunbar, standing 
chapter 12 trustee.
    On August 1, 1997 a hearing was held by the Subcommittee to 
review the negative impact of bankruptcy on educational 
funding. The witnesses on the first of two panels included 
Jayne Morrell, tax assessor/collector, Dallas Independent 
School District; Elizabeth Weller, bankruptcy attorney, Blair, 
Goggan, Sampson & Meeks; Donald R. Boehm, tax assessor/
collector, Houston Independent School District; Michael Deeds, 
attorney at law, regional managing attorney, Heard, Goggan, 
Blair & Williams; Lawrence A. Friedman, bankruptcy trustee. The 
second panel consisted of Kent Scroggins, president, Board of 
Trustees of Lakeworth Independent School District; Barbara M. 
Williams, bankruptcy attorney, Rohne, Hoodenpyle, Lobert, Myers 
& Scott; Joan E. Pilver, assistant attorney general; Dorothy J. 
Conrad, St. Lucie County tax collector; Sandy Hume, National 
Association of County Treasury and Finance Officers; Fred 
Anderson, Roanoke county treasurer.
    The Subcommittee on Administrative Oversight and the Courts 
of the Committee on the Judiciary held a hearing on April 11, 
1997 on the increase in personal bankruptcies and the crisis in 
consumer credit. Witnesses included Michael E. Staten, director 
of the Credit Research Center, Purdue University; Ian Domowitz, 
Department of Economics, Professor at Northwestern University; 
Edward Bankole, vice-president, Moody's Investors Service; Kim 
Kowalewski, Chief, Financial and General Macroeconomic Analysis 
Division, Congressional Budget Office; and Michael McEneney, 
Morrison and Foerster, on behalf of the National Consumer 
Bankruptcy Coalition.
    On March 11, 1998, the Subcommittee held a hearing on S. 
1301, entitled ``The Consumer Bankruptcy Reform Act: Seeking 
Fair and Practical Solutions to the Consumer Bankruptcy 
Crisis.'' The Subcommittee heard witnesses from three panels. 
The first panel of witnesses included Lawrence A. Friedman, 
secretary, National Association of Bankruptcy Trustees; Hon. A. 
Thomas Small, chief bankruptcy judge; Tahira K. Hira, professor 
at Iowa State University; George J. Wallace, attorney at 
Eckert, Seamans, Cherin, and Melott, LLC; William E. Brewer, 
Jr., National Association of Consumer Bankruptcy Attorneys; 
Stan Bluestone, National Retail Federation. Witnesses on the 
second panel were Richard Stana, General Accounting Office; 
Michael Staten, director of Credit Research Center; Stephen 
Brobeck, executive director, Consumer Federation of America; 
Brian McDonnell, National Association of Federal Credit Unions; 
and Robert Elliot, Household International. Witnesses on the 
third panel consisted of Douglas Boshkoff, professor at Indiana 
University School of Law; Randy Picker, National Bankruptcy 
Conference; Deborah D. Williamson, American Bankruptcy 
Institute; and Matthew Mason, United Auto Workers.

           XV. COMMITTEE AND SUBCOMMITTEE MARKUP 6

---------------------------------------------------------------------------
    \6\ Details of the amendments offered to S. 1301 during Committee 
and Subcommittee consideration can be found in S. Rep. No. 105-253, 
105th Cong. 2d Sess.
---------------------------------------------------------------------------
    On April 2, 1998, the Subcommittee on Administrative 
Oversight and the Courts met reported S. 1301, as amended, on a 
rollcall vote of 6 yeas and 1 nay.
        Yeas                          Nays
Thurmond (by proxy)                 Feingold
Kyl
Sessions
Durbin
Kohl (by proxy)
Grassley

    On May 21, 1998, the Senate Committee on the Judiciary 
reported S. 1301, as amended, on a rollcall vote of 16-2.
        Yeas                          Nays
Thurmond                            Kennedy
Grassley                            Feingold
Specter (by proxy)
Thompson (by proxy)
Kyl
DeWine
Ashcroft
Abraham
Sessions
Leahy
Biden
Kohl (by proxy)
Durbin
Torricelli
Hatch

                    XVI. SECTION-BY-SECTION ANALYSIS


                    Title I--Needs Based Bankruptcy

    This title of this new bill changes section 707(b) of the 
bankruptcy code to allow for a chapter 7 case to be dismissed 
or converted to chapter 13.

Section 101. Conversion

    This section amends section 706(C) of title 11 of the 
United States Code to provide that a court may convert a 
chapter 7 case to a chapter 12 or 13 case if the debtor 
consents.

Section 102. Dismissal or Conversion

    Section 102 deletes the current section heading and inserts 
the following: ``707. Dismissal of a case or conversion to a 
case under chapter 13.'' This section provides a mechanism for 
means-testing a debtor's eligibility for relief under chapter 
7. The standards appear as requirements for dismissal or 
conversion of a chapter 7 case to a chapter 13 case. For 
example, this section replaces the current standard for 
dismissal of ``substantial abuse'' and provides that a chapter 
7 petition must be dismissed for ``abuse'' if it is filed by a 
debtor who satisfies a flexible test which gauges whether he or 
she has the means to repay a substantial part of the debt 
outstanding under a plan funded with future income. Individuals 
who have the ability to pay their debts under the income and 
expense formula will be ineligible for bankruptcy under chapter 
7 but have the option of filing under other chapters, such as 
chapter 13.
    More specifically, S. 625 would establish a presumption 
that a chapter 7 proceeding should be dismissed or converted to 
chapter 13 if the debtor has sufficient ``monthly net income'' 
to repay at least 25 percent (or $15,000, whichever is less) of 
unsecured, nonpriority debts over 5 years. Monthly net income 
is calculated as the average of the debtor's income for the 
last 6 months minus: (I) allowable expenses set by the IRS; 
(ii) monthly payments for secured debts; and (iii) monthly 
payments for priority unsecured debts. The presumption can be 
rebutted if the debtor demonstrates ``special circumstances'' 
that require an adjustment of income or expenses that causes 
the debtor's repayment capacity to fall below the 25 percent 
(or $15,000, whichever is less) level. The Committee does not 
intend the ``special circumstances'' contained in S. 625 to 
encompass expenses for goods or services which are not 
necessary living expenses.
    Subsection (b)(2) charges the U.S. trustee with the 
responsibility of reviewing financial disclosure documents and 
all other materials filed by the debtor. Also, the U.S. trustee 
must file a statement at least 10 days before the first meeting 
of the creditors as to whether the debtor is eligible for 
relief under chapter 7. If the debtor's case is presumed to be 
an abuse, the U.S. trustee would be required to file a 707(b) 
dismissal or conversion motion within 30 days or, instead, file 
a statement setting forth the reasons the trustee does not 
believe that such motion would be appropriate. This would not 
apply, however, if the debtor's income is less than the highest 
national or applicable State median family income for a family 
of equal or lesser size, or in the case of a household of one 
person, the national or applicable State median household 
income for one earner.
    If a motion is brought by a chapter 7 trustee, and the 
court determines that the debtor's case should be dismissed or 
converted, the court must order the debtor's counsel to 
reimburse the trustee for all reasonable costs associated with 
prosecuting the motion for dismissal or conversion if the 
motion was granted and the action of the counsel was not 
substantially justified. The court must further order fines 
against the debtor's attorney if the court finds that the 
debtor's attorney violated rule 9011. The Committee intends 
these fines to serve as financial incentive for chapter 7 
trustees to discover and eliminate abusive chapter 7 cases.
    This section also provides that the court may award a 
debtor all reasonable costs in contesting a creditor's motion 
to convert or dismiss, including attorneys' fees, if the court 
does not grant the motion and the creditor's position was not 
substantially justified or the motion was brought solely to 
coerce the debtor into waiving a guaranteed right. The section 
also addresses the problems associated with small business 
creditors by providing that a party in interest filing an 
aggregate claim of less than $1,000 is not subject to any 
liability for any costs, fees or penalties or any other amounts 
under subparagraph (A).
    Finally, the section prohibits Sec. 707(b) motions by 
creditors if the debtor and the debtor's spouse combined have 
current monthly total income equal to or less than the national 
or State median family monthly income for a family of equal 
size.

Section 103. Notice of Alternatives

    This section amends section 342 of title 11 of the United 
States Code. Under the amended section, an individual whose 
debts are primarily consumer debts shall receive a written 
notice prescribed by the U.S. trustee for the district in which 
the petition is filed. The section provides that the notice 
shall contain the following:
          (1) Brief descriptions of chapters 7, 11, 12 and 13 
        of title 11 outlining the general purpose, benefits and 
        costs of proceeding under each chapter; and
          (2) Brief descriptions of services available from an 
        independent, nonprofit credit counseling service that 
        is approved by the U.S. trustee for that district.

Section 104. Debtor Financial Management Training Test Program

    Section 104 establishes a 1-year pilot program on financial 
management education for debtors under the auspices of the 
Executive Office for U.S. Trustees. 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. Upon the conclusion of the pilot 
program, the Director of the Executive Office for U.S. Trustees is 
required to submit a report to Congress 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.

Section 105. Credit Counseling

    The section amends section 109 of title 11 of the United 
States Code. This section adds a new subsection (h) which 
provides that in the 180 days prior to a filing, a potential 
debtor must attempt to make a repayment plan outside the 
bankruptcy system through an approved credit counseling 
program.
    The section also amends section 727(a) of title 11 of the 
United States Code. The section adds a new subsection (11) 
which adds the failure to complete a personal financial 
management course to the list of actions for which a court 
shall not grant a discharge.
    The section also amends section 1328 of title 11 of the 
United States Code. The section adds a new subsection (g) which 
adds the failure to complete a personal financial management 
course to the list of actions for which a court shall not grant 
a discharge.
    The section also amends section 521 of title 11 of the 
United States Code. This section adds a new subsection (b) 
which requires a debtor to file a certificate from a credit 
counseling service or other evidence of a good faith attempt to 
create a debt repayment plan. In addition, the debtor must file 
a copy of the debt repayment plan.
    The section also amends Chapter 1 of title 11 of the United 
States Code to add a new section 111. The new section provides 
that the clerk of each district shall maintain a list of credit 
counseling services. The list of programs is to be approved by 
the U.S. trustee or the bankruptcy administrator for the 
district.

                Title II--Enhanced Consumer Protections


          Subtitle A--Penalties for Abusive Creditor Practices


Section 201. Promotion of Alternative Dispute Resolution

    This section will promote out-of-court settlements between 
potential debtors and their creditors by penalizing creditors 
who refuse to negotiate in good faith prior to declaring 
bankruptcy. If, prior to bankruptcy, a debtor has proposed a 
reasonable alternative repayment schedule and the creditor 
unreasonably rejected such an offer, the bankruptcy judge may 
reduce the dollar amount of that creditor's claim by up to 20 
percent.

Section 202. Effect of Discharge

    This section will protect debtors by imposing penalties on 
creditors for the willful failure to properly credit payments 
made by the debtor in a chapter 13 plan.

Section 203. Violations of the Automatic Stay

    This section provides for new penalties against creditors 
who threaten to file 707(b) motions in order to coerce a 
reaffirmation when they have no reasonable justification for 
doing so. This provision is not intended to prevent normal, 
good faith negotiations and communications between debtor and 
creditor.

Section 204. Discouraging Abuse of Reaffirmation Practices

    This section gives every debtor who intends to reaffirm a 
wholly unsecured debt a right to a fairness hearing. Debtors 
represented by counsel may waive this hearing if they so 
choose.
    This section also amends chapter 9 with a new section 158 
entitled ``Designation of U.S. attorneys and agents of the 
Federal Bureau of Investigation to address abusive 
reaffirmations of debt.'' The Attorney General is required to 
designate a U.S. attorney for each district and an agent of the 
FBI for each field office to carry out enforcement activities 
with respect to abusive reaffirmations.
    This section also amends section 523 explaining that 
creditors are still subject to State unfair trade practices law 
with respect to section 523 and 524. Also, the attorney general 
of a State or other designated official may bring suit on 
behalf of residents to recover under section 524(C) and may 
bring suit in State court to enforce State criminal law similar 
to sections 152 or 157.

                   Subtitle B--Priority Child Support


Section 211. Definition of Domestic Support Obligation

    This section amends section 101 of title 11 by defining 
``domestic support obligation'' to mean any debt in the nature 
of alimony, maintenance, or support (including government 
assistance) owed to or recoverable by any spouse, former 
spouse, child, that's child legal guardian, or governmental 
unit.
    The debt must have been established or subject to 
establishment before or after entry of an entry of an order for 
relief under this title and must not have been assigned to a 
nongovernmental entity, unless that obligation is assigned 
voluntarily by the affected party solelyfor the purpose of 
collecting the debt.

Section 212. Priorities for Claims for Domestic Support Obligations

    This section amends section 507(a) of title 11, United 
States Code. Section 507 establishes priorities for payment of 
certain unsecured claims. The amendment moves claims for 
domestic support obligations from seventh in the list of 
priorities to first.

Section 213. Requirements to Obtain Confirmation and Discharge in Cases 
        Involving Domestic Support Obligations

    This section amends section 1325(a) of title 11 of the 
United States Code. The amended section provides that the 
debtor is generally required to pay alimony and child support 
obligations in full in order to obtain debt forgiveness in 
chapter 13.

Section 214. Exceptions to Automatic Stay in Domestic Support 
        Obligation Proceedings

    This section amends section 362(b) of title 11, United 
States Code, by creating an exception to the automatic stay 
provision wherein debtors who declare bankruptcy will face the 
possibility of the withholding, suspension, or restriction of 
drivers licenses, professional, occupational, and/or 
recreational licenses if the debtor defaults on any domestic 
support obligation.

Section 215. Nondischargeability of Certain Debts for Alimony, 
        Maintenance, and Support

    The section amends section 523 of title 11 of the United 
States Code. After technical amendments, the section adds that 
certain debts incurred for actual alimony and child support are 
automatically nondischargeable. This provision will make it 
unnecessary for an exspouse seeking to enforce these 
obligations to incur the legal expenses of litigation, as 
required by present law.

Section 216. Continued Liability of Property

    This section amends section 522 of Title 11 of the United 
States Code. The section allows those who are owed domestic 
support obligations to obtain satisfaction of those obligations 
by accessing property that is otherwise exempt from other 
creditors' claims.

Section 217. Protection of Domestic Support Claims Against Preferential 
        Transfer Motions

    This section amends section 547(c)(7) of title 11 of the 
United States Code by substituting the phrase ``domestic 
support obligation'' for ``spouse, former spouse, or child of 
the debtor * * *''

Section 218. Disposable Income Defined

    This section excludes child support and alimony income from 
the disposable income test used in bankruptcy cases. It is 
intended that expenses that are reasonably expected will be 
paid by such child support or alimony will not be double 
counted in determining disposable income.

Section 219. Collection of Child Support

    This section specifies the duties of the trustee with 
respect to notification requirements under chapter 7 and 13.

                 Subtitle C--Other Consumer Protections


Section 221. Amendments to Discourage Abusive Bankruptcy Filings

    This section imposes penalties on bankruptcy petition 
prepares who misled potential debtors regarding bankruptcy.

Section 222. Sense of Congress

    Section 225 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 223. Additional Amendments to Title 11, United States Code

    This section amends section 507(a) of title 11 of the 
United States Code by adding certain claims for motor vehicle 
related death or personal injuries to the list of priorities of 
payment. Such claims are tenth on the list of priorities.

Section 224. Protection of Retirement Savings in Bankruptcy

    This section provides that retirement plans sponsored by 
government and nonprofit employers are exempted from a 
bankruptcy estate. The section also provides that individual 
retirement accounts are also exempt from a bankruptcy estate.

                Title III--Discouraging Bankruptcy Abuse


Section 301. Reinforcement of the Fresh Start

    This section 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.

Section 302. Discouraging Bad Faith Repeat Filings

    This section will greatly reduce abuses of the bankruptcy 
system by reducing the incentive to file for bankruptcy 
repeatedly without completing the bankruptcy process. After 
technical amendments, the amended section adds that with 
respect to any action taken on a debt or property securing a 
debt, or any lease, the automatic stay shall terminate with 
respect to the property or debtor on the 30th day after the 
filing of the later case if: (A) A single or joint case is 
filed by or against an individual debtor under chapter 7, 11, 
or 13; and (B) A single or joint case of that debtor was 
pending during the preceding year but was dismissed (other than 
a case refiled under a chapter other than chapter 7 after 
dismissal under section 707(b) of this title).
    This section provides that the court may extend the stay in 
a particular case with respect to 1 or more creditors, if a 
party in interest so requests, after providing notice and a 
hearing before the expiration of the 30-day period in paragraph 
(2). The stay will be extended only if the party in interest 
demonstrates that the filing of the later case is in good faith 
with respect to the creditors to be stayed.
    The section provides that a case shall be presumed to have 
not been filed in good faith if:
          (A) More than one previous case under chapter 7, 11, 
        or 13 of this title in which the individual was a 
        debtor was pending during the 1-year period described 
        in paragraph (1) or;
          (B) A previous case under chapter 7, 11, or 13 in 
        which the individual was a debtor was dismissed after 
        the debtor failed to file or amend the petition or 
        other documents as required (after having received from 
        the court a request to do so), or the debtor failed to 
        perform the terms of a plan that was confirmed by the 
        court (without substantial excuse) or;
          (C) If, (1) during the period commencing with the 
        dismissal of the next most previous case under chapter 
        7, 11, or 13 there has not been a substantial change in 
        the financial or personal affairs of the debtor, (2) 
        the case is a chapter 7 case and there is no other 
        reason to conclude that the later case will be 
        concluded with a discharge, or (3) the case is a 
        chapter 11 or 13 case and there is not a confirmed plan 
        that will be fully performed.

Section 303. Curbing Abusive Filings

    This section responds to the abuse that occurs when 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. The section 
allows bankruptcy courts to grant prospective in rem relief for 
a period of 2 years from the automatic stay with respect to 
real property in future bankruptcy cases filed by the debtor. 
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. A 
debtor in a subsequent case may move for relief from such order 
based on changed circumstances or for showing good cause, after 
notice and a hearing or if the debtor is ineligible under 
section 109(g) to be a debtor or if the case was filed in 
violation of a court order prohibiting the debtor from being a 
debtor.

Section 304. Debtor Retention of Personal Property Security

    Section 304 provides that the chapter 7 debtor may not 
retain personal property subject to a lien securing 
dischargeable debt unless he agrees to reaffirm a debt that is 
otherwise dischargeable or he redeems the personal property by 
paying the lienholder the amount allowed under the secured 
claim. If the debtor fails to do either within 45 days after 
the first meeting of the creditors under section 341(a), 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. This section is intended to 
reject those cases which have held that a debtor may retain 
property subject to a security interest when the creditor does 
not consent to the retention.

Section 305. Relief From the Automatic Stay When the Debtor Does not 
        Complete Intended Surrender of Consumer Debt Collateral

    This section amends section 362 of title 11 of the United 
States Code. The section provides that the automatic stay is 
terminated as to property securing a claim or subject to an 
unexpired lease, if within the proscribed time the debtor fails 
to timely file the required statements of intention or to 
indicate whether the property will be surrendered or retained. 
The stay may also be terminated if the debtor intends to retain 
the property and fails to meet the requirement to redeem the 
property or reaffirm the debt, or assume the unexpired lease. 
The stay may additionally be terminated if the debtor fails to 
timely take the action specified in a statement of intention, 
unless the statement specifies reaffirmation and the creditor 
refuses to reaffirm the debt on the original contract terms. 
This section is intended to reject those cases which have held 
that a debtor may retain property subject to a security 
interest when the creditor does not consent to the retention.
    Section 305 also amends section 521(a)(2) to make it apply 
to all debts, not just consumer debts. Second, a debtor must 
fulfill his intention within 30 days after the first date set 
for the meeting of creditors under section 341 of the 
Bankruptcy Code. With respect to property that has been leased 
or bailed to a debtor or in which a creditor holds a security 
interest, subsection (2)(c) 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 of filing for bankruptcy relief.

Section 306. 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 306 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. The section also limits 
certain ``cram down'' rights to preserve a fair balance.

Section 307. Exemptions

    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 preceding the filing applies ``or for 
a longer portion of such 180-day period than in any other 
place.'' Section 307 amends section 522 and requires a debtor 
to be domiciled in the State for 2 years before he or she can 
assert that State's exemption scheme.

Section 308. Residency Requirement for Homestead Exemption

    Section 308 amends section 522 and reduces the value of 
real or personal property used as a residence which the debtor 
can claim is exempt by the extent to which such value is 
attributable to any portion of any property that the debtor 
disposed of in the 2 year period before filing with the intent 
to hinder, delay or defraud a creditor.

Section 309. Protecting Secured Creditors in Chapter 13 Cases

    Under current law, a trustee may assume, reject or assign 
the interest that the bankruptcy estate has in a lease of 
personal property. Upon the trustee's rejection or failure to 
timely assume a lease of personal property, section 309 
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 309 allows a chapter 7 debtor to notify 
the lessor of his 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.
    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 313. Further, if the such 
lease is rejected, neither the automatic stay nor the co-debtor 
stay, which applies in chapter 13 cases, applies.
    This section also adds a new section 1308 to assure that 
creditors holding purchase money security interests and lessors 
of personal property continue to receive meaningful payments 
from the time a chapter 13 bankruptcy is filed until a plan is 
confirmed and payments to the creditor begin under the plan. 
Debtors whose plans filed with the court propose to pay their 
secured debts or personal property leases as part of the plan 
are required by present law to commence their payments within 
30 days of filing their petition. This provision requires that 
the trustee, in turn, commence payments to the secured creditor 
or lessor in the amount of the payment provided by the plan to 
that creditor within 40 days of the filing of the petition. 
Debtors whose plan does not propose to pay the creditor under 
the plan are required to pay to the trustee, in addition to 
their plan payments, the scheduled contractual amount of the 
debtor's payment to the secured creditor or the lessor. The 
trustee, in turn, is required to pay such amount to the 
creditor or lessor.
    The provision also requires debtor's plans to provide for 
payments to secured creditors that are equal monthly 
installments, and adequate to provide adequate protection to 
the creditor or lessor.
    This section amends section 348(f)(1) of title 11 of the 
United States Code. The first change deletes ``in the converted 
case, with allowed secured claims'' of subparagraph (B) and 
inserts in its place, ``only in a case converted to chapter 11 
or 12 but not in a case converted to chapter 7, with allowed 
secured claims in cases under chapters 11 and 12.
    The amended section also provides that with respect to 
cases converted from chapter 13, the claim of a creditor 
holding security as of the date of the petition shall continue 
to be secured unless the full amount of the claim determined 
under applicable nonbankruptcy law has been paid in full as of 
the date of conversion. This is true notwithstanding any 
valuation or determination of the amount of an allowed secured 
claim made for the purposes of the chapter 13 proceeding. Thus, 
if a ``cram down'' occurs in chapter 13, the debtor could not 
benefit from this ``cram down'' if the case is converted to 
chapter 7.

Section 310. Limitation on Luxury Goods

    This section provides that consumer debts owed to a single 
creditor aggregating more than $250 for luxury goods or 
services purchased within 90 days before the order for relief 
are presumed to be nondischargeable. Cash advances that are 
extensions of credit under an open end credit plan aggregating 
more than $750 to all creditors within 70 days are also 
presumed nondischargeable.

Section 311. Automatic Stay

    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. Section 311 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.

Section 312. Extension of 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 6 years of when the debtor obtained a 
discharge in the prior case. Section 312 extends the current 6-
year period to 8 years.
    With only limited exception, no refiling bar currently 
applies to successively filed chapter 13 cases. Section 312 
institutes a 5-year bar.

Section 313. Definition of Household Goods and Antiques

    This section amends section 101 of title 11 of the United 
States Code. The section provides that the term ``household 
goods'' has essentially the same meaning as the same term used 
by the Federal Trade Commission in section 444.1(I) of CFR 
title 16. This section lists the items included in the Federal 
Trade Commission Rule and also certain other property, such as 
a VCR, children's toys and hobby equipment, and the like.

Section 314. Debt incurred to pay Non-dischargeable Debts

    To discourage pre-bankruptcy planning, this section 
provides that debts incurred within 70 days of filing 
bankruptcy to pay nondischargeable debts are themselves 
nondischargeable. In addition, a debt incurred outside of that 
70-day period to pay a nondischargeable debt is itself 
nondischargeable, if the debtor incurred the newly-created debt 
with the intent to discharge it in bankruptcy. Moreover, this 
section provides that debts incurred to pay nondischargeable 
debts will continue to be dischargeable if the debtor owes 
child support or alimony.

Section 315. Giving Creditors Fair Notice in Chapters 7 and 13 Cases

    This section amends section 342 of title 11 of the United 
States Code.
    A creditor, in a case of an individual under chapter 7 or 
13, may file at any time with the court a notice of the address 
to be used to notify the creditor. This notice shall be served 
on the debtor. If the court or the debtor is required to give 
the creditor notice, 5 days after receipt of the notice under 
paragraph (1), the notice shall be given at that address.
    An entity may file a statement indicating its address for 
notice in cases under chapter 7 or 13. After 30 days following 
the statement, any notice in a case filed under chapter 7 or 13 
given by the court shall be to that address. Notice given to a 
creditor other than as provided in this section shall not be 
effective notice until that notice has been brought to the 
attention of the creditor.
    The section also provides that if the creditor has 
designated a person or department to be responsible for 
receiving notices and has established reasonable procedures to 
ensure bankruptcy notices will be delivered to that department 
or person, notice shall not be brought to the attention of the 
creditor until that notice is received by that department or 
person.
    Section 315 requires the debtor to file the following 
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. Should a creditor request a copy of the debtor's 
petition, schedules, or statement of financial affairs, the 
court is required to supply such to the creditor. This 
requirement also applies to requests for copies of a chapter 13 
debtor's plan which is due within 5 days of the request.
    In addition to these requirements, an individual chapter 7 
or 13 debtor must provide to the court copies of all Federal 
tax returns 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 case is pending as well as to any amendments to his 
tax returns. These tax returns shall be available to any party 
in interest upon request for inspection and copying.
    Additional requirements apply to chapter 13 debtors. 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 45 days before each anniversary of the 
plan's confirmation date until the case is closed.

Section 316. Dismissal for Failure to Timely File Schedules or Provide 
        Required Information

    This section provides that bankruptcy cases will be 
dismissed if an individual debtor in a case under chapter 7 or 
13 fails to file all of the information required under section 
521(a)(1) of this title within 45 days after the filing for 
bankruptcy. Under this section, any party in interest may 
request the court to enter an order dismissing the case. The 
court shall enter an order of dismissal not later than 5 days 
after that request except, upon request of the debtor made 
within 45 days after the filing for bankruptcy, the court may 
allow the debtor an additional period not to exceed 45 days to 
file the information required under section 521(a)(1) of this 
title, if the court finds justification for extending the 
period.

Section 317. Adequate Time to Prepare for Hearing on Confirmation of 
        the Plan

    This section amends section 1324 of title 11 of the United 
States Code. It requires the confirmation hearing in a chapter 
13 case to be held not later than 45 days from this date. This 
section also provides that the debtor should file a plan within 
90 days of the order for relief unless an extension is given by 
the court.

Section 318. Chapter 13 Plans to Have a 5-Year Duration in Certain 
        Cases

    Under the present law, the duration of a chapter 13 plan is 
3 years unless the court, for cause, extends it to a maximum of 
5 years. This section requires 5 year plans for cases converted 
from chapter 7.

Section 319. 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 319 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. This requirement applies to signed as 
well as unsigned documents.

Section 320. Prompt Relief from Stay in Individual Cases

    This section amends section 362(e) of title 11 of the 
United States Code. The amended section provides that in the 
case of an individual filing under chapter 7, 11, or 13, the 
automatic stay under subsection (a) shall terminate 60 days 
after a request is made by a party in interest under subsection 
(d), unless a final decision is rendered by the court during 
the 60-day period (beginning on the date of the request), or 
the 60-day period is extended by agreement of all parties in 
interest or by the court for such time as the court finds is 
required for good cause.

Section 321. Treatment of Certain Earnings of an Individual Debtor who 
        files a Voluntary Case under Chapter 11

    This section provides that post-petition income will become 
property of the bankruptcy estate in individual consumer cases 
under chapter 11.

       Title IV--General and Small Business Bankruptcy Provisions


           Subtitle A--General Business Bankruptcy Provisions


Section 401. Rolling Stock Equipment

    This section amends sections 1168 and 1110 of title 11 of 
the United States Code. The amended section makes clear that 
aircraft leases and railroad leases are dealt with in this 
section and this section only of the bankruptcy code.

Section 402. Adequate Protection for Investors

    Section 402 creates an exception to the automatic stay 
provisions of section 362 of the Bankruptcy Code for 
nonmonetary enforcement actions by ``securities self regulatory 
organizations.'' Such actions include the delisting or refusal 
to permit quotation of any stock that does not meet applicable 
regulatory requirements. Such organizations, as defined under 
this section 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.

Section 403. 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 U.S. Trustee, creditors, and other parties in interest to 
assess the debtor's financial condition.
    Section 403 allows the bankruptcy court to dispense with 
this requirement for cause where the debtor solicited 
prepetition acceptances of its plan of reorganization. This 
provision particularly applies to ``prepackaged chapter 11 
plans,'' where the debtor, before filing for bankruptcy relief, 
obtained the acceptance of creditors and interest holders in 
its plan of reorganization. Section 403 requires notice and 
hearing as a prerequisite to dispensing with the requirement 
for a meeting of creditors and equity security holders.

Section 404. Protection of Refinance of Security Interest

    Section 547(e)(2), subparagraphs (A), (B), and (C) are 
amended by replacing 10 with the number 30.

Section 405. Executory Contracts and Unexpired Leases

    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.
    This section amends section 365 of United States Code title 
11. Under this provision, the trustee shall immediately 
surrender nonresidential real property under which the debtor 
is the lessee to the lessor if the trustee does not assume or 
reject the unexpired lease by the earlier of 120 days after the 
date of the order for relief or the date of plan confirmation. 
The section also allows the court to extend the time, but only 
upon motion of the lessor.

Section 406. Creditors and Equity Security Holders Committees

    This section amends section 1102 of United States Code 
title 11. It allows the court on its own motion, or by request 
of a party in interest, to order a change in committee 
membership if it determines the change is necessary to ensure 
adequate representation of creditors or equity security 
holders. This can only be done after notice and hearing.

Section 407. Amendment to Section 546 of Title 11, United States Code

    This section amends section 546 of title 11, United States 
Code. The amendment provides that notwithstanding other 
sections of the title, trustees may not avoid a warehouseman's 
lien for storage, transportation or other incidental storage 
and handling costs.

Section 408. Limitation

    This section amends section 546(c)(1)(B) of title 11 of the 
United States Code. The amendment extends the reclamation 
period from 20 to 45 days.

Section 409. Amendment to Section 330(a) of Title 11, United States 
        Code

    This section amends section 330(a) of title 11 of the 
United States Code by clarifying to whom the court is allowed 
to award reasonable attorney's fees. The amendment also adds 
that courts are to treat compensation awarded trustees as a 
commission based on the results achieved.

Section 410. Postpetition Disclosure and Solicitation

    Section 1125 of title 11 is amended by providing that an 
acceptance of the plan may be solicited from a holder of a 
claim or interest if the solicitation complies with 
nonbankruptcy law and the holder was properly solicited before 
the commencement of the case.

Section 411. Preferences

    Section 411 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. Presently, 
the Bankruptcy Code requires both of these grounds to be 
established in order to sustain a defense to a preferential 
transfer action.
    Section 411 also establishes a threshold amount for a 
preferential transfer action. 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.

Section 412. Venue of Certain Proceedings

    Section 412 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.

Section 413. Period for Filing Plan under Chapter 11

    Section 413 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 414. Fees Arising from Certain Ownership Interests

    This section amends section 523(a)(16) of title 11 of the 
United States Code. The amendment adds ``a lot in a homeowners 
association'' to the debtor's interests which are not 
discharged when other debts are discharged under section 727, 
1141, 1228(a), 1228(b), or 1328(b).

Section 415. Creditor Representation at First Meeting of Creditors

    This section amends section 341(c) of title 11 of the 
United States Code. The amended section provides that 
notwithstanding any local or State law requiring that 
representation be by an attorney in a meeting of creditors 
under subsection (a), a creditor holding a consumer debt or any 
representative of the 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. Nothing in the subsection should be construed to 
require any creditor to be represented by an attorney at any 
meeting of creditors.
    This section will reduce costs for small businesses in 
bankruptcy, which often cannot afford to pay an attorney to 
appear at the creditor's meeting.

Section 416. Definition of Disinterested Person

    Section 417 amends the definition of a disinterested person 
under section 101(14) of the Bankruptcy Code by eliminating its 
references to investment bankers.

Section 417. Factors for Compensation of Professional Persons

    This section permits a bankruptcy court to consider whether 
a professional retained by a trustee for bankruptcy-related 
services is certified as an expert in bankruptcy when setting 
the amount of compensation for the professional.

Section 418. Appointment of Elected Trustee

    This section refines existing law by clarifying the 
procedure for giving effect to the election of a private 
trustee in a chapter 11 reorganization case. Section 702(b) of 
the Bankruptcy Code permits creditors at the meeting of 
creditors to elect one person to serve as trustee in the case, 
provided certain conditions are met. Section 1104(b) of the 
Bankruptcy Code relates to the convening of the meeting of 
creditors for this purpose and the conduct of the election. In 
additionthe section would renumber section 1104(b) as Section 
1104(b)(1) and would add a new subsection 1104(b)(2) requiring the U.S. 
trustee to file a report certifying the election when an eligible, 
disinterested trustee is elected under paragraph (1). The effect of 
such filing would be to consider such elected trustee as selected and 
appointed for purposes of Section 1104 and to terminate the service of 
any trustee appointed under subsection (d), which provides for the 
appointment of a trustee or examiner by the U.S. trustee, subject to 
court approval.

Section 419. Utility Services

    This section requires certain debtors in bankruptcy to 
provide adequate assurances of future payment to utility 
providers. The change made by this section prevents a mere 
promise coupled with administrative expense priority from 
constituting adequate assurance.

            Subtitle B--Small Business Bankruptcy Provisions


Section 421. Flexible Rules for Disclosure Statement and Plan

    Section 421 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 422. Definitions; Effect of Discharge

    Section 422 amends section 101 of title 11 and provides 
that a small business case is a case filed in which the debtor 
is a ``small business debtor.'' A ``small business debtor'' is 
an entity that has aggregate noncontingent, liquidated secured 
and unsecured debts in the amount of $4 million or less as of 
the commencement of the case.

Section 423. Standard Form Disclosure Statement and Plan

    This section requires the Advisory Committee on Bankruptcy 
Rules of the Judicial Conference of the U.S. 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 424. Uniform National Reporting Requirements

    The U.S. Trustee Guidelines generally requires 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 U.S. 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 424 mandates that a small business debtor file periodic 
financial reports containing specified information.

Section 425. Uniform Reporting Rules and Forms for Small Business Cases

    Section 425 provides that the Advisory Committee on 
Bankruptcy Rules of the Judicial Conference of the United 
States shall propose for adoption uniform reporting rules and 
Official Bankruptcy Forms to be used by small business debtors.

Section 426. Duties in Small Business Cases

    To implement greater administrative controls over small 
business chapter 11 debtors, section 426 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. 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 U.S. 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 U.S. Trustee 
also include ``initial debtor interviews,'' where the U.S. 
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 meeting of creditors,'' provide 
an opportunity for the debtor to be examined under oath by the 
U.S. 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 426 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. 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.
    Sixth, section 426 permits the U.S. Trustee to inspect the 
debtor's books and records and business premises at reasonable 
hours with proper notice.

Section 427. Plan Filing and Confirmation Deadlines

    Section 427 further reduces the time periods for filing 
plans and achieving confrontation 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 427 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 
427 requires that the time period may be extended only if the 
debtor, after providing notice, demonstrates by a preponderance 
of the evidence that it is more likely than not that the court 
will confirm a plan within a reasonable period of time.

Section 428. Plan Confirmation Deadline

    Section 428 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 429. Prohibition Against Extension of Time

    To ensure that the strict time frames are not eviscerated, 
section 429 of this bill limits a court's authority to avoid 
the impact of these provisions.

Section 430. Duties of the U.S. Trustee

    Section 430 mandates that the U.S. 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 U.S. Trustee to investigate the debtor's 
viability and business plan. It also provides an opportunity 
for the U.S. Trustee to explain the debtor's obligation to file 
monthly operating reports and other requirements. During the 
course of the interview, the U.S. 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 430 also authorizes the U.S. Trustee to inspect the 
debtor's premises, review its books and records, and verify 
that the debtor has filed its tax returns. The U.S. 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 U.S. Trustee discover 
material grounds for warranting either dismissal or conversion 
of the chapter 11 case to one under chapter 7 for liquidation, 
section 430 requires the U.S. Trustee to apply promptly for 
such relief.

Section 431. Scheduling Conferences

    Section 431 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 432. Serial Filer Provisions

    Under this section, 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 2 years from the filing of the second case; 
(3) The second case was filed within 2 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. These exceptions do not 
apply if the debtor can prove 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 within a reasonable time.
    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 433. Expanded Grounds for Dismissal or Conversion and 
        Appointment of Trustee

    Section 433 requires the conversion or dismissal of a 
chapter 11 case if the movant establishes cause. An exception 
to this mandate is specified in this section. This section 
lists 16 items as examples of cause warranting either mandatory 
conversion or dismissal of a chapter 11 case. Section 433 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 in 
the best interests of the creditors and the bankruptcy estate.

Section 434. Study of Operation of Title 11 of the United States Code, 
        With Respect To Small Businesses

    This section provides that, within 2 years after enactment 
of this Act, the Small Business Administration shall conduct a 
study to determine the internal and external factors that cause 
small businesses to become title 11 debtors and how federal 
laws may be made more effectiveand efficient in assisting small 
businesses to remain viable.

Section 435. Payment of Interest

    Section 435 permits a debtor to make the requisite interest 
payments out of rents or other proceeds generated by the real 
property. It, however, changes the amounts of these payments. 
Under section 435, 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 estate.

                Title V--Municipal Bankruptcy Provisions


Section 501. Petition and Proceedings Related to Petition

    Chapter 9 is a form of bankruptcy relief that is only 
available to municipalities. Section 501 clarifies that a court 
must enter the order for relief for those cases.

Section 502. Applicability of other Sections to Chapter 9

    Insert 555, 556 after 553 and 559, 560 after 557 in Section 
901.

           Title VI--Improved Bankruptcy Statistics and Data


Section 601. Audit Procedures

    This section amends section 586 of title 28 of the United 
States Code. This section provides that 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 of title 11 (and when applicable section 111 of title 11) 
in cases filed under chapter 7 or 13. The procedures shall be 
reasonably designed in light of accepted auditing techniques to 
determine the accuracy and completeness of the information in 
the audited debtor provided to support the claim for relief.
    The audit procedures shall:
          (1) Establish a method of selecting appropriate 
        qualified persons to contract with the United States 
        trustee to perform those audits;
          (2) Establish a method of randomly selecting cases to 
        be audited (not less than 1 out of every 250 cases in 
        each Federal judicial district shall be selected);
          (3) Require audits for schedules of income and 
        expenses which reflect greater than average variances 
        from the statistical norm of the district where the 
        schedules were filed if variances due to higher income 
        or expenses than the district norm; and
          (4) Establish procedures for providing, at least 
        annually, public information concerning the aggregate 
        results of such audits including the percentage of 
        cases, by district, in which a material misstatement of 
        income or expenditures is reported.
    The section also provides that the U.S. trustee for each 
district is authorized to contract with auditors to perform 
audits in cases designated by the U.S. trustee in accordance 
with the above procedures.
    Upon request of a duly appointed auditor, the debtor shall 
cause the accounts, papers, documents, financial records, files 
and all other things that the auditor requests and that are 
reasonably necessary to facilitate the audit to be made 
available for inspection.
    The report of each audit conducted under this subsection 
shall be filed with the court, the Attorney General, and the 
U.S. Attorney, under the procedures established in paragraph 
(1).
    If a material misstatement of income or expenditures or of 
assets is reported under subparagraph (A), a statement 
specifying that misstatement shall be filed with the court and 
the U.S. trustee and shall give notice thereof to the creditors 
and the U.S. Attorney for the district (in an appropriate case 
in the opinion of the U.S. trustee).
    The amendments made by this section shall take effect 18 
months after the date of enactment of this Act.

Section 602. Improved Bankruptcy Statistics

    This section amends chapter 6 of part I of title 28 of the 
United States Code by adding a new section. This new section 
provides that the clerk of each district shall compile 
statistics regarding debtors with primarily consumer debts 
seeking relief under chapters 7, 11, and 13 of title 11. The 
Director of the Administrative Office of the United States 
shall prescribe the form for the statistics, compile the 
statistics, and make them available to the public. In addition, 
the director shall prepare annually and submit to Congress a 
report concerning the statistics compiled and an analysis of 
the information.
    The compilation required of the Director shall be itemized 
by chapter with respect to title 11, presented both in the 
aggregate and for each district, and include information 
concerning the following: (A) Total assets and liabilities of 
the debtors and each category of assets and liabilities 
reported by those debtors in the schedules prescribed pursuant 
to section 2075; (B) Current total monthly income, projected 
monthly net income, and average income and expenses as filed by 
the debtors under sections 111, 521, and 1322 of title 11; (C) 
The aggregate amount of debt discharged in the reporting period 
(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 predominantly nondischargeable 
categories); (D) Average time period between filing of 
thepetition and the closing of the case; (E) For the reporting period, 
the number of cases in which a reaffirmation was filed, total number of 
reaffirmations filed, number of reaffirmation cases where the debtor 
was not represented by an attorney, and of those cases the number 
approved by the court; (F) With respect to cases filed under chapter 13 
of title 11, the number of cases where the final order determined the 
value of property securing a claim to be less than the amount of the 
claim, the number of final orders determining the value of property 
securing a claim issued, the number of cases dismissed for failure to 
make payments, and the number of cases where the debtor filed another 
case within the 6 years previous to the filing, and (G) The extent of 
creditor misconduct and any amount of punitive damages awarded by the 
court for creditor misconduct; and (H) The number of cases in which 
sanctions under rule 9011 were imposed.
    The amendments made by this section shall take effect 18 
months after the date of enactment of this Act.

Section 603. Uniform Rules for the Collection of Bankruptcy Data

    To implement the data gathering provisions of section 601, 
section 603 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 604. Sense of Congress Regarding Availability of Bankruptcy 
        Data

    Section 604 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 the bankruptcy 
cases should be released in a useable form in bulk to the 
public subject to appropriate privacy safeguards.

                  Title VII--Bankruptcy Tax Provisions


Section 701. Treatment of Certain Liens

    Section 701 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 701 
does not permit subordination for the purpose of paying chapter 
11 administrative expenses. Also, section 701 requires the 
chapter 7 trustee to utilize all other estate assets before he 
could resort to section 724 to subordinate liens on personal 
and real property of the estate.
    Section 701 also prevents a bankruptcy court from 
determining the amount of 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 702. 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 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 702 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 702, 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.

Section 703. Notice of Request for a Determination of Taxes

    Section 703 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. This 
amendment comports with section 702 requiring adequate notice 
to governmental entities.

Section 704. Rate of Interest on Tax Claims

    Section 704 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 704 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 705. Tolling of Priority of Tax Claim Time Periods

    Section 705 suspends applicable time periods under section 
507(a)(8) of the Bankruptcy Code by 6 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 1 year. The amendment also tolls the period for 6 
months with regard to collection actions pending within the 
240-day period.

Section 706. Priority Property Taxes Incurred

    Section 507 of title 11 is amended by replacing assessed 
with the word incurred.

Section 707. Chapter 13 Discharge of Fraudulent and Other Taxes

    Insert (1) after ``paragraph'' in section 1328(a)(2) of 
title 11.

Section 708. Chapter 11 Discharge of Fraudulent Taxes

    Section 708 amends the discharge provisions of chapter 11 
to prevent the discharge of tax or customs duty tax 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 709. Stay of Tax Proceedings

    Upon the filing of a bankruptcy case, a broad stay of most 
creditor collection actions immediately and automatically goes 
into effect. Section 709 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 709 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.

Section 710. 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 6 years from the date of assessment of such claims. 
Section 710 specifies that these payments must be made paid in 
regular cash installments not longer than 3 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 709 
specifically prohibits balloon payments. The 6-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 
710.

Section 711. Avoidance of Statutory Tax Liens Prohibited

    Section 711 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 or similar 
provision of either state or local law.

Section 712. Payment of Taxes in the Conduct of Business

    Section 712 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 to pay tax obligations in the course of the debtors' 
business, with only one limited exception. Section 712, 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 were not incurred by the trustee or if the court has 
determined that there are insufficient funds in the estate to 
pay administrative expenses.
    Second, section 712 clarifies that certain secured and 
postpetition unsecured taxes incurred by a bankruptcy estate, 
including property taxes, are entitled to administrative 
expense priority.
    Third, section 712 eliminates the need for a governmental 
unit to formally request payment of an administrative expense 
relating to a tax liability or tax penalty.
    Four, section 712 amends section 06(b) of the Bankruptcy 
Code, which determines the entitlement of secured claimants to 
interest, fees, and costs pursuant to the underlying agreement. 
Section 712 adds a reference to ``state statute'' to extend 
this entitlement to state tax claimants.
    Fifth, section 712 allows a trustee to recover from 
property securing a claim for the payment of all ad valorem 
property taxes relating to such property.

Section 713. Tardily Filed Priority Tax Claims

    Section 713 permits a priority tax claim to be filed either 
before the trustee commences distribution or 10 days following 
the mailing to creditors of the summary of the trustee's 
finalreport, whichever is earlier.

Section 714. 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 714 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 715. 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 715 extends the applicability of section 
505(b) to bankruptcy estates.

Section 716. Requirement to File Tax Returns to Confirm Chapter 13 
        Plans

    Section 716 requires chapter 13 debtors to file tax returns 
and institute enforcement mechanisms to ensure compliance. 
First, section 517 creates an additional requirement for plan 
confirmation. Namely, the debtor must file all prepetition tax 
returns for the 6-year period ending prior to the filing of the 
chapter 13 case. 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 his 
failure to file the returns was due to circumstances beyond his 
control. Third, the failure to comply with this provision 
constitutes cause warranting dismissal or conversion of the 
chapter 13 case. Fourth, section 716 extends the applicable 
time periods pertaining to the allowance and disallowance of 
tax claims that are the subject of tax returns.

Section 717. Standards for Tax Disclosure

    Section 717 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 as its principal place of business.

Section 718. Setoff of Tax Refunds

    Section 718 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.

           Title VIII--Ancillary and Other Cross-Border Cases


Section 801. Amendment to Add a Chapter 15 to Title 11, United States 
        Code

    This section adds a new chapter to title 11 of the United 
States Code. This new chapter, chapter 15, contains a number of 
sections and subsections. They are as follows:

Section 1501. Purpose and Scope of Application

    The new chapter is designed to incorporate the Model Law on 
Cross-Border Insolvency to provide effective mechanisms for 
dealing with cases of cross-border insolvency. This section 
lays out the following chapter objectives: cooperation between 
the United States and foreign countries, legal certainty in 
trade investment, fair and efficient administration of cross-
border insolvency cases, protection and maximization of the 
value of debtor's assets, and helping the rescue of troubled 
businesses. The section also lays out the circumstances when 
the chapter does and does not apply.

                    Subchapter I--General Provisions


Section 1502. Definitions

    This section provides definitions of ``debtor,'' 
``establishment,'' ``foreign court,'' ``foreign main 
proceeding,'' ``foreign nonmain proceeding,'' ``trustee'' and 
``within the territorial jurisdiction of the United States.''

Section 1503. International Obligations of the United States

    This section provides that treaties in which the United 
States is a party will prevail to the extent they are in 
conflict with provisions of this chapter.

Section 1504. Commencement of Ancillary Case

    The section provides that a case is commenced by filing a 
petition for recognition of a foreign proceeding under section 
1515.

Section 1505. Authorization to Act in a Foreign Country

    This section gives authority to the court to appoint a 
trustee or other entity to act on behalf of an estate created 
under section 541 of this act in a foreign country. Entities 
authorized to act may act as permitted by applicable foreign 
law.

Section 1506. Public Policy Exception

    This section grants the court discretion not to act if 
action would be manifestly contrary to the public policy of the 
United States.

Section 1507. Additional Assistance

    This section allows the court to provide assistance to 
foreign representatives. It provides that in determining 
whether to offer additional assistance the court shall consider 
whether such assistance will assure just treatment, protection 
of U.S. Claim holders, prevention of fraudulent use of 
property, distribution of proceeds and the concept of fresh 
start (if appropriate).

Section 1508. Interpretation

    This section directs the court to take into account the 
international implications when interpreting provisions of the 
chapter.

 Subchapter II--Access of Foreign Representatives and Creditors to the 
                                 Court


Section 1509. Right of Direct Access

    This section allows foreign representatives, after 
recognition through section 1515, to sue and be sued in Federal 
or State courts and commence a case under section 1504. 
Recognition under this chapter is a prerequisite to the 
granting of cooperation.

Section 1510. Limited Jurisdiction

    The section provides that the filing of petitions under 
this chapter by a foreign representative does not subject the 
representative to the jurisdiction of U.S. courts for any other 
purposes.

Section 1511. Commencement of Bankruptcy Case under Section 301 or 303

    The section provides that a foreign representative may 
commence either a voluntary or involuntary case upon filing a 
petition for recognition. The courts involved must receive 
notice of both the petition and intent to commence a case. The 
case will be dismissed unless recognition is granted.

Section 1512. Participation of a Foreign Representative in a Case under 
        this Title

    The section provides that upon recognition, the foreign 
representative may participate as a party in interest.

Section 1513. Access of Foreign Creditors to a Case under this Title

    The section provides that foreign creditors shall have the 
same rights as domestic creditors. It also provides that 
allowance and priority of foreign tax claims or public laws 
shall be governed by applicable tax treaties.

Section 1514. Notification to Foreign Creditors Concerning a Case under 
        this Title

    The section provides that when notice is to be given to 
domestic creditors, it shall also be given to foreign 
creditors. Notification of foreign creditors may be 
individually unless the court determines another means more 
appropriate. The section also provides requirements for content 
of the notice.

     Subchapter III--Recognition of a Foreign Proceeding and Relief


Section 1515. Application for recognition of a Foreign Proceeding

    The section provides that application for recognition shall 
be by petition to the court. The petition must be accompanied 
by one of the following (1) Copy of the commencement decision 
in the foreign proceeding which appointed the foreign 
representative, (2) A certificate from a foreign court 
confirming the proceeding and representative, or (3) Other 
acceptable evidence proving the existence of the proceeding and 
representative. In addition a statement identifying all foreign 
proceedings involving the debtor must be filed. All documents 
in this section shall be filed in English. The section also 
gives the court the power to require English translations of 
any additional documents.

Section 1516. Presumptions Concerning Recognition

    This section establishes presumptions the court is entitled 
to. The court may presume that foreign certificates or 
decisions are authentic and accurate. The court may also assume 
the debtor's registered office, or residence in the case of an 
individual, is the center of the debtor's main interests.

Section 1517. Order Recognizing a Foreign Proceeding

    The section provides when a foreign proceeding shall be 
recognized and when an order recognizing a foreign proceeding 
shall be ordered. The petition and proceeding must meet the 
requirements in this section as well as other referenced 
sections. The section also allows the modification or 
termination of recognition if the grounds for granting it did 
not exist or ceased to exist. Such a determination required to 
court to weigh possible prejudice to parties relying on the 
granting of recognition.

Section 1518. Subsequent Information

    This section provides that the foreign representative must 
file with the court a notice of any change of status in the 
foreign proceeding or representative and any other proceeding 
which becomes known.

Section 1519. Relief that may be Granted upon Petition for Recognition 
        of a Foreign Proceeding

    This section allows the court to grant provisional relief 
while the petition for recognition is pending if relief is 
urgently needed to protect the assets of the debtor. This 
relief terminates when the petition for recognition is decided 
upon. The section also provides instances when relief shall not 
be granted.

Section 1520. Effects of Recognition of a Foreign Main Proceeding

    The section provides sectional cross-references to other 
sections which become applicable upon recognition. In addition 
the section restrains the transfer, encumbrance or any other 
disposition of the debtor's property within the United States 
to the extent it is property of an estate under sections 363, 
549 and 552. It also allows the foreign representative to 
operate the debtor's business and exercise the powers of a 
trustee.

Section 1521. Relief that may be Granted upon Recognition of a Foreign 
        Proceeding

    The section allows the court to grant relief, upon 
recognition, where necessary to effectuate the purpose of the 
chapter and to protect the assets of the debtor or the 
interests of the creditors. The relief includes stays, 
suspension of rights to dispose of assets, examining witnesses 
and gathering information on debtor's assets, entrusting the 
foreign representative or other court designee with the 
administration of the debtor's assets, and any additional 
relief that may be available. The section does not allow the 
court to enjoin a police or regulatory act, including a 
criminal action or proceeding.

Section 1522. Protection of Creditors and other Interested Persons

    The section provides that the court must find that the 
interests of creditors and other interested persons are 
sufficiently protected when granting relief under sections 1519 
and 1521. The court may condition its grant of relief or modify 
or terminate such relief once granted.

Section 1523. Actions to Avoid Acts Detrimental to Creditors

    The section provides that, upon recognition, a foreign 
representative in a pending case has standing to initiate 
actions under other sections of this chapter. The section also 
provides that when the pending case is a nonmain proceeding, 
the court must be satisfied that the action initiated relates 
to assets that should be administered in the foreign nonmain 
proceeding.

Section 1524. Intervention by a Foreign Representative

    The section provides that, upon recognition, a foreign 
representative may intervene in any proceedings in which the 
debtor is a party.

      Subchapter IV--Cooperation With Foreign Courts and Foreign 
                            Representatives


Section 1525. Cooperation and Direct Communication between the Court 
        and Foreign Courts or Foreign Representatives

    The section provides that the court shall cooperate to the 
maximum extent possible with foreign courts or representatives. 
The court may communicate directly with these courts and 
representatives.

Section 1526. Cooperation and Direct Communication between the Trustee 
        and Foreign Courts or Foreign Representatives

    The section provides that the trustee shall cooperate to 
the maximum extent possible with foreign courts or 
representatives. The trustee may communicate directly with 
these courts and representatives.

Section 1527. Forms of Cooperation

    The section provides that the cooperation mentioned in 
sections 1525 and 1526 may be accomplished by any appropriate 
means including appointment of a person to act at the direction 
of the court, communication, coordination of administration and 
supervision of assets, approval and implementation of 
agreements and coordination of concurrent proceedings.

                  Subchapter V--Concurrent Proceedings


Section 1528. Commencement of a Case under this Title after Recognition 
        of a Foreign Main Proceeding

    The section provides that upon recognition of a foreign 
main proceeding, a case may be commenced under another chapter 
only if the debtor has assets in the United States. It further 
provides that the effects of the case shall be restricted to 
assets in the United States and other assets if necessary to 
accomplish coordination to the extent the other assets are not 
subject to the jurisdiction and control of a recognized foreign 
proceeding.

Section 1529. Coordination of a Case under this Title and a Foreign 
        Proceeding

    The section provides that when foreign and domestic 
proceedings regarding the samedebtor are taking place 
concurrently the court shall seek cooperation and coordination. The 
section also provides for the applicability of relief under specific 
circumstances and discusses treatment of inconsistencies between cases 
in the United States and foreign jurisdictions.

Section 1530. Coordination of more than One Foreign Proceeding

    This section provides that the court shall seek cooperation 
and coordination if the debtor is involved in more than one 
foreign proceeding. The section further provides that any 
relief granted must be consistent and that relief may be 
modified or terminated for the purpose of facilitating 
coordination of the proceedings.

Section 1531. Presumption of Insolvency Based on Recognition of a 
        Foreign Main Proceeding

    The section provides that for the purpose of commencing a 
proceeding under section 303, recognition of a foreign main 
proceeding is proof that the debtor is not paying his debts.

Section 1532. Rule of Payment in Concurrent Proceedings

    The section provides that, without prejudice to secured 
claims or rights in rem, once a creditor receives payment of an 
insolvency claim in a foreign proceeding, the creditor may not 
receive another payment for the same claim if the payments made 
to other creditors in the same class are proportionately less 
than the payment received.
    Section 1532 was the last section to be added under Title 
VIII.

Section 802. Amendments to Other Chapters in Title 11, United States 
        Code

    This section amends section 103 of United States Code title 
11. The section identifies when chapter 15 applies.
    The section also amends section 101 of United States Code 
title 11. The section changes the definitions of ``foreign 
proceeding'' and ``foreign representative'' in order to be 
consistent with the new chapter 15.
    The section also amends section 157(b)(2) of United States 
Code title 28. This section changes the procedures section to 
recognize foreign proceedings under chapter 15.
    The section also amends section 1334 of United States Code 
title 28. The section provides an exception for chapter 15 
cases.
    Lastly the section amends section 586 of United States Code 
title 28. The section adds chapter 15 to the duties of trustees 
section.

Section 803. Claims Relating to Insurance Deposits in Cases Ancillary 
        to Foreign Proceedings

    This section amends section 304 of United States Code title 
11. The section adds a new subsection (a) which defines 
``domestic insurance company,'' ``foreign insurance company,'' 
``U.S. claimant,'' ``U.S. creditor,'' and ``U.S. 
policyholder.'' The section also provides instances in which 
the court may not grant relief against foreign insurance 
companies.

                Title IX--Financial Contracts Provisions


Section 901. Bankruptcy Code Amendments

    Subsection (a)(1) amends the Bankruptcy Code definitions of 
``repurchase agreement'' and ``swap agreement'' to conform with 
the amendments to the FDIA contained in sections 901(e) and 
901(f) of the Act.
    In connection with the definition of ``repurchase 
agreement,'' the term ``qualified foreign government 
securities'' is defined to include securities that are direct 
obligations of, or fully guaranteed by, central governments of 
members of the Organization for Economic Cooperation and 
Development (OECD). This language reflects developments in the 
repurchase agreement markets, which increasingly use foreign 
government securities as the underlying asset. The securities 
are limited to those issued by or guaranteed by full members of 
the OECD, as well as countries that have concluded special 
lending arrangements with the International Monetary Fund 
associated with the Fund's General Arrangements to Borrow.
    Subsection (a)(1) also amends the definition of 
``repurchase agreement'' to include those on mortgage-related 
securities, mortgage loans and interests therein, and expressly 
to include principal and interest-only U.S. Government and 
agency securities as securities that can be the subject of a 
``repurchase agreement.'' The reference in the definition to 
U.S. Government and agency securities is intended to include 
all obligations eligible for purchase by Federal Reserve banks 
under the similar language of section 14(b) of the Federal 
Reserve Act, such as those issued by Fannie Mae and Freddie 
Mac.
    This amendment is not intended to affect the status of 
repos involving securities or commodities as securities 
contracts, commodity contracts, or forward contracts, and their 
consequent eligibility for similar treatment under other 
provisions of the Bankruptcy Code. In particular, a repurchase 
agreement as defined in the Bankruptcy Code, insofar as it applies to a 
security, would continue to be a securities contract as defined in the 
Bankruptcy Code and thus also would be subject to the Bankruptcy Code 
provisions pertaining to securities contracts. Similarly, insofar as a 
repurchase agreement as defined in the Bankruptcy Code applies to a 
commodity, it would continue to be a forward contract for purposes of 
the Bankruptcy Code and would be subject to the Bankruptcy Code 
provisions pertaining to forward contracts.
    Subsection (a)(1) specifies that repurchase obligations 
under a participation in an commercial mortgage loan do not 
make the participation agreement a ``repurchase agreement.'' 
Such repurchase obligations embedded in participation in 
commercial loans (such as recourse obligations) do not 
constitute a ``repurchase agreement.'' However, a repurchase 
agreement involving the transfer of participations in 
commercial mortgage loans with a simultaneous agreement to 
repurchase the participation on demand or at a date certain 1 
year or less after such transfer would constitute a 
``repurchase agreement.''
    The definition of ``swap agreement'' is amended to include 
an ``interest rate swap, option, future, or forward agreement, 
including a rate floor, rate cap, rate collar, cross-currency 
rate swap, and basis swap; a spot, same day-tomorrow, tomorrow-
next, forward, or other foreign exchange or precious metals 
agreement; a currency swap, option, future, or forward 
agreement; an equity index or equity swap, option, future, or 
forward agreement; a debt index or debt swap, option, future, 
or forward agreement; a credit spread or credit swap, option, 
future, or forward agreement; a commodity index or commodity 
swap, option, future, or forward agreement.'' As amended, the 
definition of ``swap agreement'' will achieve contractual 
netting across economically similar over-the-counter products 
that can be terminated and closed out on a mark-to-market 
basis.
    The definition of ``swap agreement'' originally was 
intended to provide sufficient flexibility to avoid the need to 
amend the definition as the nature and uses of swap 
transactions matured. To that end, the phrase ``or any other 
similar agreement'' was included in the definition. To clarify 
this, subsection (a)(1) expands the definition of ``swap 
agreement'' to include ``any agreement or transactions similar 
to any other agreement or transaction referred to in 
[subsection (a)(1)] that is presently, or in the future 
becomes, regularly entered into in the swap market [. . .] and 
is a forward, swap, future, or option on 1 or more rates, 
currencies, commodities, equity securities or other equity 
instruments, debt securities or other debt instruments, or 
economic indices or measures of economic risk or value.''
    The definition of ``swap agreement'' in this subsection 
should not be interpreted to permit parties to document non-
swaps as swap transactions. Traditional commercial 
arrangements, such as supply agreements, or other non-financial 
market transactions, such as commercial, residential or 
consumer loans, cannot be treated as ``swaps'' under either the 
FDIA or the Bankruptcy Code because the parties purport to 
document or label the transactions as ``swap agreements.'' 
Subsection (a)(1)(C) specifies that this definition of swap 
agreement applies only for purposes of the Bankruptcy Code and 
is inapplicable to the other statutes, rules and regulations 
enumerated in that subsection.
    The definition also includes any security agreement or 
arrangement, or other credit enhancement, related to a swap 
agreement. This ensures that any such agreement, arrangement or 
enhancement is itself deemed to be a swap agreement, and 
therefore eligible for treatment as such for purposes of 
termination, liquidation, acceleration, offset and netting 
under the Bankruptcy Code and the FDIA. Similar changes are 
made in the definitions of ``forward contract,'' ``commodity 
contract'' and ``repurchase agreement.'' An example of a 
security arrangement is a right of set off; examples of other 
credit enhancements are letters of credit, guarantees, 
reimbursement obligations and other similar agreements.
    Subsections (a)(2) and (a)(3) amend the Bankruptcy Code 
definitions of ``securities contract'' and ``forward 
contract,'' respectively, to conform them to the definitions in 
the FDIA, and also to include any security agreements or 
arrangements or other credit enhancements related to one or 
more such contracts.
    Subsection (a)(2), like the amendments to the FDIA, amends 
the definition of ``securities contract'' expressly to 
encompass margin loans and to clarify the coverage of 
securities options. The inclusion of ``margin loans'' in the 
definition is intended to encompass only those loans commonly 
known in the securities industry as ``margin loans,'' such as 
arrangements where a securities broker or dealer extends credit 
to a customer in connection with the purchase, sale or trading 
of securities, and does not include loans that are not commonly 
referred to as ``margin loans,'' however documented. The 
reference in subsection (b) to a ``guarantee'' by or to a 
``securities clearing agency'' is intended to cover other 
arrangements, such as novation, that have an effect similar to 
a guarantee.
    Subsection (a)(2) also specifies that purchase, sale and 
repurchase obligations under a participation in a commercial 
mortgage loan do not constitute ``securities contracts.'' While 
a contract for the purchase or sale or a participation may 
constitute a ``securities contract,'' the purchase, sale or 
repurchase obligation embedded in a participation agreement 
does not make that agreement a ``securities contract.''
    Subsection (b) amends the Bankruptcy Code definitions of 
``financial institution'' and ``forward contract merchant.'' 
The definition for ``financial institution'' includes Federal 
Reserve Banks and the receivers or conservators of insolvent 
depository institutions. With respect only to securities 
contracts, the definition of ``financial institution'' also 
includes investment companies registered under the Investment 
Company Act of 1940.
    Subsection (b) also adds a new definition of ``financial 
participant'' to limit the potential impact of insolvencies 
upon other major market participants. This definition will 
allow such market participants to close-out and net agreements 
with insolvent entities under sections 362(b)(6), 546, 548, 
555, and 556 even if the creditor could not qualify as, for 
example, a commodity broker. The new subsection preserves the 
limitations of the right to close-out and net such contracts, 
inmost cases, to entities who qualify under the Bankruptcy 
Code's counterparty limitations. However, where the counterparty has 
transactions with a total gross dollar value of at least $1 billion in 
notional or actual principal amount outstanding on any day during the 
previous 15-month period, or has gross mark-to-market positions of at 
least $100 million (aggregated across counterparties) in one or more 
agreements or transactions on any day during the previous 15-month 
period, the new subsection and corresponding amendments would permit it 
to exercise netting and related rights irrespective of its inability 
otherwise to satisfy those counterparty limitations. This change will 
help prevent systemic impacts upon the markets from a single failure, 
and is derived from threshold tests contained in Regulation EE 
promulgated by the Federal Reserve in implementing the netting 
amendments contained in the Federal Deposit Insurance Corporation 
Improvement Act.
    Subsection (C) adds to the Bankruptcy Code new definitions 
for the terms ``master netting agreement'' and ``master netting 
agreement participant.''
    The definition of ``master netting agreement'' is designed 
to protect the termination and close-out netting provisions of 
cross-product master agreements between parties. Such an 
agreement may be used (I) to document a wide variety of 
securities contracts, commodity contracts, forward contracts, 
repurchase agreements and swap agreements or (ii) as an 
umbrella agreement for separate master agreements between the 
same parties, each of which is used to document a discrete type 
of transaction. The definition includes security agreements or 
arrangements or other credit enhancements related to one or 
more such agreements and clarifies that a master netting 
agreement will be treated as such even if it documents 
transactions that are not within the enumerated categories of 
qualifying transactions (but the provisions of the Bankruptcy 
Code relating to master netting agreements and the other 
categories of transactions will not apply to such other 
transactions).
    A ``master netting agreement participant'' is any entity 
that is a party to an outstanding master netting agreement with 
a debtor before the filing of a bankruptcy petition.
    Subsection (d) amends section 362(b) of the Bankruptcy Code 
to protect enforcement, free from the automatic stay, of setoff 
or netting provisions in swap agreements and in master netting 
agreements and security agreements or arrangements related to 
one or more swap agreements or master netting agreements. This 
provision parallels the other provisions of the Bankruptcy Code 
that protect netting provisions of securities contracts, 
commodity contracts, forward contracts, and repurchase 
agreements. Because the relevant definitions include related 
security agreements, the references to ``setoff'' in these 
provisions, as well as in section 362(b)(6) and (7) of the 
Bankruptcy Code, are intended to refer also to rights to 
foreclose on, and to set off against obligations to return 
collateral securing swap agreements, master netting 
arrangements, repurchase agreements, securities contracts, 
commodity contracts, or forward contracts. Collateral may be 
pledged to cover the cost of replacing the defaulted 
transactions in the relevant market, as well as other costs and 
expenses incurred or estimated to be incurred for the purpose 
of hedging or reducing the risks arising out of such 
termination. Enforcement of these agreements and arrangements 
is consistent with the policy goal of minimizing systemic risk.
    Subsection (d) also clarifies that the provisions 
protecting setoff and foreclosure in relation to securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements, and master netting agreements free 
from the automatic stay apply to collateral pledged by the 
debtor that is under the control of the creditor but that 
cannot technically be ``held by'' the creditor, such as 
receivables and book-entry securities, and to collateral that 
has been repledged by the creditor and securities resold 
pursuant to repurchase agreements.
    Subsection (e) amends section 546 of the Bankruptcy Code to 
provide that transfers made under or in connection with a 
master netting agreement or an individual contract covered 
thereby may not be avoided by a trustee except where such 
transfer is made with actual intent to hinder, delay or defraud 
or except to the extent a transfer under an individual contract 
is otherwise avoidable. For example, if a transfer under a 
master netting agreement relates both to a securities contract 
and a swap agreement and the transferee is a swap participant 
but not a commodity broker, forward contract merchant, 
stockbroker, financial institution or participant, or a 
securities clearing agency, the transfer would benefit from 
Section 546(h) to the extent allocable to the swap agreement. 
This Section of the Act also clarifies the limitations on a 
trustee's power to avoid transfers made under swap agreements.
    The current codification of section 546 of the Bankruptcy 
Code contains two subsections designated as ``(g)''; subsection 
(e) corrects this error.
    Subsection (f) amends section 548(d) of the Bankruptcy Code 
to provide that transfers made under or in connection with a 
master netting agreement may not be avoided by a trustee except 
where such transfer is made with actual intent to hinder, delay 
or defraud. This amendment provides the same protections for 
transfers made under, or in connection with, master netting 
agreements as currently is provided for margin payments and 
settlement payments received by commodity brokers, forward 
contract merchants, stockbrokers, financial institutions, 
securities clearing agencies, repo participants, and swap 
participants under paragraphs (B), (C) and (D) of section 
548(d), even if the transfer is not directly allocable to an 
individual contract covered by the master netting agreement.
    Subsections (g), (h), (i) and (j) clarify that the 
provisions of the Bankruptcy Code that protect (i) rights of 
liquidation under securities contracts, commodity contracts, 
forward contracts and repurchase agreements also protect rights 
of termination or acceleration under such contracts, and (ii) 
rights to terminate under swap agreements also protect rights 
of liquidation and acceleration.
    Subsection (k) adds a new section 561 to the Bankruptcy 
Code to protect the contractual right of a master netting 
agreement participant to enforce any rights of termination, 
liquidation, acceleration, offset or netting under a master 
netting agreement. Such rights include rights arising (i) from 
the rules of a securities exchange or clearing organization, 
(ii) under common law, law merchant or (iii) by reason of 
normal business practice. This is consistent with thecurrent 
treatment of rights under swap agreements under section 560 of the 
Bankruptcy Code.
    Subsections (b)(2)(A) and (b)(2)(B) of new Section 561 
limit the exercise of contractual rights to net or to offset 
obligations where the debtor is a commodity broker and one leg 
of the obligations sought to be netted relates to commodity 
contracts. Under subsection (b)(2)(A) netting or offsetting is 
not permitted in these circumstances if the party seeking to 
net or to offset has no positive net equity in the commodity 
account at the debtor. Subsection (b)(2)(B) applies only if the 
debtor is a commodity broker, acting on behalf of its own 
customer, and is in turn a customer of another commodity 
broker. In that case, the latter commodity broker may not net 
or offset futures obligations with non-futures claims against 
its customer, the debtor. Subsections (b)(2)(A) and (b)(2)(B) 
limit the depletion of assets available for distribution to 
customers of commodity brokers. This is consistent with the 
principle of subchapter IV of chapter 7 of title 11 that gives 
priority to customer claims in the bankruptcy of a commodity 
broker.
    For the purposes of Bankruptcy Code sections 555, 556, 559, 
560 and 561, it is intended that the normal business practice 
in the event of a default of a party based on bankruptcy or 
insolvency is to terminate, liquidate or accelerate securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements and master netting agreements with 
the bankrupt or insolvent party.
    The protection of netting and offset rights in sections 560 
and 561 is in addition to the protections afforded in sections 
362(b)(6), (b)(7), (b)(17) and (b)(19).
    Under title IX, the termination, liquidation or 
acceleration rights of a master netting agreement participant 
are subject to limitations contained in other provisions of the 
Bankruptcy Code relating to securities contracts and repurchase 
agreements. In particular, if a securities contract or 
repurchase agreement is documented under a master netting 
agreement, a party's termination, liquidation and acceleration 
rights would be subject to the provisions of the Bankruptcy 
Code relating to orders authorized under the provisions of SIPA 
or any statute administered by the SEC. In addition, the 
netting rights of a party to a master netting agreement would 
be subject to any contractual terms between the parties 
limiting or waiving netting or set off rights. Similarly, a 
waiver by a bank or a counterparty of netting or set off rights 
in connection with QFCs would be enforceable under the FDIA.
    Subsection (l) clarifies that, with respect to municipal 
bankruptcies, all the provisions of the Bankruptcy Code 
relating to securities contracts, commodity contracts, forward 
contracts, repurchase agreements, swap agreements and master 
netting agreements (which by their terms are intended to apply 
in all proceedings under title 11) will apply in a chapter 9 
proceeding for a municipality. Although sections 555, 556, 559 
and 560 provide that they apply in any proceeding under the 
Bankruptcy Code, this subsection makes a technical amendment in 
chapter 9 to clarify the applicability of these provisions.
    Subsection (m) clarifies that the provisions of the 
Bankruptcy Code related to securities contracts, commodity 
contracts, forward contracts, repurchase agreements, swap 
agreements and master netting agreements apply in a proceeding 
ancillary to a foreign insolvency proceeding.
    Subsections (n) and (o) clarify that the exercise of 
termination and netting rights will not otherwise affect the 
priority of the creditor's claim after the exercise of netting, 
foreclosure and related rights.
    Subsection (o) amends section 553 of the Bankruptcy Code to 
clarify that the acquisition by a creditor of setoff rights in 
connection with swap agreements, repurchase agreements, 
securities contracts, forward contracts, commodity contracts 
and master netting agreements cannot be avoided as a 
preference.
    This subsection also adds setoff of the kinds described in 
sections 555, 556, 559, 560, of the Bankruptcy Code to the 
types of setoff excepted from section 553(b).

Section 902. Damage Measure

    Section 902 adds a new section 562 to the Bankruptcy Code 
providing that damages under any swap agreement, securities 
contract, forward contract, commodity contract, repurchase 
agreement or master netting agreement will be calculated as of 
the earlier of (I) the date of rejection of such agreement by a 
trustee or (ii) the date of liquidation, termination or 
acceleration of such contract or agreement.
    New section 562 provides important legal certainty and 
makes the Bankruptcy Code consistent with the current 
provisions related to the timing of the calculation of damages 
under QFC's in the FDIA.

Section 903. Asset-backed Securitizations

    Section 903 generally protects asset-backed securitization 
transactions from legal uncertainties and disruptions related 
to the bankruptcies of certain parties and allows for the 
further development of structured finance. Asset securitization 
involves the issuance of securities supported by assets having 
an ascertainable cash flow or market value. Securitization of 
receivables, such as small-business loans, commercial and 
multifamily mortgages, and car loans, allows for the funding of 
such loans from capital market sources. The process generally 
enlarges the pool of capital available and reduces financing 
costs for vital lending purposes such as the financing of 
small-business operations and home ownership.
    Through a number of definitions designed to ensure that the 
exclusion from property of the estate applies only to the 
intended type of transaction, new section 541(b)(5) of the 
Bankruptcy Code excludes from the property of a debtor's estate 
any ``eligible asset'' (and proceeds thereof) to the extent 
that such eligible asset was ``transferred'' by the debtor, 
before the date of commencementof the case, to an ``eligible 
entity'' in connection with an ``asset-backed securitization.'' Each 
term is explicitly defined to reflect its specific role or application 
in the securitization process to ensure that only bona fide 
securitizations are eligible for the safe harbor exclusion. All defined 
elements of a securitization must be present for the safe harbor to 
apply. Other commercial transactions lacking any of the defined 
elements, such as transactions documented and structured as 
collateralized lending arrangements and other commercial asset sales or 
financings that are unrelated to securitization transactions, would be 
ineligible for the safe harbor provided by section 541(b)(5).
    The phrase ``to the extent'' in new section 541(b)(5) makes 
clear that a portion of the eligible asset may remain part of 
the debtor's estate, for example, where the eligible entity 
obtains the right to receive only interest payments on the 
first 10 percent of payments due on a receivable in connection 
with an asset-backed securitization. In addition, the reference 
to section 548(a) in new section 541(b)(5) will make clear that 
the safe harbor does not supersede a trustee's power to avoid 
fraudulent transfers.
    New section 541(b)(5) is not intended to override state law 
requirements, if any, regarding ``perfection'' of an asset 
sale. However, regardless of strict compliance with such state 
law requirements, new section 541(b)(5) is intended to provide 
an exclusion of the debtor's interest in eligible assets (and 
proceeds thereof) from the debtor's estate, upon compliance 
with section 541(b)(5). Thus, despite an eligible entity's 
failure to have properly perfected a sale for state law 
purposes, the eligible assets in question would remain excluded 
from the debtor's estate. In such event, however, a third party 
creditor with an interest in such eligible assets under state 
law would not be precluded from asserting, outside of the 
bankruptcy proceedings, such interest against the issuer or any 
other party purporting to have an interest in those assets. In 
other words, the amendments do not purport to extinguish any 
party's interest in the securitized assets other than the 
debtor's interest to the extent transferred by the debtor to 
the securitization vehicle. In order to provide certainty to 
participants in the asset-backed securities market (including 
both issuers and purchasers of such securities), it is noted 
that the ``strong-arm'' provisions of section 544 of the 
Bankruptcy Code are not intended to override the general rule 
set forth in new section 541(b)(5) so as to bring such assets 
back into the debtor's estate.
    Frequently, asset securitizations involve the issuance of 
more than one class of securities with differing payment 
priorities, subordination provisions and other characteristics. 
The definition of ``asset-backed securitization'' contained in 
new section 541(e)(1) requires that the most senior asset-
backed securities backed by the eligible assets in question be 
rated investment grade, thereby requiring that each asset-
backed securitization as to which eligible assets are excluded 
from the debtor's estate be a carefully reviewed transaction 
subjected to third party scrutiny by a nationally recognized 
statistical rating organization. In view of the cost and time 
associated with obtaining an investment-grade rating, such 
ratings are generally not pursued for smaller transactions. 
These and other burdens of the rating process add further 
protection against potential abuse of the safe harbor for sham 
transactions and ensure its application for its intended 
purpose--to preserve payments on asset-backed securities issued 
in the public and private markets.
    New section 541(e)(2) defines the term ``eligible asset.'' 
This definition is based upon the definition provided in rule 
3a-7 under the Investment Company Act of 1940, which provides 
an exemption from registration under the Investment Company Act 
for issuers of asset-backed securities (i.e., issuers in the 
business of purchasing, or otherwise acquiring, and holding 
eligible assets). The phrase ``or other assets'' is intended to 
cover assets often conveyed in connection with securitization 
transactions such as letters of credit, guarantees, cash 
collateral accounts, and other assets that are provided as 
additional credit support. This phrase would also cover other 
assets, such as swaps, hedge agreements, etc., that are 
provided to protect bondholders against interest rate, currency 
and other market risks. The inclusion of cash and securities as 
eligible assets allows so-called market-value based 
securitizations of equity and other non-amortizing securities 
to fall within the purview of the amendment, although 
securitizations of such securities are not included under rule 
3a-7 and therefore would be subject to regulation under the 
Investment Company Act if another exemption therefrom were not 
available.
    New sections 541(e)(3) and (4) define the terms ``eligible 
entity'' and ``issuer,'' respectively. The definitions exclude 
operating companies by encompassing only single purpose 
entities. Because securitization transactions often involve 
intermediary transferees, an eligible entity can be either an 
issuer or an entity engaged exclusively in the business of 
acquiring and transferring eligible assets directly or 
indirectly to an issuer.
    New section 541(e)(5) defines the term ``transferred.'' In 
order for the eligible assets to be excluded from the debtor's 
estate under section 541, the debtor must represent and warrant 
in a written agreement that such eligible assets were sold, 
contributed or otherwise conveyed with the intention of 
removing them from the debtor's estate pursuant to section 541. 
The definition makes clear that the debtor's written intention 
as to the exclusion of the eligible assets will be honored, 
regardless of the state law characterization of the transfer as 
a sale, contribution or other conveyance, and regardless of any 
other aspect of the transaction (such as the debtor's holding 
an interest in the issuer or any securities issued by the 
issuer, the ongoing servicing obligation of the debtor; the tax 
and accounting characterization; or any recourse to the debtor, 
whether relating to a breach of a representation, warranty or 
covenant, or otherwise) which may affect a state law analysis 
as to the true sale.

Section 904. Effective date; Application of Amendments

    Subsection (a) provides that the amendments made under 
title IX take effect on the date of enactment.
    Subsection (b) provides that the amendments made under 
title IX shall not apply with respect to cases commenced, or to 
conservator/receiver appointments made, before the date of 
enactment.

                 Title X--Protection of Family Farmers


Section 1001. Reenactment of Chapter 12

    Chapter 12 is reenacted on April 1, 1999.

Section 1002. Debt limit Increase

    This section amends section 104(b) of title 11 of the 
United States Code. This provision provides, beginning April 1, 
2001, for annual or biannual adjustments of the debt limit for 
family farmers.

Section 1003. Elimination of Requirement that Family Farmer and Spouse 
        Receive Over 50 Percent of Income From Farming and Operation in 
        Year Prior to Bankruptcy

    This section amends section 101(18)(A) of title 11 of the 
United States Code by requiring that persons engaged in farming 
operations must have received more than 50 percent of his/her/
their gross income from farming in at least one of the three 
calender years preceding the year in which their case was 
filed. Previously, those persons must have received over 50 
percent of their income in the year immediately preceding the 
bankruptcy filing.

Section 1004. Certain Claims Owed to Governmental Units

    Section 1004 provides for payment in full of all claims 
entitled to section 507 priority unless the claim is owed to a 
governmental unit arising from the sale or exchange of any farm 
asset. In that case the claim is treated as an unsecured claim 
and the underlying debt is treated the same if the debtor 
receives a discharge or the holder of a claim agrees to a 
different treatment of that claim.

                     Title XI--Technical Amendments

    In general, the changes in this title of S. 625 mirror 
provisions of H.R. 764, which passed the House of 
Representatives in the 105th Congress.

Section 1101. Definitions

    This section amends the definitions contained in section 
101 of title 11 of the United States Code. Paragraphs (1), (2), 
(4), (5)(B), (7), and (8) of section 401 make technical changes 
to section 101 to convert each definition into a sentence 
(thereby facilitating future amendments to the separate 
paragraphs) and to redesignate the definitions in correct and 
completely numerical sequence. Paragraph (8) of this section 
makes the necessary conforming amendment to cross references to 
the newly redesignated definitions and simplifies these 
references to avoid future reference errors. Paragraph (5)(A) 
of the section excludes family farms from the definition of 
single asset real estate.
    In general terms, single asset real estate is a single 
piece of real estate which generates substantially all of the 
gross income of the debtor, on which no other substantial 
business is being conducted, and which as presently defined is 
encumbered by no more than $4 million in outstanding debt. 
Section 362 of the Bankruptcy Code effectively provides a 
secured creditor with relief from the automatic stay's bar to 
foreclosure on such property unless, within 90 days of the 
order for relief, the debtor has filed a plan of reorganization 
which stands a reasonable possibility of being confirmed, or 
unless the debtor has commenced making monthly payments to each 
secured creditor in an amount equal to interest at the current 
fair market rate on the value of the creditor's interest in the 
real estate.
    The present $4 million cap prevents the 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 section removes the ceiling.

Section 1102. Adjustment of Dollar Amounts

    This section corrects an omission in section 104(b) of 
title 11 of the United States Code, as added by Public Law 103-
894, by adding references to section 522(f)(3) so that the 
triennial adjustment required by section 104(b) extends to the 
figure representing an aggregate value of certain implements, 
professional books, tools of the trade, farm animals, and crops 
which the debtor may exempt from the property of the estate and 
so protect from creditors' liens. Section 522(f)(3) now sets 
the total permissible value of such property at $5,000.

Section 1103. Extension of Time

    The section makes a technical amendment by striking ``922'' 
and all that follows and inserting ``922, 1201, or.'' To 
correct a reference error described in amendment notes 
contained in the United States Code.

Section 1104. Technical Amendments

    This section of the bill makes a technical amendment by 
striking subsection ``(c) or (d) of'' in section 109(b)(2). 
Additionally, it adds ``or'' to section 541(b)(4) and inserts 
``products'' for ``product'' in section 552(b)(1).

Section 1105. Penalty for Persons Who Negligently or Fraudulently 
        Prepare Bankruptcy Petitions

    This section of the bill makes a technical correction to 
change from the singular possessive to the plural possessive in 
reference to the fees payable to attorneys. This section amends 
section 110(j)(3) of title 11, of the United States Code.

Section 1106. Limitation on Compensation of Professional Persons

    This section amends 328(a) of title 11 of the United States 
Code to provide that a trustee or a creditors' and equity 
security holders' committee may, with court approval, employ a 
professional person on any reasonable terms and conditions of 
employment, including on a retainer, on an hourly basis, or on 
a contingent fee basis. This section amends section 328(a) to 
include compensation ``on a fixed or percentage fee basis'' in 
addition to the other specified forms of reimbursement.

Section 1107. Special Tax Provisions

    The section of the bill makes a technical correction in 
section 346(g)(1)(C) of title 11 of the United States Code to 
remove language referring to a repealed section of the Internal 
Revenue Code of 1986. Additional information regarding the 
repealed section is indicated in the appropriate footnote, and 
contained in the notes under the heading ``References in 
Text,'' found in the United States Code.

Section 1108. Effect of Conversion

    The section makes a technical correction in section 
348(f)(2) of title 11 of the United States Code to clarify that 
the first reference to property, like the subsequent reference 
to property, is a reference to property of the estate.

Section 1109. Allowance of Administrative Expenses

    This section provides that 503(b)(4) of title 11 of the 
United States Code, limits the types of compensable 
professional services rendered by an attorney or accountant 
that can qualify as administrative expenses in a bankruptcy 
case. Expenses for attorneys or accountants incurred by 
individual members of creditors' and equity security holders' 
committees would not be recoverable, but expenses incurred for 
such professional services by the committees themselves would 
be.

Section 1110. Exceptions to Discharge

    This section makes technical and conforming changes to 
accommodate drafting errors in changes made to title 11 from 
the Bankruptcy Reform Act of 1994 and the Omnibus Consolidated 
Rescissions and Appropriation Act of 1996.

Section 1111. Effect of Discharge

    Section 1214 of the bill makes technical amendments to 
correct errors in section 524(a)(3) of title 11 of the United 
States Code.

Section 1112. Protection Against Discriminatory Treatment

    The section amends section 525(C) of title 11 of the United 
States Code by making a technical amendment to conform a 
reference to its antecedent reference. The omission of 
``student'' before ``grant'' in the second place it appears in 
section 525(C) made possible the interpretation that a broader 
limitation on lender discretion was intended, so that no loan 
could be denied because of a prior bankruptcy if the lending 
institution was in the business of making student loans. The 
section is intended to make clear that lenders involved in 
making government guaranteed or insured student loans are not 
barred by this Bankruptcy Code provision from denying other 
types of loans based on an applicant's bankruptcy history; only 
student loans and grants, therefore, cannot be denied under 
section 525(C) because of a prior bankruptcy.

Section 1113. Property of the Estate

    The section makes technical changes to section 541 of the 
Bankruptcy Code to clarify the original Congressional intent to 
generally exclude production payments from the debtor's estate.

Section 1114. Preferences

    Technical amendment reaffirms the position that innocent 
lenders should not be subject to the insider preference 
provision. In 1994, the Congress first attempted to clarify the 
situation by amending section 550 of the Code. The section by 
section analysis placed in the Congressional Record stated: 
``This section by section overrules the DePrizio line of cases 
and clarifies that non-insider transferees should not be 
subject to the preference provisions of the Bankruptcy Code 
beyond the 90 day statutory period.'' Courts ignored the 
amendments and the legislative history that is why this is 
here.

Section 1115. Postpetition Transactions

    The section amends section 549(C) to clarify its 
application to an interest in real property.

Section 1116. Disposition of Property of the Estate

    The section amends section 726(b) of title 11 of the United 
States Code, by striking ``1009''.

Section 1117. General Provisions

    The section amends section 901(a) of title 11 of the United 
States Code to correct an omission in a list of sections 
applicable to cases under chapter 9 of title 11.

Section 1118. Abandonment of Railroad Line

    The section redesignates section ``11347'' as section 
``11326(a).''

Section 1119. Contents of Plan

    The section redesignates section ``11347'' as section 
``11326(a).''

Section 1120. Discharge Under Chapter 12

    The section amends section 1228 of title 11 of the United 
States Code, replacing each reference of ``1222(b)(10)'' with 
``1222(b)(9)''.

Section 1121. Bankruptcy Cases and Proceedings

    This section makes a technical change to correct an 
incomplete cross-reference.

Section 1122. Knowing Disregard of Bankruptcy Law or Rule

    This section amends section 156(a) of title 18 of the 
United States Code, which defined ``bankruptcy petition 
preparer'' and ``document for filing,'' by making stylistic 
changes and correcting a reference to title 11 of the United 
States Code.

Section 1123. Transfers Made by Nonprofit Charitable Corporations

    This section amends section 363(d) of title 11 of the 
United States Code. This section is Specter's amendment 
concerning the distribution of nonprofit corporations' assets.

Section 1124. Protection of Valid Purchase Money Security Interests

    Section 547(c)(3)(B) of title 11 is amended by replacing 20 
with 30.

Section 1125. Extensions

    Section 302(d)(3) of the Bankruptcy, Judges, U.S. Trustees, 
and Family Farmer Bankruptcy Act of 1986 is amended by striking 
out all references to October 1, 2002, whichever occurs first 
and October 1, 2003 and whichever occurs first.

Section 1126. Bankruptcy Judgeships

    This section amends title 28 of the United States Code. It 
authorizes the appointment of additional temporary bankruptcy 
judgeships in the districts that follow:
          (A) One additional bankruptcy judgeship for the 
        eastern district of California.
          (B) Four additional bankruptcy judgeships for the 
        central district of California.
          (C) One additional bankruptcy judgeship for the 
        southern district of Florida.
          (D) Two additional bankruptcy judgeship for the 
        district of Maryland.
          (E) One additional bankruptcy judgeship for the 
        eastern district of Michigan.
          (F) One additional bankruptcy judgeship for the 
        southern district of Mississippi.
          (G) One additional bankruptcy judgeship for the 
        district of New Jersey.
          (H) One additional bankruptcy judgeship for the 
        eastern district of New York.
          (I) One additional bankruptcy judgeship for the 
        northern district of New York.
          (J) One additional bankruptcy judgeship for the 
        southern district of New York.
          (K) One additional bankruptcy judgeship for the 
        eastern district of Pennsylvania.
          (L) One additional bankruptcy judgeship for the 
        middle district of Pennsylvania.
          (M) One additional bankruptcy judgeship for the 
        western district of Tennessee.
          (N) One additional bankruptcy judgeship for the 
        eastern district of Virginia.
    The section provides that judgeship vacancies in the above 
districts resulting from death, retirement, resignation, or 
removal of a bankruptcy judge which occur 5 years or more after 
the appointment date shall not be filled.
    The section also adds that temporary bankruptcy judgeships 
authorized for the northern district of Alabama, the district 
of Delaware, the district of Puerto Rico, the district of South 
Carolina, and the eastern district of Tennessee under the 
Bankruptcy Judgeship Act of 1992 are extended until the first 
vacancy resulting from the death, retirement, resignation, or 
removal occurs:
          (A) 8 years or more after November 8, 1993, in the 
        northern district of Alabama.
          (B) 10 years or more after October 28, 1993, in the 
        district of Delaware.
          (C) 8 years or more after August 29, 1994, in the 
        district of Puerto Rico.
          (D) 8 years or more after June 27, 1994, in the 
        district of South Carolina.
          (E) 8 years or more after November 23, 1993, in the 
        district of Tennessee.
    The section also amends section 152(a)(1) of title 28 of 
the United States Code. It adds that each judge shall be 
appointed by the U.S. Court of Appeals for the circuit in which 
such a district is located.
    The section also amends section 156 of title 28 of the U.S. 
Code to require post-travel reports for non-cases related 
travel by bankruptcy judges. The section defines the term 
travel expenses to include expenses incurred by a bankruptcy 
judge that are not directly related to any case, and excludes 
expenses incurred by the judge paid from personal funds and 
where no payment or reimbursement is made to the judge by the 
government or any other person or entity. Each bankruptcy judge 
will submit an annual report to the Chief Bankruptcy Judge. The 
Chief Bankruptcy Judge will submit an annual report to the 
Director of the Administrative Office of the U.S. Courts on the 
travel expenses of each bankruptcy judge. The annual report 
shall include: the travel expenses and the name of each judge, 
the description of the subject matter of the travel expenses, 
the number of days that the judge traveled.
    The section also requires that the Director of 
Administrative Office of the United States consolidate the 
reports received into one report and submit it to Congress.

      Title XII--General Effective Date; Application of Amendments


Section 1201. Effective Date; Application of Amendments

    This section provides that this title and the amendments 
made take effect on the date of enactment and apply only with 
respect to cases commenced on or after the date of enactment of 
the act.

                          XVII. COST ESTIMATE

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 10, 1999.
Hon. Orrin G. Hatch,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 625, the Bankruptcy 
Reform act of 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Susanne S. 
Mehlman (for Federal costs), Lisa Cash Driskill (for the State 
and local impact), and John Harris (for the private-sector 
impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

               CONGRESSIONAL BUDGET OFFICE--COST ESTIMATE

S. 625--Bankruptcy Reform Act of 1999

            Summary
    S. 625 would make many changes and additions to the laws 
relating to bankruptcy, including establishing a system of 
means-testing for determining eligibility for relief under 
chapter 7 of the U.S. bankruptcy code. CBO estimates that 
implementing S. 625 would cost $218 million over the 2000-2004 
period--$207 million is discretionary spending, subject to 
appropriation of the necessary funds, and $11 million in 
mandatory spending. CBO also estimates that enacting this bill 
would increase receipts by about $2 million over the next 5 
years. Because the bill would affect direct spending and 
receipts, pay-as-you-go procedures would apply. Provisions in 
title VII also would affect receipts, but the Joint Committee 
on Taxation (JCT) has not completed an estimate of such changes 
at this time.
    S. 625 contains no intergovernmental mandates as defined in 
the Unfunded Mandates Reform Act (UMRA). Overall, CBO expects 
that enacting this bill would benefit State and local 
governments by enhancing their ability to collect outstanding 
obligations in bankruptcy cases. S. 625 would impose new 
private-sector mandates, as defined in UMRA, on bankruptcy 
attorney's, creditors, and credit and charge-card companies. 
CBO estimates that the costs of these mandates would exceed the 
$100 million (in 1996 dollars) threshold established in UMRA.
            Description of the bill's major provisions
    In addition to establishing means-testing for determining 
eligibility for chapter 7 bankruptcy relief, S. 625 would:
          Require the Executive Office for the United States 
        Trustees (U.S. Trustees) to establish a test program to 
        educate debtors on financial management;
          Require the Administrative Office of the United 
        States Courts (AOUSC) to receive and maintain tax 
        returns for all chapter 7 and chapter 13 debtors; and
          Require that at least one out of every 250 bankrupty 
        cases under chapter 13 or chapter 7 be audited;
          Require the AOUSC and the U.S. Trustees to collect 
        and publish certain statistics on bankruptcy cases; and
          Authorize 18 new temporary judgeships and extend five 
        existing judgeships in 19 federal districts.
Other provisions would make various changes affecting the 
bankruptcy provisions for municipalities and the treatment of 
tax liabilities in bankruptcy cases.
            Estimated cost to the Federal Government
    As shown in the following table, CBO estimates that 
implementing S. 625 would cost the courts, the AOUSC, and the 
U.S. Trustees $12 million in fiscal year 2000 and $207 million 
over the 2000-2004 period, subject to appropriation of the 
necessary funds. In addition, we estimate that mandatory 
spending for the salaries and benefits of bankruptcy judges 
would increase by less than $500,000 in 2000 and $11 million 
over the 2000-2004 period. Enacting the means-testing 
provisions in title I would result in a net increase in 
revenues of about $2 million over the next 5 years. The costs 
of this legislation fall within budget function 750 
(administration of justice).
            Basis of estimate
    For purposes of this estimate, CBO assumes that S. 625 will 
be enacted by October 1, 1999, and that all estimated 
authorization amounts will be approved for each fiscal year
            Spending Subject to Appropriation
    Most of the estimated increases in discretionary spending 
would be required to fund the additional workload that would be 
imposed on the U.S. Trustees, which are currently funded 
through the bankruptcy-related fees collected by the courts. 
Without additional statutory authority, those fees cannot be 
increased to cover any expenditures that would occur under the 
bill. Because the legislation does not provide for such 
increases in fees, any additional costs would be subject to the 
availability of appropriated funds.

----------------------------------------------------------------------------------------------------------------
                                                                     By fiscal year in millions of dollars--
                                                               -------------------------------------------------
                                                                  2000      2001      2002      2003      2004
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Means-Testing (Section 102):
    Estimated Authorization Level.............................         5        10         9         9         8
    Estimated Outlays.........................................         5        10         9         9         8
Debtor Financial Management Training (Section 104):
    Estimated Authorization Level.............................         2         0         0         0         0
    Estimated Outlays.........................................         1         1         0         0         0
Credit Counseling Certification (Section 105):
    Estimated Authorization Level.............................         4         3         3         4         4
    Estimated Outlays.........................................         2         4         3         4         4
Maintenance of Tax Returns (Section 315):
    Estimated Authorization Level.............................         3         6         7         9         9
    Estimated Outlays.........................................         3         6         7         9         9
U.S. Trustee Site Visits (Section 430):
    Estimated Authorization Level.............................         3         2         2         2         3
    Estimated Outlays.........................................         1         4         2         2         3
Audit Procedures (Section 601):
    Estimated Authorization Level.............................         0         3         8        10        10
    Estimated Outlays.........................................         0         3         8        10        10
Compiling and Publishing Data (Sections 602-603):
    Estimated Authorization Level.............................         0         5         9         8         8
    Estimated Outlays.........................................         0         5         9         8         8
Additional Judgeships--Support Costs (Section 1228):
    Estimated Authorization Level.............................     (\1\)         6        11        11        12
    Estimated Outlays.........................................     (\1\)         6        11        11        12
                                                               -------------------------------------------------
Total Discretionary Changes:
    Estimated Authorization Level.............................        17        35        49        53        54
    Estimated Outlays.........................................        12        39        49        53        54

                                           CHANGES IN DIRECT SPENDING

Additional Judgeships (Section 1228):
    Estimated Budget Authority................................     (\1\)         2         3         3         3
    Estimated Outlays.........................................     (\1\)         2         3         3         3

                                             CHANGES IN REVENUES \2\

Changes in Filing Fees (Section 102):
    Estimated Revenues........................................         0         0     (\1\)         1         1
----------------------------------------------------------------------------------------------------------------
\1\ Less than $500,000.
\2\ The Joint Committee on Taxation has not yet completed its review of tax provisions in title VII.

    Means-Testing (Section 102). This section would establish a 
system of means-testing for determining a debtor's eligibility 
for relief under chapter 7. Under the means test, if the debtor 
is expected to have income (after certain expenses) to pay at 
least $15,000 or 25 percent of general outstanding unsecured 
claims over five years, the debtor would be presumed ineligible 
for chapter 7 relief. A debtor who could not demonstrate 
``special circumstances,'' which would cause expected 
disposable income to fall below the threshold, could file under 
other chapters of the bankruptcy code. The U.S. Trustees would 
be responsible for conducting the initial review of a debtor's 
income and expenses, filing the majority of motions for 
dismissal or conversion, and taking part in additional 
litigation that is expected to occur as the courts and debtors 
debate allowable expenses and other related issues.
    Although CBO cannot predict the amount of such litigation, 
we expect that the amount of litigation could be significant 
during the first few years, as parties test the new law's 
standards. In subsequent years, litigation could begin to 
subside as precedents are established. Based on information 
from the U.S. Trustees, CBO estimates that the U.S. Trustees 
would require about 85 additional attorneys, paralegals, and 
analysts to address the increased workload. As a result, CBO 
estimates that appropriations of $41 million would be required 
over the next 5 years.
    Debtor Financial Management Test Training Program (Section 
104). This section would require the U.S. Trustees to establish 
a test training program in three judicial districts to educate 
debtor on financial management. Based on information from the 
U.S. Trustees, CBO estimates that about 45,000 debtor would 
participate in the program, which we expect would be carried 
out over fiscal years 2000 and 2001. At a projected cost of 
about $40 per debtor, CBO estimates that the U.S. Trustees 
would require an appropriation of about $2 million in fiscal 
year 2000 to administer the program.
    Credit Counseling Certification (Section 105). This section 
would require the U.S. Trustees to certify, on an annual basis, 
that certain credit counseling services could provide adequate 
services to potential debtors. Based on information from the 
U.S. Trustees, CBO estimates that the U.S. Trustees would 
require additional attorneys and analysts to handle the 
additional workload associated with certification. CBO 
estimates that enacting this provision would require 
appropriations of $18 million over the next 5 years.
    Maintenance of Tax Returns (Section 315). This section 
would require the AOUSC to receive and return tax returns for 
the three most recent years preceding the commencement of the 
bankruptcy case for all chapter 7 and 13 debtor (about 8 
million debtors over the 2000-2004 period). CBO estimates that 
appropriations of $34 million over the next 5 years would be 
required to store and provide access to over 20 million tax 
returns.
    U.S. Trustee Site Visits in Chapter 11 Cases (Section 430). 
This section would expand the responsibilities of the U.S. 
Trustees in small business bankruptcy cases to include site 
visits to inspect the debtor's premises, review records, and 
verify that the debtor has filed tax returns. Based on 
information from the U.S. Trustees, CBO estimates that 
implementing section 430 would require about 20 additional 
analysts to conduct over 2,300 site visits each year. CBO 
estimates that the U.S. Trustees would require appropriations 
of about $12 million over the next 5 years for the salaries, 
benefits, and travel expenses associated with these additional 
personnel.
    Audit Procedures (Section 601). Beginning 18 months after 
enactment, S. 625 would require that at least 1 out of every 
250 bankruptcy cases under chapter 7 and chapter 13, plus other 
selected cases under those chapters, be audited by qualified 
persons, as determined by the Attorney General. Based on 
information from the U.S. Trustees, CBO estimates that about 
1.3 million cases would be subject to audits in fiscal year 
2001, increasing to about 1.8 million in fiscal year 2004. CBO 
assumes that about 0.8 percent of all cases would be audited 
and that each audit would cost about $500 (in 2000 dollars). 
CBO also expects that the U.S. Trustees would need about 10 
additional analysts and attorneys to support the follow-up work 
associated with the audits. Thus, we estimate that implementing 
this provision would require appropriations of $3 million in 
fiscal year 2001 and $31 million over the 2000-2004 period.
    Compiling and Publishing of Data on Bankruptcy (Section 
602-603). S. 625 would require the AOUSC to collect data on 
chapters 7, 11, and chapter 13 cases and the U.S. Trustees to 
make such information available to the public. CBO estimates 
that appropriations of about $30 million would be required over 
the 2000-2004 period to meet these requirements. Of the total 
estimated cost, about $24 million would be required for 
additional legal clerks, analysts, and data base support. The 
remainder would be incurred by the U.S. Trustees for compiling 
data and providing Internet access to records pertaining to 
bankruptcy cases.
    Additional Judgeships--Support Costs (Section 1228). This 
provision would extend five temporary bankruptcy judgeships and 
authorize 18 new temporary bankruptcy judgeships for 19 Federal 
judicial district. Based on information from the AOUSC, CBO 
assumes that one-half of the 18 new positions would be filed by 
the beginning of fiscal year 2001 and the other half would be 
filled by the start of fiscal year 2002. Also, we anticipate 
that all five temporary judgeships would be filled by fiscal 
year 2002. We expect that discretionary expenditures associated 
with each judgeship would average about $450,000 (in 2000 
dollars), after initial costs of about $50,000. Therefore, CBO 
estimates that the administrative support of additional 
bankruptcy judges would require an appropriation of less than 
$500,000 infiscal year 2000 and about $40 million over the 
2000-2004 period. (Salaries and benefits for the judges are classified 
as direct spending, and those costs are described below.)
            Direct Spending and Revenues
    Additional Judgeships (Section 1228). CBO estimates that 
enacting the means-testing provision (section 102) would impose 
some additional workload on the courts. Section 1228 would 
authorize 18 new temporary bankruptcy judgeships and extend 
five existing temporary judgeships. Based on information from 
the AOUSC and other bankruptcy experts, CBO expects that the 
increase in the number of bankruptcy judges would be sufficient 
to meet the increased workload. Assuming that the salary and 
benefits of a bankruptcy judge would average about $150,000 a 
year, CBO estimates that the mandatory costs associated with 
the salaries and benefits of these additional judgeships would 
be less than $500,000 in fiscal year 2000 and about $11 million 
over the 2000-2004 period.
    Changes in Filing Fees (Section 102). The means-testing 
provision also could affect the government's income from 
bankruptcy filing fees because it would cause changes in the 
number and type of bankruptcy filings. CBO projects that about 
5 to 10 percent of all chapter 7 debtors (about 50,000 to 
100,000 cases each year) could be subject to the means test 
proposed under this bill. CBO expects that those debtors who 
are not successful in proving ``special circumstances'' will 
either convert their cases to chapter 13 cases or withdraw 
their petitions for bankruptcy relief. Under either of these 
options, CBO estimates that there would be no significant 
effect on the Federal budget because there is no fee for 
converting a case from chapter 7 to chapter 13, and filing fees 
are not refunded to debtors who withdraw their petitions for 
bankruptcy relief. Over the long term, CBO estimates that the 
Federal government could collect additional revenues as more 
debtors file directly under chapter 13. (The government 
collects an additional $45 for each case filed under chapter 13 
instead of chapter 7.) This increase could be partly offset by 
those debtors who might refrain from filing for any type of 
bankruptcy relief. On balance, CBO estimates that the means-
testing provision would increase revenues by about $1 million a 
year beginning in 2003.
    Tax Provisions (Title VII). The provisions in title VII of 
the bill are currently under review by the Joint Committee on 
Taxation, and estimates of their effects on revenues will be 
provided when they are completed.
            Pay-as-you-go considerations
    The Balanced Budget and Emergency Deficit Control Act sets 
up pay-as-you-go procedures for legislation affecting direct 
spending or receipts. Because this bill would affect both, pay-
as-you-go procedures would apply. The net changes in outlays 
and governmental receipts are shown in the following table. 
(JCT is reviewing title VII and has not yet completed an 
estimate of its effects on receipts.) For the purposes of 
enforcing pay-as-you-go procedures, only the effects in the 
current year, the budget year, and the succeeding four years 
are counted.

----------------------------------------------------------------------------------------------------------------
                                                       By fiscal year, in millions of dollars--
                                    ----------------------------------------------------------------------------
                                      1999   2000   2001   2002   2003   2004   2005   2006   2007   2008   2009
----------------------------------------------------------------------------------------------------------------
Changes in outlays.................      0      0      2      3      3      3      3      3      3      2      2
Changes in receipts \1\............      0      0      0      0      1      1      1      1      1      1      1
----------------------------------------------------------------------------------------------------------------
\1\ Estimated impact of means-testing. JCT has not completed an estimate of changes in receipts for title VII.

            Estimated impact on State, local, and tribal governments
    S. 625 contains no intergovernmental mandates as defined in 
the Unfunded Mandates Reform Act (UMRA). Overall, CBO expects 
that enacting this bill would benefit State and local 
governments by enhancing their ability to collect outstanding 
obligations in bankruptcy cases. The changes to bankruptcy law 
in the bill would affect State and local governments primarily 
as creditors and holders of claims for taxes or child support. 
In addition, it would change the applicability of some State 
statutes that govern which of a debtor's assets are protected 
from creditors in a bankruptcy proceeding.
    In 1996, a survey of the 50 states conducted by the 
Federation of Tax Administrators and the State's Association of 
Bankruptcy Attorneys, indicated that more than 360,000 
taxpayers in bankruptcy owed claims to States totaling about $4 
billion. Of these claims, States reported collecting only about 
$234 million. While CBO cannot predict how much more money 
might be collected, it is likely that States and local 
governments would collect a greater share of future claims than 
they would have under current law.
            Exemptions
    Although bankruptcy is regulated according to Federal 
statute, States are allowed to provide debtors with certain 
exemptions for property, insurance, and other items that are 
different from those allowed under the Federal bankruptcy code. 
(Exempt property remains in possession of the debtor and is not 
available to pay off creditors). In some States debtors can 
chose the Federal or State exemption; other States require a 
debtor to use only the State exemptions. This bill would 
restrict homestead exemptions, create a new exemption for 
certain retirement funds, and define which household goods 
would be eligible for exemption. These standards would apply 
regardless of the State policy on exemptions. The new 
restrictions on homestead exemptions would make more money 
available to creditors in some cases, while the exemptions on 
retirement savings generally would make less money available.
            Domestic Support Obligations
    The bill would significantly enhance a State's ability to 
collect domestic support obligations, including child support. 
Domestic support obligations owned to State or local 
governments would be given priority over all other claims, 
except those same obligations owed to individuals. This bill 
also would require that filers under chapters 11 and 13 pay in 
full all domestic support obligations owed to government 
agencies or individuals, in order to receive a discharge of 
outstanding debts. In addition, the automatic stay that is 
triggered by filing for bankruptcy would not apply to domestic 
support obligations. Last, the bill would require bankruptcy 
trustees to notify individuals with domestic support claims of 
their right to use the services of a State child support 
enforcement agency and notify the agency that they have done 
so. The last known address of the debtor would be a part of the 
notification.
            Utility Service
    The bill would enhance the ability of a utility provider, 
including State and local utilities, to collect debts by 
clarifying the definition of adequate assurance of payment. 
Currently, a utility must continue to provide service to a 
business that files for bankruptcy if adequate assurance that 
payment will be provided is received. The bill would clarify 
that adequate assurance means a cash deposit, or other 
verifiable forms of payments, rather than a verbal assurance.
            Tax Payment Plans
    The bill would require that payment plans for tax 
liabilities be limited to 6 years and that payment amounts be 
regular and proportionate to payments for other obligations. 
Under current law, taxing authorities sometimes face payment 
plans that include a series of small payments over time 
followed by a large balloon payment near the end of the planned 
payment stream. At that point, the debtors often fail to 
complete their claims. This provision would require that taxes 
be paid at a rate proportionate to those of other debts. It 
also would establish interest rates to be applied to 
outstanding tax liabilities. Under current law, interest 
charges on outstanding tax liabilities are determined at the 
discretion of the bankruptcy judge.
            Time Limits on Tax Collection
    Under some circumstances, a tax claim can qualify for 
priority status, and thus a State and local government would be 
more likely to collect the debt. However, this status is 
granted only if a tax assessed within a specific period of time 
from the date of the filing for bankruptcy. If that filing is 
subsequently dismissed and a new filing is made, the tax claim 
may lose its priority status. The bill would allow more time to 
pass in some circumstances, thus increasing the likelihood that 
state or local tax claims would maintain their priority status.
            Taxes and Administrative Expenses
    Under current law, certain expenses can be paid out of 
funds that would otherwise be available to pay tax liens on 
property. The bill would restrict the use of funds for 
administrative expenses to a limited number of circumstances, 
thereby making it more likely that funds would remain available 
to cover tax obligations.
            Tax Return Filing and Government Notification
    A number of provisions in the bill would require debtors to 
have filed tax returns, and in some cases to be current in 
their tax payments, before a bankruptcy case may continue. 
Also, debtors would be require to provide notice to State 
authorities in a specific manner when they pursue relief under 
bankruptcy law. These provisions would help States identify 
potential claims in bankruptcy cases where they may be owed 
delinquent taxes.
            Priority of Payments
    In some circumstances, debtors have borrowed money or 
incurred some new obligation that is dischargeable (able to be 
written off at the end of bankruptcy) to pay for an obligation 
would not be dischargeable. This bill would give a new debt the 
same priority as the underlying debt. If the underlying debt 
had a priority higher than that of State or local tax 
liabilities, State and local governments could lose access to 
some funds. However, it is possible that the underlying debt 
could be for a tax claim, in which case the taxing authority 
would face no loss. Because it is unclear what types of 
nondischargeable debts are covered by new debt and the degree 
to which this new provision would discourage such activity, CBO 
can estimate neither the direction nor the magnitude of the 
provision's impact on States and localities.
            Single Assess Cases
    One provision of the bill would allow expedited bankruptcy 
proceeding in certain single asset cases (usually involving a 
large office building). State and local governments could 
benefit to the extent that real property is returned to the tax 
rolls earlier.
            Municipal Bankruptcy
    The bill would clarify regulations governing municipal 
bankruptcy actions and allow municipalities that have filed for 
bankruptcy to liquidate certain financial contracts.
            Estimated impact on the private sector
    S. 625 would impose new private-sector mandates on 
bankruptcy attorneys, creditors, and preparers of bankruptcy 
petitions. Bankruptcy attorneys would be required to make 
reasonable inquiries to confirm that the information in 
documents they submit to courts or bankruptcy trustees is well 
grounded in fact. Creditors would be required to make 
disclosures in reaffirmation agreements with debtors, to 
refrain from certain communications with debtors, and to 
provide notices to the court and to debtors. Preparers of 
bankruptcy petitions would be required to make disclosures to 
debtors and may face additional costs due to regulation of 
fees. CBO estimates that the costs of these mandates would 
exceed the $100 million (in 1996 dollars) threshold established 
in UMRA.
    Sections 102 and 319 would make bankruptcy attoneys liable 
for misleading statements and inaccuracies in schedules and 
documents submitted to courts or trustees. To avoid sanctions 
and potential civil penalties, attorneys would need to verify 
the information given to them by their clients regarding the 
list of creditors, assets and liabilities, and income and 
expenditures. Based on 1,286,000 projected filings under 
chapter 7 and chapter 13 and an estimated increase in 
attorneys' costs of $150 to $500 per case, CBO estimates that 
the costs to attorneys of complying with this requirement would 
be between $190 million and $640 million in fiscal year 2000. 
With the rise in projected filings over the next 5 years, 
annual costs would be $280 million to $940 million for fiscal 
year 2004. CBO expects bankruptcy attorneys to pass some of the 
cost on to debtors, reducing the pool of funds available to 
creditors.
    S. 625 would regulate communications between creditors and 
debtors. Section 203 would require any creditor with an 
unsecured consumer debt seeking a reaffirmation agreement with 
the debtor to notify the debtor of his right to a hearing to 
determine whether the agreement is an undue hardship, is in the 
debtor's best interest, or is the result of an illegal threat 
by the creditor. Section 204 would prohibit creditors seeking 
reaffirmation agreements from threatening to file motions to 
determine dischargeability or to dismiss and from threatening 
to repossess collateral protected by the automatic stay created 
by filing for bankruptcy. The bill would also require creditors 
to specify to the court and to the debtor the person designated 
to receive notices. The requirements in section 204 would 
diminish creditors' ability to obtain reaffirmation agreements 
and recover debts, but CBO cannot estimate the costs of these 
requirements because of a lack of data on reaffirmation 
agreements. The costs of the other requirements would be small.
    CBO cannot estimate the total costs to nonattorney 
preparers of bankruptcy petitions. Section 221 would require 
preparers of petitions to provide debtors with written notice 
that they are not attorneys and cannot provide legal advice. 
Section 221 also would authorize the Supreme Court and the 
Judicial Conference of the United States to set limits on the 
fees charged by preparers of bankruptcy petitions but does not 
suggest an appropriate limit. As a result, CBO cannot estimate 
the costs of limiting fees.
            Previous CBO estimate
    On May 5, 1999, CBO transmitted a cost estimate for H.R. 
833, as reported by the House Committee on the Judiciary on 
April 28, 1999. Both H.R. 833 and S. 625 would authorize 
additional bankruptcy judges; thus, enacting either bill would 
affect direct spending. S. 625, unlike H.R. 833, however, would 
not waive chapter 7 filing fees for certain debtors, As 
aresult, enacting S. 625 would result in a net increase in revenues of 
about $2 million over the next 5 years. Differences in discretionary 
spending estimates between S. 625 and H.R. 833 reflect differences in 
the provisions of the two bills. The major differences in discretionary 
provisions between the two bills involve the debtor of financial 
management test program and the audit requirement. Under S. 625, the 
U.S. Trustees must administer a test program in three judicial 
districts, while under H.R. 833, they must administer the program in 
six judicial districts. With regard to the audit requirement, S. 625, 
unlike H.R. 833, does not require that an independent certified public 
accountant conduct the audits.
            Estimate prepared by
    Federal Costs: Susanne S. Mehlman; impact on State, local, 
and tribal governments: Lisa Cash Driskill; impact on the 
private sector: John Harris.
            Estimate approved by
    Paul N. Van de Water, Assistant Director for Budget 
Analysis.

                   XVIII. REGULATORY IMPACT STATEMENT

    Pursuant to paragraph 11(b), rule XXVI of the Standing 
Rules of the Senate, the committee, after due consideration, 
concludes that S. 625 will not have a significant regulatory 
impact.

                 XIX. ADDITIONAL VIEWS OF SENATOR KOHL

    While this bill still needs significant improvement, I 
supported it in Committee, in part because of the continuing 
efforts of Senators Grassley and Torricelli to make this a 
better bill and in part because we need to sharply reduce the 
growing number of personal bankruptcies--and encourage more 
personal responsibility.
    The dramatic rise in bankruptcies is very, very troubling, 
regardless of whether the blame lies with credit card 
companies, a culture that disparages personal responsibility, 
the bankruptcy code itself or, most probably, all of the above. 
While none of us wants to return to the era of ``debtors' 
prison,'' we need to do something to reverse this trend. I 
don't believe this bill is as balanced as the measure the 
Senate passed by a 97-1 vote last year, but I am hopeful that 
we will move in the right direction on the floor.
    Let me give a few examples of how this bill can and should 
be improved. First, and most importantly, we cannot call this 
true ``reform'' or truly restore the stigma to bankruptcy 
unless we stop the most egregious abuses. That means 
terminating the unlimited ``homestead exemption,'' which allows 
millionaire deadbeats to shield their assets in luxury homes in 
states like Florida and Texas, while writing off millions of 
dollars they owe to honest creditors.
    For example, the owner of a failed Ohio S&L paid off only a 
fraction of $300 million in bankruptcy claims, but still held 
on to the multimillion-dollar ranch he bought in Florida. A New 
Jersey couple moved to Florida when their business was about to 
fail, and then used bankruptcy to protect their half-million-
dollar home, yet at the same time writing off most of the 
nearly $2 million they owed to creditors. And a convicted Wall 
Street financier filed bankruptcy while owing at least $50 
million in debts and fines, but still kept his $5 million 
Florida mansion with 11 bedrooms and 21 bathrooms. The list 
goes on and on.
    This is not only wrong, it is unacceptable, and it is 
unfair to residents in the 43 States with exemptions equal to 
or less than $100,000. We need to send the message that 
bankruptcy is a tool of last resort, not just another tool for 
financial planning. Besides, it's hard to take reform seriously 
if we place new burdens on poor debtors, but leave open big 
loopholes for wealthy ones.
    Last year the Senate unanimously supported a $100,000 cap 
that Senator Sessions and I offered, and it also went on record 
saying that ``meaningful bankruptcy reform cannot be achieved 
without capping the homestead exemption.'' But this year's 
version only has a 2-year residency requirement to qualify for 
a State exemption. While that's a first step, it won't deter a 
savvy debtor who plans ahead for bankruptcy and it won't do 
anything about in-State abusers.
    Second, real reform requires a balanced approach that not 
only targets abuses by debtors, but also curbs abuses by 
creditors. The credit card industry has played no small role in 
the explosion of consumer debt and consumer bankruptcies. Mass 
credit card solicitations do more than overload our mail boxes 
and pile up on our kitchen tables. With ``teaser'' rates and 
other potentially deceptive practices, they also tempt many 
individuals to try to borrow their way out of financial 
distress, often leaving them worse off and with little choice 
other than bankruptcy. As an incentive to creditors, perhaps 
the benefits of this measure should be denied to credit card 
companies who deliberately extend credit to those who are 
clearly too irresponsible to use it wisely. On the floor, I 
hope we can address these abuses, or, at the very least, ensure 
that consumers have the information they need to make 
intelligent choices.
    And third, I am very concerned about the restriction on the 
use of ``cramdowns'' for car loans in chapter 13. As a former 
businessman, my sense is that this provision turns the idea of 
a ``secured'' interest on its head. In the everyday world, if 
you make a $10,000 loan to help someone buy a car, your 
``secured'' interest is the value of that car. That's generally 
less than the value of the loan, because once a car moves off 
the lot, it falls in value. So if the lender defaults on a 
loan, the creditor is only certain to get his ``secured'' 
interest back--the car--and perhaps no more. Thus, if the car 
is worth $7,000, that $7,000 is all the creditor is guaranteed. 
He can pursue the remaining $3,000 by filing a lawsuit or 
hiring a collection agency, but he stands in the same shoes 
with respect to that debt as any other unsecured creditor.
    Comparably, in chapter 13 repayment plans, where secured 
creditors get priority, they currently get guaranteed payment 
of their ``secured'' interest--that is the $7,000 car value. 
But that creditor stands the same chance of recovering the 
remaining $3,000 as other unsecured creditors.
    This bill, however, says that in chapter 13, the 
``secured'' interest should be $10,000, the full value of the 
loan. That defies common sense. Why should a ``secured'' 
creditor have more powerful rights inside of bankruptcy than 
outside? And why should car loans get better treatment than 
loans to purchase washing machines, farm equipment or boats? 
Even worse, increasing the amount of ``secured'' debts will 
only make it harder for debtors to successfully complete 
chapter 13 plans, which already fail at an abysmal 67 percent 
rate. Indeed, one of the main goals of this bill is to direct 
more people to chapter 13 in order to recover debts that 
otherwise would be discharged under Chapter 7. Yet this 
provision makes it more likely that 13's will fail--and that 
the promise of more repayments will go unfulfilled. Creditors 
who don't get repaid would lose out, and so would debtors who 
are left with no recourse. I am very concerned about this 
provision--so are many of my colleagues--and I may offer an 
amendment to strike it when this bill comes to the floor.

                                                         Herb Kohl.

            XX. ADDITIONAL VIEWS OF SENATOR DIANNE FEINSTEIN

    I write in concurrence with the majority views supporting 
passage of S. 625, the Bankruptcy Reform Act of 1999. Our 
country faces a crisis of bankruptcy filings. In 1998, the 
Administrative Office of U.S. Courts determined there were 
1,444,812 bankruptcy filings, the fourth consecutive year of 
record filings. More than one in a hundred households will file 
a bankruptcy case this year.
    This growth in bankruptcies is especially alarming as the 
U.S. economy moves into its eighth year of expansion. While our 
country is enjoying this unprecedented prosperity, it seems 
counterintuitive that so many families are filing for 
bankruptcy. The majority attributes part of this surge in 
filings to a lessening of the moral stigma attached to 
bankruptcy and notes that ``the bankruptcy code's generous, no-
questions-asked policy of providing complete debt forgiveness 
under chapter 7'' encourages a lack of personal responsibility. 
I agree that people who can pay back their debts should pay 
back their debts. Moreover, bankruptcy should be a last-resort 
legal option, and not a vehicle for avoiding personal 
responsibility.
    However, I am writing additional views because I am 
concerned that this bill does not address a root cause of many 
bankruptcies--the explosion of consumer credit.
    It's a simple matter of arithmetic. The typical family 
filing for bankruptcy in 1998 owed more than one-and-a-half 
times its annual income in short-term, high-interest debt. This 
means that the average family in bankruptcy, with a median 
income of just over $17,500, had $28,955 in credit card and 
other short-term high interest debt.
    Studies by the Congressional Budget Office, the FDIC, and 
independent economists all link the rise in personal 
bankruptcies directly to the rise in consumer debt. As consumer 
debt has risen to an all-time high, so has consumer 
bankruptcies.
    Any meaningful bankruptcy reform must address the 
irresponsible actions of certain segments of the credit card 
industry. Last year, the credit card industry sent out a record 
3.45 billion unsolicited offers. That's over 30 solicitations 
to every household in America. The number of solicitations 
jumped by 15 percent last year alone.
    There are well over a billion cards in circulation--a dozen 
credit cards for every household in the country. Three-quarters 
of all households have at least one credit card. Not 
surprisingly, credit card debt has increased with the flood of 
solicitations. Credit card debt doubled between 1993 and 1997: 
The amount of credit card debt outstanding at the end of 1997 
was $422 billion, twice as much as the amount in 1993.
    I am particularly concerned that the credit card 
solicitations are growing fastest among debtors with the lowest 
incomes. From 1997 to 1998, the two populations with the 
highest growth in credit card solicitations were college 
students and those with incomes of less than $10,000 per year. 
The result is not surprising: 27 percent of the under-$10,000 
families have consumer debt that is more than 40 percent of 
their income.
    During this 2-year debate on bankruptcy, my staff has 
contacted numerous credit card issuers. The overwhelming 
majority of these companies do not check the income of the 
consumers being solicited. In other words, credit card issuers 
have no idea whether persons to whom they issue credit cards 
have the means to pay their bills each month.
    Because credit card issuers are failing to screen their 
clients, credit cards are being offered to persons who are 
unable to afford them. I would like to offer just a few 
examples of these inappropriate solicitations. A constituent 
from San Ramon, CA, wrote that her 7-year-old son received a 
``charter membership offer'' for a Visa Signature Card. Both 
sons of a staff member who works in my San Francisco office 
received credit offers--and they were 12 and 15 years old.
    A constituent from Lakewood, CA, describes the situation 
aptly: ``What really bugs me about this is that credit card 
companies send out these solicitations for their plastic cards 
and then when they get burned, they start crying foul. They 
want all kinds of laws passed to protect them from taking hits 
when it's their own practices that caused the problem.''
    If bankruptcy reform is to address the wishes of the 
American people, Congress must place reasonable restrictions in 
the bankruptcy process on irresponsible creditors. In an April 
1999 survey by Opinion Research Corporation International, 74 
percent of the public said that credit card companies share 
responsibility for the increase of personal bankruptcies.
    When S. 625 comes to the floor, I intend to propose an 
amendment to put reasonable restrictions on those irresponsible 
lenders who have pushed vulnerable borrowers over the edge into 
bankruptcy. This amendment would limit the ability of credit 
card issuers to file motions in bankruptcy against debtors if 
the original loan was of high-interest or made to a highly-
indebted consumer.
    I am hopeful we can make this simple reform to this 
legislation. The underlying message of S. 625 is that our 
bankruptcy laws should reward responsibility. This maxim should 
apply to both creditors and debtors. While it is clear that our 
bankruptcy system needs reform, our laws should not give 
irresponsible issuers of credit the means to use the bankruptcy 
laws as a collection agency for loans they never should have 
offered.

                                                  Dianne Feinstein.

         XXI. ADDITIONAL VIEWS OF SENATORS TORRICELLI AND KOHL

    While we believe that S. 625 is significantly improved over 
last year's Conference Report, we still have concerns about the 
bill as it is reported from Committee. We believe that S. 625 
does not take necessary steps to prevent the over 1 million 
personal bankruptcies filed each year and may, in some 
important respects, fail to strike an equitable balance between 
debtors and creditors.
    There are genuine concerns that unscrupulous individuals 
are abusing the current bankruptcy system and some debtors are 
being allowed to erase debt that they have the financial 
ability to repay. We must ensure, however, that as we make it 
more difficult for the unscrupulous to manipulate and abuse the 
bankruptcy system, we do not penalize the many families who 
legitimately need a fresh start. The majority of people who 
file for bankruptcy are low to middle income working class 
families. They turn to the consumer bankruptcy system for help 
in managing overwhelming financial problems. They are honest, 
hardworking Americans who have fallen into financial trouble as 
a result of unexpected life events, such as a divorce, a 
medical crisis, or the loss of a job.
    Last year, the Senate voted 97-1 to pass a balanced, 
comprehensive bankruptcy bill. Unfortunately last year's 
Conference Report abandoned many of those principles. We 
support the goals of bankruptcy reform because of the 
importance of preventing and catching abuse, but believe that 
the principles found in last year's Senate bankruptcy bill must 
once again be adequately addressed.

                         The Bankruptcy Problem

    In recent years, bankruptcy filings have increased to 
record levels. In 1997, 1.4 million persons filed for 
bankruptcy, representing an increase of 18.7 percent from 1996 
and an increase of more than 350 percent since 1980. Some of 
these filings were made by those seeking to abuse the 
bankruptcy system, but far more were made by people and 
families who encountered legitimate, catastrophic financial 
difficulties.
    A few facts will help to put this incredible number of 
filings into perspective. In 1975, total household debt was 24 
percent of aggregate household income. Today, household debt is 
more than 100 percent of aggregate household income.\1\ Thus, 
in the last 23 years, the average debt burden of the average 
American family has quadrupled. Not surprisingly, this higher 
debt burden has made more and more American families vulnerable 
to financial catastrophe. A job loss, layoff, or income decline 
can result in debts spinning out of control very quickly. A 
divorce, a car crash, a health emergency, a sick parent , or a 
lawsuit can lead to a financial emergency.
---------------------------------------------------------------------------
    \1\ See Statistical Abstract of the United States.
---------------------------------------------------------------------------
    The evidence indicates that most personal bankruptcies 
filed are not for abusive purposes. Several facts illuminate 
this case: According to the National Bankruptcy Review 
Commission, in 1977 there were 0.74 bankruptcies for every 
million dollars of consumer debt; in 1997, there were 0.73 
bankruptcies for every million dollars of consumer debt.\2\ 
Studies prepared by the Congressional Budget Office indicate 
that personal bankruptcy filings increase almost in lockstep 
with increases in household debt-to-income ratios.\3\
---------------------------------------------------------------------------
    \2\ Report of the National Bankruptcy Review Commission (1997) at 
85.
    \3\ Statement of Kim Kowalewski, Chief, Financial and General 
Macroeconomic Analysis Unit, Congressional Budget Office, before the 
Subcommittee on Administrative Oversight and the Courts, Committee on 
the Judiciary, U.S. Senate at 4 (April 1997). See also Diane Ellis, 
`The Effect of Consumer Interest Rate Deregulation on Credit Card 
Volumes, Charge-offs, and the Personal Bankruptcy Rate,' Bank Trends 
98-05 (Division of Insurance, FDIC February 1998).
---------------------------------------------------------------------------
    These facts persuade us of two things. First, most people 
are going into bankruptcy because of debt, not because the are 
lazy, shiftless, and morally corrupt. Second, any effort to 
address the bankruptcy problem must not only deal with the 
personal responsibility of the debtor but must also deal with 
the corporate responsibility of the creditor.

                        The Credit Card Industry

    Even as we debated bankruptcy reform in Congress, credit 
card solicitations increased by 15 percent last year, totaling 
3.45 billion. That is more that one solicitation per month for 
every man, woman and child in the United States. In a little 
over 4 years, the credit card companies offered about $1 
million of credit to every household in the United States.\4\ 
Today, 55 to 60 million households carry a credit card balance 
from month-to-month. They have an average balance of $7000 and 
pay more than $1000 a year in interest and fees. It should be 
no surprise that in the last 4 years, outstanding credit card 
debt has doubled so that by the end of 1997 $422 billion in 
credit card loans were outstanding.\5\
---------------------------------------------------------------------------
    \4\ George M. Salem and Aaron C. Clark, GKM Banking Industry 
Report, Bank Credit Cards: Loan Loss Risks are Growing, 5 (June 11, 
1996).
    \5\ OCC Advisory Letter 96-7, September 26, 1996, (96-7.txt at 
www.occ.treas.gov); FDIC quarterly Banking Profile Graph Book, Fourth 
Quarter 1997.
---------------------------------------------------------------------------
    Direct solicitations of both college and high school 
students reached unprecedented heights. In New York, nearly 
every member of a group living house for people with learning 
disabilities received credit card applications. One of them, 
who could sign his name but could not add or subtract, had 13 
credit cards with more than $11,000 in debt outstanding. His 
onlyincome is $7,000 a year from Social Security disability 
benefits.\6\
---------------------------------------------------------------------------
    \6\ Dan Herbeck, ``Where Credit Isn't Due Developmentally Disabled 
Become Victims,'' BuffaloNews, April 7, 1998.
---------------------------------------------------------------------------
    Credit card usage has grown fastest in recent years among 
debtors with the lowest incomes. Since the early 1990's, 
Americans with incomes below the poverty line nearly doubled 
their credit card usage, and those in the $10,000 to $25,000 
income bracket came in a close second in the rise in debt. The 
result is not surprising: 27 percent of the under $10,000 
families have consumer debt that is more than 40 percent of 
their income. Nearly 1 in 10 has at least one debt that is more 
than 60 days past due.\7\
---------------------------------------------------------------------------
    \7\ Federal Reserve Bulletin, Family Finances in the United States: 
Recent Evidence from the Survey of Consumer Finances, Table 14 
Aggregate and median ratios of debt payments to family incomes, and 
shares of debtors with ratios above 40 percent and those with any 
payment 60 days or more past due, by selected family characteristics, 
1989, 1992, and 1995.
---------------------------------------------------------------------------
    At the same time, some in the credit card industry have 
instituted practices that effectively push overextended 
borrowers into deeper and deeper trouble. Late fees, over-limit 
fees, teaser rates, and other hidden charges and dramatic jumps 
in interest rates mean that a person who suffers a minor 
financial setback can quickly find himself speeding toward 
financial catastrophe. Banks often almost double the interest 
rate they charge for a consumer who misses two payments. 
Getting behind on you credit cards today is not just a small 
problem that can be cured easily with a new job at the same 
salary or with a small loan from a friend willing to help. 
Moreover, evidence indicates that creditors are unwilling to 
help people who find themselves in financial trouble. A survey 
of people who declared bankruptcy prepared by Visa in 1996 
found that two-thirds of the people surveyed reported that 
creditors did not try to work with them to help them avoid 
filing for bankruptcy.\8\
---------------------------------------------------------------------------
    \8\ Visa, ``Consumer Bankruptcy: Bankruptcy Debtor Survey,'' 10 
(July 1996).
---------------------------------------------------------------------------
    Consumers are very often unaware of the obligations they 
are undertaking--needed disclosures are lacking and 
solicitations and bills are virtually incomprehensible. For 
example, credit card companies do not indicate how long it 
would take to pay off your debt by paying only your minimum 
payments. Industry analysts estimate that using a typical 
minimum monthly payment rate on a credit card it would take 34 
years to pay off a $2,500 loan and total payments would exceed 
300 percent of the original principal.\9\ Other examples 
include the terms on low introductory teaser rates and late 
fees.
---------------------------------------------------------------------------
    \9\ Salem & Clark, supra note 4, at 25.
---------------------------------------------------------------------------
    Too many Americans pay only the monthly minimum without 
knowing that at that rate it will take them years to pay off 
the full amount. They transfer balances to cards with low 
introductory rates only to be surprised by higher interest 
rates on other purchases. Not surprisingly, consumer confusion 
mixed with tantalizing offers and aggressive solicitation from 
credit card companies is a recipe for financial trouble.
    While we recognize the jurisdictional issues raised in the 
Committee report, we believe that true bankruptcy reform must 
assure that consumers have clear and comprehensive information 
about credit card debt and that the institutions that engage in 
risky and predatory lending are neither encouraged nor 
protected by the bankruptcy law.

                             Means Testing

    A level of discretion for bankruptcy judge to determine 
which debtors truly have the ability to repay a sufficient 
portion of their debts is a necessary ingredient in the bill's 
means test mechanism. Although the bill includes more 
discretion than last year's Conference Report Committee, we 
believe that still more discretion should be provided. The 
system gains nothing by forcing debtors who lack the ability to 
pay into repayment plans. It virtually guarantees the failure 
of that plan, injuring not only the debtor, but each of his 
creditors in the process.
    For example, the current means test in S. 625 uses IRS 
standards, otherwise used in determining a taxpayer's ability 
to pay a delinquent tax liability. We believe that the IRS 
standards are inappropriate as a basis for determining a 
debtor's living expenses in bankruptcy. The standards were not 
formulated with bankruptcy in mind and provide virtually no 
flexibility to account for the debtor's actual expenses. 
Senators Grassley and Torricelli have asked Attorney General 
Reno and Secretary of the Treasury Rubin to either modify the 
IRS standards to reflect the needs of debtors in bankruptcy or 
to draft alternative bankruptcy appropriate standards.
    We will continue to work with the Majority and the 
Administration to craft a plan that will provide for a 
reasonable level of judicial discretion and bankruptcy 
appropriate standards for means testing.

                   Liability of the Debtor's Attorney

    S. 625 currently includes a provision which would make a 
debtor's attorney liable if he or she was not substantially 
justified in filing the petition in chapter 7. We believe that 
this would have a chilling effect on the system of justice in 
our nation. A debtor's attorney should not be faced with a 
financial disincentive to file in chapter 7 unless in so doing 
they violate rule 11 standards of attorney conduct. To require 
a penalty in any other case is not only unjust, but will force 
attorneys to run afoul of their ethical obligations to act in 
their client's best interest. In Committee, an amendment was 
offered by Senator Feingold to eliminate this provision from 
the bill. The Feingold amendment was narrowly defeated by a 
vote of 9-9. We will continue to support efforts to drop this 
provision from the S. 625.

                     Non-dischargeability of Debts

    In crafting a fair and balanced bankruptcy bill, we have 
sought to ensure that we do not so limit those debts that can 
be discharged at the close of chapter 13 repayment plan, that 
we effectively deny the debtor a fresh start--the principle 
which is at the very heart of the bankruptcy system. In some 
respects, S. 625 achieves this goal, but in others it falls 
short. For example, the bill requires that when a creditor 
alleges that a debt has been fraudulently incurred and is 
therefore non-dischargeable, the debtor bears the burden of 
disproving that allegation. To require that the debtor assume 
this burden is both unworkable and unfair. Moreover, it flies 
in the face of a principle that is at the heart of our legal 
tradition and is reflected in both civil and criminal court--
the accused is innocent until proven otherwise. We believe that 
in order for S. 625 to strike the proper balance between 
debtors and creditor, the burden of proof in such matters as 
this, must rest on the proper party.

                             Reaffirmations

    Reaffirmations are one of the tools on which debtors can 
rely in getting back on their feet. They are also, however, an 
area of current law in which debtors are afforded insufficient 
protection from coercion by a creditor and may ultimately end 
up reaffirming a debt that they are unable to afford. The 
provisions in S. 625 are an improvement on both last year's 
Conference Report and on current law, but they do not go far 
enough. We believe that stronger penalties against creditors 
who attempt to coerce the debtor into signing a reaffirmation 
are also needed to deter abusive reaffirmations and protect the 
debtor from the often disproportionate resources at the 
creditors disposal.

                               Conclusion

    We offer these additional views in an effort to ensure that 
any eventual legislation is both fair and balanced, ends the 
abuses of the system, protects those who truly need the 
protection of the bankruptcy code, and works to reduce the 
troubling level of bankruptcy in America.

                                   Robert Toricelli.
                                   Herb Kohl.

 XXII. MINORITY VIEWS OF SENATORS LEAHY, KENNEDY, FEINGOLD, AND SCHUMER

                              Introduction

    There is no doubt that a substantial number of American 
families are turning to the consumer bankruptcy system and the 
financial protections it offers. Addressing the high number of 
consumer bankruptcies should have several components. Where 
there is fraud and abuse we must take steps to reduce and 
eliminate it. However, even by the accounts of the strongest 
proponents of reform, the percentage of bankruptcy cases 
involving debtor abuse is relatively small. Thus, even if this 
legislation were 100 percent successful in deterring debtor 
abuse, the filing rate would still be high. If our goal is to 
reduce the bankruptcy filing rate more significantly, steps 
must be taken to reduce the number of individuals and families 
who find themselves in need of bankruptcy protection and debt 
relief. Taking this step requires an understanding of the 
underlying causes of bankruptcy in the vast majority of cases 
that involve no debtor abuse of any kind.
    In 1997, more than 1.3 million families filed for 
bankruptcy; more than 1.4 million filed in 1998. Although 1997 
filings were over than 19 percent higher than 1996 filings, the 
growth in filings between 1997 and 1998 was 2.7 percent, far 
lower than predicted. While bankruptcy filings did not reach 
the expected 15 percent increase over 1997, we saw that 
increase elsewhere--in the number of credit card 
solicitations.\1\
---------------------------------------------------------------------------
    \1\ Press Release of the National Consumer Law Center, Consumers 
Union, Consumer Federation of America, and U.S. PIRG (Apr. 19, 1999); 
Miriam Kreinin Souccar, ``Postal Solicitations For Credit Cards Again 
Set Record,'' AMERICAN BANKER (April 8, 1999).
---------------------------------------------------------------------------
    The smaller increase in bankruptcy filings has prompted 
economist Lawrence Ausubel to declare that the bankruptcy 
``crisis''--if there was one--is over.\2\ Whether or not 
Professor Ausubel's declaration proves to be correct, the 
significant decrease in the growth of bankruptcy filings should 
serve as a reminder that we cannot overreact to ``emergency'' 
requests, primarily from one industry, to overhaul the system, 
especially when we are dealing with a system as collective and 
complex as bankruptcy. If we are going to address abuses in the 
system, we must approach our task with care.
---------------------------------------------------------------------------
    \2\ Lawrence M. Ausubel, A Self-Correcting ``Crisis'': The Status 
of Personal Bankruptcy In 1999, University College London Working Paper 
(March 10, 1999) (personal bankruptcy filing rate per thousand 
population grew at an annual rate of only 1.5 percent in the last year, 
and at seasonally adjusted annual rate of 1 percent in last quarter; 
credit card chargeoffs are flat or improving); Lawrence M. Ausubel, 
Personal Bankruptcies Begin Precipitous Drop: 1999 Data Update, 
University of Maryland Department of Economics Working Paper (May 3, 
1999) (early indications are that per capita personal bankruptcy rate 
has declined approximately 7 percent from last year; default rates on 
credit cards are also now declining).
---------------------------------------------------------------------------

                Shortcomings in the Deliberative Process

    In September of last year, many members of the Senate 
worked hard to improve the Consumer Bankruptcy Reform Act of 
1997, which began as an imbalanced piece of legislation. After 
serious negotiations, the result was a bill that was 
significantly more balanced in its approach.\3\ That bill 
garnered nearly unanimous support, passing by a vote of 97 to 
1. Rather than using that more balanced product as the starting 
point for reform this year, bankruptcy reform unfortunately 
regressed. In producing the Conference Report on H.R. 3150 last 
year, the conference committee excluded all Senate Democrats 
and discarded or altered beyond recognition the provisions that 
were the product of our earnest negotiations and compromise. S. 
625 is based largely on that Conference Report, which has been 
roundly criticized for its hard line approach, arbitrariness, 
sloppy drafting, and special interest flavor.
---------------------------------------------------------------------------
    \3\ See also Letter from Acting Assistant Attorney General Dennis 
K. Burke to Senate Judiciary Chairman Orrin Hatch (Apr. 9, 1999) 
(discussing the Bankruptcy Reform Act of 1999) (``Last year the 
Administration expressed its support for the bankruptcy reform 
legislation that passed the Senate with a virtually unanimous vote * * 
* Although we thought that the Senate bill could be further improved, 
we believed that the extraordinary bipartisan support for the Senate 
bill was an endorsement of balance and moderation'').
---------------------------------------------------------------------------
    S. 625 also goes much farther in overhauling the bankruptcy 
system than last year's Senate bill by venturing into complex 
areas of business bankruptcy. At a time when the business 
community predicts a host of workouts and reorganizations in a 
variety of industries, this bill forges ahead with untested and 
undebated changes to the business bankruptcy system. This 
approach is especially troublesome in light of two new 
studies--conducted on behalf of the nonpartisan American 
Bankruptcy Institute and the Executive Office for U.S. 
Trustees, a division of the Department of Justice--that have 
been released since the production of the Conference Report on 
H.R. 3150, on which S. 625 is based. In addition, in the months 
between the Conference Report and the introduction of S. 625, 
we have received additional information regarding systematic 
creditor abuse. At the very least, all of this new information 
should prompt us to take a second look.
    Last year, there were only two days of subcommittee 
hearings on the issue of consumer bankruptcy and one hearing on 
the proposed bill before the Committee passed legislation 
embodying the most ambitious changes in the bankruptcy law in 
the 100 years of the modern bankruptcy system. This already was 
a dramatic departure from the attention Congress historically 
has given to major bankruptcy reform legislation. This year, 
however, there has been virtually no deliberative process, 
notwithstanding the fact that the bill is markedly different 
than last year's Senate bill and tackles entirely new sets of 
issues. Although the Subcommittee on Administrative Oversight 
scheduled one hearing to be held jointly with theHouse 
Subcommittee on Commercial and Administrative Law, voting prevented 
Senators from attending during the witness' testimony. Even worse, 
there were no hearings in the Senate and no Subcommittee mark up 
sessions.
    By comparison, in 1978, the last time Congress reformed the 
bankruptcy laws in such a significant fashion, the Subcommittee 
on Improvements in Judicial Machinery held 21 days of hearings, 
and the Full Committee held three more hearings on the bill. 
Similarly, the House Subcommittee on Civil and Constitutional 
Rights held 35 days of hearings. The House Subcommittee spent 
42 hours debating the Bankruptcy Reform Act of 1978 in 22 
separate markup sessions, during which the legislation was 
reviewed line-by-line. Over 120 amendments were offered and 
over 100 were adopted. With the use of a 700-page briefing 
book, the full Committee markup took 3 days, and 6 amendments 
were adopted on the unanimous, bipartisan Subcommittee bill. If 
this was the high water mark for careful deliberation, we very 
well may have set the low water mark this year.
    The Committee also gave little consideration to the report 
of the bi-partisan National Bankruptcy Review Commission, 
created by Congress to study the bankruptcy system and make 
recommendations for change, that sent its findings and 
recommendations to Congress in October 1997. When the 
Commission was authorized in 1994, Congress specifically 
pronounced itself ``generally satisfied with the basic 
framework established in the current Bankruptcy Code,'' and 
counseled the Commission ``not [to] disturb the fundamental 
tenets of current law.'' While the Commission did not reach 
unanimous agreement in some areas of consumer bankruptcy, the 
legislation diverges sharply from the recommendations of both 
the majority and the four-person minority. Although S. 625 
adopts some of the Commission's recommendations, it primarily 
consists of proposals that were specifically rejected or not 
acted upon by the Commission.
    Keeping in mind its mandate, the Commission held 21 public 
meetings, which were attended by 2600 people and entailed 602 
participants. The Commission adopted 172 proposals, which were 
forwarded to Congress. Even if we choose to reject the findings 
of the Commission, we have done ourselves a disservice by 
failing to take advantage of the rich record they created of 
views expressed by a range of parties throughout the country. 
Our failure to take heed of the near unanimous disapproval of 
this bill by nonpartisan experts, bankruptcy judges, and 
bankruptcy trustees is equally troubling.

      Studies on Ability To Pay, Causes and Effects of Bankruptcy

    Many proponents of the legislation argue that consumer 
abuses have precipitated the rise in filings. Accordingly, they 
believe sweeping legislative reform is necessary to curb abuses 
and eliminate so-called, ``bankruptcies of convenience,'' which 
we are told impose a bankruptcy tax on each American family of 
several hundred dollars per year. In assessing the extent to 
which these are accurate statements, it is important to review 
some of the relevant data.
    Supporters of a bankruptcy overhaul initially relied on an 
October 1997 Credit Research Center report entitled Personal 
Bankruptcy: A Report on Petitioners Ability to Pay as a 
foundation for the claim that most debtors could repay a 
significant amount of their debts. In fact, the study estimated 
that 30 percent of chapter 7 debtors in the sample could pay at 
least 21 percent of ``nonhousing, nonpriority'' debts (which is 
not limited to unsecured debts and therefore includes items 
such as car loans). But the General Accounting Office (GAO) 
found that the Center's report had several methodological flaws 
that make both its validity and its reliability suspect. The 
GAO concluded that ``[t]he methods used in the Center's 
analysis do not provide a sound basis for generalizing the 
Center report's findings to the annual 1996 filings in each of 
the 13 locations nor to the national population of personal 
bankruptcy filings.''
    Thereafter, VISA U.S.A. and MasterCard International funded 
several additional studies, including one by the WEFA Group. 
The WEFA Group determined that losses due to 1997 personal 
bankruptcies totaled more than $44 billion, more than 90 
percent of which resulted from chapter 7 filings. This figure 
apparently is the source of the statistic that bankruptcy 
imposes a hidden tax on each American family of $400 per year, 
which recently has increased to $550 a year.\4\ Assuming that 
the filing rate grew 15 percent over the following 3 years, 
WEFA concluded that ``the American economy would have to absorb 
a cumulative cost of $221.2 billion.'' In a letter to Rep. 
Martin Meehan, Richard Stana, Associate Director for 
Administration of Justice Issues for the General Accounting 
Office stated that he could not determine the validity of the 
WEFA report's conclusion and that ``we believe the report's 
estimates of creditor losses and bankruptcy system costs should 
be interpreted with caution.'' \5\ Whether or not these 
predictions have a sound basis, the 1998 filing rate was only a 
2.7 percent increase over the 1997 filing rate and therefore we 
cannot rely on these figures without further calculation and 
adjustment.
---------------------------------------------------------------------------
    \4\ Creditor advocates make this claim without corresponding 
support.
    \5\ See GAO/GGD-98-116R, The Financial Costs of Personal 
Bankruptcy, at p.6.
---------------------------------------------------------------------------
    VISA U.S.A. and MasterCard International also funded two 
studies by Ernst & Young LLP. The assumptions used to calculate 
debtors' ability to pay in the Ernst & Young studies differed 
from the earlier Credit Research Center report, and also 
yielded different results. The most recent Ernst & Young study 
of a nationally representative sample predicted that about 10 
percent of chapter 7 debtors would be caught by a means test 
for ability to pay 25 percent or more of unsecured debts or 
$5,000 over 5 years--but only if they remained in payment plans 
for 5 full years, if their incomes did not decline, and if 
their expenses did not increase, among other assumptions. All 
of their assumptions also would have to come true in order to 
re-coup the estimated $3 billion in debt over 5 years.
    Professors Marianne Culhane and Michaela White, who also 
conducted a study of debtors' ability to pay for the 
nonpartisan American Bankruptcy Institute, refer to the Ernst & 
Young recovery estimates as ``impossible dreams.'' Taking a 
slightly different approach in theircalculations,\6\ Culhane 
and White reported in House Subcommittee testimony that they estimate 
the percentage of can-pay chapter 7 debtors to be 3.6 percent and debt 
recovery likely would be $450 million over 5 years. Even using the 
assumptions used by Ernst & Young, Culhane and White nonetheless found 
that creditors would recoup far less than the amount predicted by Ernst 
& Young from the can-pay debtors who otherwise would file for chapter 7 
in any given year.\7\
---------------------------------------------------------------------------
    \6\ The General Accounting Office, which had previously audited and 
raised issues regarding the Ernst & Young ability to pay studies, found 
that the differences in the conclusions between Ernst & Young and 
Culhane and White were at least partially attributable to varying 
methodological approaches, in addition to sampling differences.
    \7\ Culhane and White also noted that the recent change to the 
Bankruptcy Code permitting charitable contributions will permit 
sophisticated filers to avoid can-pay status.
---------------------------------------------------------------------------
    The most recent ability to pay study is a nationwide study 
of chapter 7 debtors undertaken by the Executive Office for 
United States Trustees, which is a division of the Department 
of Justice. The EOUST concluded that ``only a small percentage 
of current chapter 7 debtors have the ability to pay any 
portion of their unsecured debts.'' \8\ It further concluded 
that ``the means tests contained in the Conference bill would 
result in less than $1 billion annually being returned to 
unsecured creditors.'' The EOUST also noted that the currently 
low chapter 13 completion rate suggests that a 5 year repayment 
schedule may lead to overly optimistic estimates of repayment. 
In addition, the administrative costs of the new chapter 13 
regime would have to be taken into consideration to gain an 
accurate assessment of the costs and benefits of the proposed 
system.
---------------------------------------------------------------------------
    \8\ Executive Office for United States Trustees, incomes, debts, 
and repayment capacities of recently discharged chapter 7 debtors, p. 
10 (January 1999).
---------------------------------------------------------------------------
    Even if we accepted the most optimistic estimates of 
ability to pay offered by the credit industry study, it remains 
the case that the overwhelming majority of chapter 7 debtors 
cannot pay their debts. Those numbers suggest that a decline in 
social stigma associated with bankruptcy cannot be the sole 
cause of increased bankruptcy filings.\9\ Much of the increase 
in bankruptcy filings can be attributed to job loss, divorce, 
increasing health care costs, and declining real wages,\10\ all 
of which affect the lives of millions of families 
notwithstanding the stock market and this period of 
prosperity.\11\
---------------------------------------------------------------------------
    \9\ Some researchers identify decreasing stigma as at least 
partially responsible for the increase in filings, see, e.g., David B. 
Gross and Nicholas S. Souleses, Explaining the Increase in Bankruptcy 
and Delinquency: Stigma Versus Risk-Competition (Preliminary draft 
1998) (analyzing account information provided by credit card issuers 
and determining that other factors explain only small changes in 
default rates, and thus higher defaults must be due to decline in 
stigma); F.H. Buckley & Margaret F. Brinig, The Bankruptcy Puzzle, 27 
J. Leg. Stud. 187 (1998). Economist Michelle White has argued that at 
least 15 percent of American households would benefit financially by 
discharging their debts in bankruptcy, and this figure would be higher 
if households acted strategically, Michelle White, Why Don't More 
Households File for Bankruptcy, University of Michigan Department of 
Economics Working Paper 98-03 (March 25, 1998), and yet only a fraction 
of those families actually use the bankruptcy system. Some economists 
and scholars not only are skeptical of the stigma argument, but perhaps 
more significantly are concerned that restricting bankruptcy laws to 
heighten stigma or for other purposes may very well lead to a higher 
consumer default rate. See, e.g., David A. Moss and Gibbs A. Johnson, 
The Rise of Consumer Bankruptcy: Evolution, Revolution, or Both?, 
Harvard Business School Division of Research Working Paper 98-104 
(Rev'd Oct. 1998); Lawrence M. Ausubel, Personal Bankruptcies Begin 
Precipitous Drop: 1999 Data Update, University of Maryland Department 
of Economics Working Paper (May 3, 1999); Letter from Douglas Baird, 
Harry A. Bigelow Distinguished Service Professor, University of Chicago 
Law School, Vice Chair of the National Bankruptcy Conference, to 
Speaker Dennis Hastert (April 30, 1999) (``By limiting the scope of 
bankruptcy relief (through means testing and other devices), we do 
discourage any given individual in bad financial straits from filing 
for relief, but these same measures will (for the same reasons) give 
lenders a greater incentive to lend in the first instance. In the 
abstract, one cannot say which effect will be greater, and this issue 
was given virtually no attention during any of the hearings on H.R. 833 
or its predecessor in the last Congress.''); Mark M. Zandi, Easy 
Credit, Profligate Borrowing, Tough Lessons, Regional Financial Review 
(January 1997). One also might question how this legislation will 
heighten the stigma of bankruptcy, particularly if the credit industry 
continues to offer postbankruptcy credit. See Michael Staten, The 
Impact of Post-Bankruptcy Credit on the Number of Personal Bankruptcies 
Credit Research Center, Krannert School of Management, Purdue 
University, Working Paper No. 58, (January 1993); Letter from Robert 
Mitch, American Bankruptcy Service, re: Fresh Start Visa 
Distributorship (December 18, 1998) (offering $10 to debtors' lawyer 
for every client who applies for this credit card).
    \10\ See, e.g., Report of the National Bankruptcy Review 
Commission, Vol. 1, pp. 84-86 (Oct. 20, 1997); Teresa A. Sullivan, 
Elizabeth Warren, and Jay Lawrence Westbrook, Consumer Debtors Ten 
Years Later; A Financial Comparison of Consumer Bankrupts 1981-1991, 68 
Am. Bank. L. J. 121 (1994); Teresa A. Sullivan, Elizabeth Warren, and 
Jay Lawrence Westbrook, From Golden Years to Bankrupt Years, Norton 
Bank. L. Adviser, p. 4 (July 1998) (finding that job and medical 
problems are the reasons most frequently by bankrupt debtors over 50 as 
the reason they filed); SMR Research Corp., The Personal Bankruptcy 
Crisis (1997) (Finding, among other things, that bankruptcy rates tend 
to rise with divorce rates when evaluated at county level); Ian 
Domowitz and Robert L. Sartain, Determinants of the Consumer Bankruptcy 
Decision, J. Fin. Vol. Liv, No. 1 (1999) (Using 1983 random sample 
compiled by General Accounting Office, finding medical and credit card 
debt to be strongest contributors to bankruptcy). Credit industry 
papers and studies have acknowledged that bankruptcies are not entirely 
explained by lack of personal responsibility and declines in stigma. 
See, e.g., Lawrence Chimerine, Americans in Debt: The Reality, p. 24 
(MasterCard International 1997) (``Stagnation in real wages during the 
last 20 years and the growing disparity in income and wealth, * * * 
have almost certainly contributed to the rise in personal bankruptcies. 
Declines in income caused by job loss make it more difficult for those 
affected to service previously accumulated debt.''); Bankruptcy 
Petition Study, Executive Summary, VISA Consumer Bankruptcy Reports 
(April 1997) (``The single most important factor affecting an 
individual's decision to file for bankruptcy appears to be a decline in 
income, coupled with an inability to adjust lifestyles sufficiently to 
accommodate the reduced level of income); Consumer Bankruptcies: Causes 
and Implications, VISA Consumer Bankruptcy Reports (July 1996) 
(multiple regression analysis study finding that bankruptcy filings 
significantly correlated with following factors: changes in employment 
growth rates; increases in the share of population aged 25-44; 
increases in the divorce rate; declines in median existing home prices; 
social factors trends; number of bank credit cards accounts per adult; 
and ratio of consumer installment debt service to personal disposable 
income).
    \11\ Hearing on Consumer Debt and Bankruptcy, Subcommittee on 
Administrative Oversight and the Courts, Committee on the Judiciary, 
United States Senate (April 11, 1997) (Statement of Kim J. Kowalewski, 
Chief, Financial and General Macroeconomic Analysis Unit, Macroeconomic 
Analysis Division, Congressional Budget Office) (Although bankruptcies 
increase during recessions, data on bankruptcies throughout the 20th 
century show that nonbusiness bankruptcies ``have tended to increase 
even more dramatically during economic expansions. Indeed * * * most of 
the rise in nonbusiness bankruptcies during the postwar period occurred 
apart from recessions'').
---------------------------------------------------------------------------
    Perhaps more significantly, financially overburdened 
consumers, particularly those in bankruptcy, are carrying more 
short-term, high interest debt, and, as a result, they are more 
susceptible to financial failure. Independent academic studies 
and government studies of the increase in bankruptcy 
demonstrate that the rise in bankruptcy filings follows equally 
sharp rises in the amount of consumer debt per household. 
Harvard Business School Professor David Moss and his co-author 
Gibbs Johnson note that ``the evidence suggests that shifts in 
the volume of and distribution of consumer credit--rather than 
declining stigma--are the most likely sources of the recent 
surge in consumer filings.'' They add that another explanation 
for the surge of filings that began in the late 1980s ``is that 
consumer creditors began reaching substantially further down 
into the income distribution beginning in the mid 1980s.'' \12\ 
Professor Moss' conclusions are consistent with those of Diane 
Ellis at the FDIC Division of Insurance, who has argued that 
the functional deregulation of consumer credit ``fundamentally 
altered the market for credit card loans in a way that 
significantly expanded the availability of credit and increased 
the average risk profile of borrowers. * * * The result was a 
substantial expansion in credit card availability, a reduction 
in average credit quality, and an increase in personal 
bankruptcies.'' \13\ Ellis further states that ``by marketing 
high-risk debt to customers who are at substantial risk for 
non-payment, credit card issuers have contributed to the rise 
in consumer bankruptcies.''
---------------------------------------------------------------------------
    \12\ David A. Moss and Gibbs A. Johnson, The Rise of Consumer 
Bankruptcy: Evolution, Revolution, or Both?, Harvard Business School 
Division of Research Working Paper 98-104 (Rev'd Oct. 1998).
    \13\ Diane Ellis, Division of Insurance, FDIC, The Effect of 
Consumer Interest Rate Deregulation on Credit Card Volumes, Charge-
offs, and the Personal Bankruptcy Rate, Bank Trends 98-05, at pg. 3, ( 
March 1998).
---------------------------------------------------------------------------
    In light of this information, one can draw several 
conclusions. First, only a small percentage of chapter 7 
debtors can pay a significant amount of their unsecured debts. 
We therefore must be realistic when determining the costs and 
benefits to the proposed structural changes. Second, it would 
be foolish for us to believe that changing the rules of the 
bankruptcy system, alone, will lower the bankruptcy filing rate 
in any significant respect; instead, we must consider 
bankruptcy in tandem with the root causes of financial 
distress, such as shortcomings in health insurance and the need 
for a higher minimum wage, along with a careful revisitation of 
our policies regarding consumer credit.

                       Credit Industry Practices

    As stated above, the growth of the consumer credit industry 
was precipitated in large part by the deregulation of consumer 
credit interest rates in the late 1970's, which gave states 
greater flexibility to raise interest rates.\14\ Credit card 
issuers and some states capitalized on the new environment 
created by these decisions and deregulation. Lenders then began 
to broaden their customer base by extending credit to those 
further down the spectrum of credit quality.\15\ The result is 
aggressive marketing and a loosening of underwriting standards 
in an effort to attract more credit card customers and increase 
profits.
---------------------------------------------------------------------------
    \14\ See Marquette National Bank of Minneapolis v. First of Omaha 
Service Corp., 439 U.S. 299 (1978) (National Banking Act permits 
national banks to charge out of state customers maximum interest rate 
allowable in that state); Smiley v. Citibank (South Dakota), N.A., 116 
S. Ct. 1730 (1996) (national banks may export late-payment fees, annual 
fees, cash advance fees, and other fees related to extension of 
credit).
    \15\ Ellis, supra note 12, at 5.
---------------------------------------------------------------------------
    According to the FDIC Division of Insurance, ``credit card 
lending was dubbed the Wild West of consumer credit. This title 
was earned, in part, by lenders' aggressive marketing and 
solicitation of their cards and consumers' willingness to push 
their holdings of credit card debt to record high levels.'' 
\16\ Because of the high profitability of consumer credit 
lending, consumer lenders are using many tools to increase 
their customer base and encourage families to carry large card 
balances.
---------------------------------------------------------------------------
    \16\ See Diane Ellis, FDIC Division of Insurance, High Loan-to-
Value Lending: A New Frontier in Home Equity Lending, Regional Outlook 
(1st Quarter 1999).
---------------------------------------------------------------------------
    In addition to the aggressive solicitation of new 
customers, consumer lenders engage in a variety of practices 
that increase the likelihood that borrowers will file for 
bankruptcy relief. Some of these practices include, encouraging 
debtors to make minimum payments which will not decrease the 
loan principal, offering ``teaser'' interest rates designed to 
encourage customers to increase debt, switching credit rates 
with no advance notification to customers, using confusing and 
sometimes misleading descriptions of interest calculations, 
failing to disclose how long or how expensive repayment will be 
if consumers make only the minimum monthly payments and 
increasing credit limits for customers who carry large debt 
balances without further credit investigation or even a request 
from the customer.
    The offers of credit extensions do not seem to be in 
abatement, even at a time of high bankruptcy filings. The all-
time high in credit card mail solicitations in 1997 (3.1 
billion) has been surpassed by a new all-time high: according 
to the American Banker and the New York Times, 1998 credit card 
solicitations reached 3.45 billion. Mail is only one way to 
market consumer credit; in 1996, for example, credit card 
companies logged 24.1 million telemarketing hours. Credit card 
manufacturers also increased their advertising 14 percent 
between 1995 and 1996.
    Credit is available to almost any college student--no 
income, no credit history, and no parental signature 
required.\17\ The National Bankruptcy Review Commission 
received an advertisement for a two-day workshop for creditors 
entitled, ``Competing in the Sub Prime Credit Card Market,'' 
including a presentation entitled, ``Targeting College 
Students: Real Life 101,'' with tips on how to ``target the 
money makers of tomorrow.'' \18\
---------------------------------------------------------------------------
    \17\ See also Report of the National Bankruptcy Review Commission 
93 (October 20, 1997); George M. Salem and Aaron C. Clark, GKM Banking 
Industry Report, Bank Credit Cards: Loan Loss Risks are Growing, pg. 9 
(June 11, 1996). Although humorous, the following example makes it 
clear that credit card issuers will solicit the business of almost 
anyone--or anything. Barbara Fazio of Windsor, Connecticut received a 
credit card solicitation for her 9-year-old cat, Daisy. Fazio had 
answered a television advertisement for free insulation and used her 
cat's name as a joke. Six weeks later, Visa offered Daisy a Gold Card 
with a $2,500 line of credit.
    \18\ An administrator at Indiana University tells parents at 
freshman orientation that Indiana ``lose[s] more students to credit 
card debt than academic failure.'' Bonnie Miller Rubin, College 
students charge right into valley of debt, Chicago Tribune (Aug 16, 
1998). According to a Nellie Mae study, 2 out of 3 undergrads have at 
least one credit card and 27 percent have 4 or more cards. The average 
credit card balance for undergrads, according to accounts of that 
study, is $1,879. Nancy Lloyd, Should your teenagers have a credit 
card? What every parent should know, Family Circle (February 1, 1999) 
(Providing real examples of teens who got themselves in trouble with 
credit, including junior high school age teens who are getting credit 
card applications in the mail). Simmons Market Research found that the 
number of full time undergrads who carry a balance is around 39 
percent, and the number who make only the minimum monthly payment is up 
to 16 percent. Credit card crackdowns; Colleges curb sales pitches, 
Chicago Sun-Times (March 14, 1999) (``college students are a prized 
target for the card industry. One reason: consumers a loyal to their 
first credit card * * * and even though college students have little or 
no income, they are not considered high risk borrowers because parents 
generally bail them out if they get into trouble * * * Students are 
bombarded with credit card offers from the moment they step on campus 
as freshmen. They often find applications slipped into their bags at 
college book stores. Card marketers offer them gifts if they fill out 
an application * * * If marketers are banned from campus, they don't 
give up. They often just move to other locations frequented by 
students, such as spring break vacation hotspots''). ``A 1996 
University of Minnesota study suggests that credit card debt often goes 
hand in hand with stress and depression. The study found that two-
thirds of students who said they were taking medication for depression 
had more than $1,000 in credit card debt. * * * The study also found 
that as credit card debt increased, the students' grade point averages 
went down. Students with high credit card balances also worked more 
hours and were more likely to drop classes.'' Christine Dugas, Lead us 
not into temptation; Colleges target card solicitors, USA Today (March 
12, 1999) (``College administrators complain that marketers entice 
students to apply for cards and take on debt with free T-shirts, music 
CDs and promises of an easy way to pay for spring break vacations. They 
say some marketers yell at students to get their attention and follow 
them through hallways to make a sale. Marketers have shown up on 
campuses unannounced and without permission to hawk cards in 
dormitories and other areas. 'Many times card marketers get student 
organizations to work for them. * * * Then you have friends pressuring 
friends.'''). ``On many campuses, credit card use is a growing concern 
for administrators, who worry that excessive debt can wreck students' 
credit ratings and hurt academic performance.'' The magic of plastic; 
College students increasingly lured into world of debt, Tulsa World 
(December 6, 1998) (reporting on students who were given several credit 
cards and used them improvidently). See also Card-carrying kids; More 
young people are taking the plunge into plastic, diving deep into debt, 
Fort Worth Star-Telegram (January 1, 1999) (estimating that 7 out of 10 
college students have their own credit cards today, and 81 percent got 
them during their freshman year of college or in high school).
---------------------------------------------------------------------------
    Even people who have declared bankruptcy receive 
unsolicited credit card applications for unsecured credit 
cards. While the consumer credit industry is lobbying lawmakers 
to overhaul the bankruptcy system to compensate for the alleged 
lack of stigma in bankruptcy, the American Bankruptcy Service, 
which has indicated support for the legislation in testimony 
before Congress, is soliciting debtors' lawyers and offering 
them $10 for every bankrupt client they encourage to enroll for 
a ``Fresh Start VISA Card'' from First Consumers National Bank. 
Bankrupt debtors are attractive because they have proven that 
they will take on credit and, by law, they cannot seek a 
bankruptcy discharge for another six years.\19\
---------------------------------------------------------------------------
    \19\ Dr. Michael Staten, Director, Credit Research Center, Krannert 
School of Management, Purdue University, Working Paper No. 58, The 
Impact of Post-Bankruptcy Credit on the Number of Personal Bankruptcies 
(January 1993).
---------------------------------------------------------------------------
    Some credit card issuers argue that solicitations should be 
compared to fast food advertising and ``[j]ust as consumers 
ought not go have a Big Mac every time they see a McDonald's 
ad, they probably ought not avail themselves of every credit 
card solicitation they receive.'' \20\ Credit card issuers 
suggest that a credit product is no more difficult to 
understand than a Big Mac and requires no more sophisticated 
analysis than whether to buy one with cheese or one without.
---------------------------------------------------------------------------
    \20\ Shenk, Bankrupt Policy, The New Republic, May 18, 1998, at 16, 
17 (quoting William Binzel, a spokesperson for MasterCard).
---------------------------------------------------------------------------
    Americans thankfully have sufficient restraint to say 
``no'' to some of the solicitations they receive, which has led 
to a slowdown in the growth of credit card debt outstanding. 
However, they have not ignored the billions of dollars in 
advertising that have urged them to buy on credit without 
considering either the long-term consequences or how high-cost, 
short-term debt increases their economic vulnerability to some 
other economic shock. The 55 to 60 million households that 
carry a credit card balance from month-to-month have an average 
balance of $7,000 and pay more than $1,000 per year in interest 
and fees.\21\ As the bankruptcy files amply demonstrate, the 
long-term effects of credit that outstrips income can be 
catastrophic.
---------------------------------------------------------------------------
    \21\ See Consumer Federation of America, ``Recent Trends in Credit 
Card Marketing and Indebtedness'' (July, 1998) at p.1.
---------------------------------------------------------------------------
    As unsecured debt overwhelms some American families, some 
of them look to home equity loans. Once obtained to enhance the 
value of one's assets for investments such as home 
improvements, a survey in 1997 found that 40 percent of home 
equity loan borrowers give up their home equity and put their 
homes at risk to consolidate their out-of-control credit card 
debt.\22\ In fact, origination of home equity loans has 
surpassed origination of credit card loans in 1997 and 1998. 
Often these home equity loans exceed the amount of the equity 
or the value of the property, hence the terms 125 percent loan 
to value mortgages or high LTV loans. According to the FDIC, 
the risks of this relatively new lending practice--both on the 
credit industry and on consumers--are unknown.
---------------------------------------------------------------------------
    \22\ See Diane Ellis, FDIC Division of Insurance, High Loan-to-
Value Lending: A New Frontier in Home Equity Lending, Regional Outlook 
(1st Quarter 1999).
---------------------------------------------------------------------------
    Although the credit industry calls for ``personal 
responsibility in the bankruptcy context, its behavior shows a 
preference for less responsible consumers outside of 
bankruptcy. Several companies charge fees or cancel cards if 
customers pay in full every month.\23\ For example, Beneficial 
National Bank of Delaware canceled 12,000 customers' 
MasterCards because the customers paid their balances every 
month. NationsBank and GE Rewards MasterCard have imposed fees 
or canceled cards for customers who pay their bills in full. 
Credit card issuers that earn most of their revenues from the 
interest paid by borrowers who do not pay in full every month 
are not motivated or required to consider the best interests of 
their potential customers.
---------------------------------------------------------------------------
    \23\ David S. Evans & Richard L. Schmalensee, The Economics of the 
Payment Card Industry, Fig. 3 (1993).
---------------------------------------------------------------------------
    Truth in Lending laws require different disclosures for 
open end credit, such as credit cards, than they do for closed 
end credit, such as mortgages and car loans. For this reason, 
credit card companies are currently not required to disclose 
how long it would take and how much it would cost if a borrower 
makes only the minimum monthly payment based on the terms and 
current balance of the borrower. If those and other disclosures 
were required, the sticker shock might help consumers make more 
responsible credit decisions. Credit card industry analysts 
estimated several years ago that if an individual made typical 
monthly payments at an average interest rate, it would take 34 
years to eliminate a $2,500 credit card debt.\24\ Total 
payments would exceed 300 percent of the original principal. 
Most borrowers are not aware of this fact, and, unlike mortgage 
loans and car loans, credit card statements do not disclose the 
amortization rates or the total interest that will be paid if 
the cardholder makes only the minimum monthly payment.
---------------------------------------------------------------------------
    \24\ George M. Salem and Aaron C. Clark, GKM Banking Industry 
Report, Bank Credit Cards: Loan Loss Risks are Growing, p. 25 (June 11, 
1996).
---------------------------------------------------------------------------
    Even in the face of mounting evidence that aggressive 
consumer lending to low income and marginal borrowers has 
contributed to increased bankruptcy filings, this bill declines 
to recognize or address the realities of the consumer credit 
world today and how that affects bankruptcy and insolvency. 
Notwithstanding several thoughtful proposals to make modest 
reforms to the Truth in Lending laws, the bill demands no new 
disclosures from the credit card industry or consumer 
protections. Instead, we are expected to take a leap of faith 
and turn a blind eye to lending practices that encourage 
borrowing by people who cannot afford it, while we sharply 
limit the safety valve for honest but troubled American 
families. No one is suggesting that credit card debt, or the 
availability of credit generally, is the sole factor 
responsible for consumer bankruptcies. However, we cannot 
ignore lending practices, which contribute to financial 
instability, while charging ahead with this bankruptcy 
overhaul.
    Credit industry representatives have referred to freely 
flowing credit offered to those who cannot afford it as the 
``democratization of credit,'' and have suggested that credit 
might dry up if the bankruptcy laws are not changed. Fair 
access to credit should not be confused withoverly aggressive 
solicitation of customers who are clearly unable to accommodate 
additional debt and the failure to inform customers about the full 
risks of the products they use. Eliminating discriminatory lending 
practices is one issue, but the relaxation of industry standards is 
quite a different matter. Although risky lending can be extremely 
profitable, consumer defaults--and consequently bankruptcies--will not 
subside unless consumer lenders consider the credit worthiness of their 
potential customers when making a lending decision. Indeed, Professor 
Moss of Harvard Business School and Professor Ausubel of the University 
of Maryland Department of Economics have opined that restricting 
bankruptcy laws will increase the flow of risky credit. Reducing the 
risk of default and loss through bankruptcy will only encourage the 
credit industry to continue on its current course.

                         Problems With the Bill

    Notwithstanding our belief that bankruptcy reform should 
not occur in a vacuum, we nonetheless wish to clearly state 
specific and substantive concerns about the bankruptcy 
amendments and to debunk several myths about the details of the 
legislation.

A. The Arbitrary Means Test

    We support bolstering the Bankruptcy Code so that improper 
bankruptcy cases are more easily removed from the system. 
However, any such mechanism should be carefully crafted so 
that, at a minimum, the means test identifies the abusive 
filers without creating other distortions in the system and so 
that the costs of this enterprise do not outweigh the benefits. 
The current means test in section 102 of S. 625 unfortunately 
fails on both counts.
    When a formulaic means test was first introduced in the 
House last year, it applied only to debtors with income that 
exceeded the national median. Section 102 of S. 625 requires 
that every single chapter 7 debtor, even those earning less 
than the poverty level, engage in a complex certification 
process within the first few days of the case involving the 
means testing formula and extensive verification. It simply 
does not make sense to conduct an extensive review of low 
income chapter 7 filers, which will impose considerable costs 
on the taxpayers and the legal costs to the debtor, given that 
there will be only a remote likelihood that any low income 
filers will be able to repay their debts under the means test. 
Doing so foists the burden and expense of these additional 
procedures on a substantial group of low income filers who are 
appropriate candidates for chapter 7, even by credit industry 
accounts.
    The details of the means test itself are troublesome. The 
proposed formula relies heavily on the use of the Internal 
Revenue Collection standards to determine whether a debtor's 
expenses are appropriate. These are the same standards that 
were called into question by the Internal Revenue Service 
Restructuring and Reform Act of 1998 that directed the IRS to 
reconsider whether those expenses were adequate and realistic. 
In analyzing the extent to which debtors have the ability to 
pay, the recent study by the Executive Office for United States 
Trustees explains the use of these standards, which highlights 
their significant logistical problems and the biases produced 
by the means test. In evaluating the IRS allowance for food, 
clothing, housekeeping supplies, personal care products and 
services, the EOUST observed that the amount of the allowance 
is based not only on family size, but also on gross family 
income. The resulting allowances permit a single high income 
person to set aside a higher amount of money than a low income 
family of 6. Whether or not this is acceptable in the IRS 
context, it is not acceptable when used as a mandatory measure 
to determine access to debt relief in bankruptcy.\25\
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    \25\ The EOUST report also observes that there appears to be little 
rhyme or reason to the IRS food allowances, noting that a ``middle 
income family receives an allowance of $537 for the first person, $207 
for the second, $91 for the third, $61 for the fourth, and $165 each 
for each person over four. The applicability of these tables to 
families in a bankruptcy context is not intuitively clear.''
---------------------------------------------------------------------------
    The legislation permits homeowners to deduct their mortgage 
payments as secured debt, regardless of the amount of the 
mortgage payments, in addition to the portion of the IRS 
housing allowance that is not attributable to the mortgage 
payment. However, the means test does not make clear how much 
of the IRS housing allowance may be claimed by homeowners for 
housing-related costs that are not included in the mortgage 
payment. Perhaps more troublesome is the fact that this portion 
of the test favors homeowners with high mortgage payments over 
homeowners with low mortgage payments, and gives least favored 
status to families who rent their dwellings.
    The transportation allowance is based on the number of cars 
owned and the debtor's location. The EOUST notes that ``the 
allowances vary from a low of $126 for an individual without a 
car in Buffalo, New York, to a high of $983 for an individual 
in Dallas, Texas who is making payments on two cars.'' This 
approach also disfavors people without a car who save costs by 
using public transportation; the EOUST concludes that ``the 
allowance is generally about $700 per month higher for people 
making payments on two cars than for people who have no car'' 
before even considering any car loan payments, which also can 
be deducted. This approach creates perverse incentives by 
benefitting high income debtors who buy 2 new cars before 
filing for bankruptcy. Surely this is not ``needs based'' 
bankruptcy.
    Other expenses are allowable if covered under the ``other 
necessary expense'' category of the IRS standards. This 
category is intended to include items such as taxes, health 
care, court ordered payments, involuntary payroll deductions, 
secured debt payments, child and dependent care, life 
insurance, charitable contributions, educational costs, union 
and professional dues. The means test fails to mention, 
however, that the IRS regulations establish no preset 
allowances and instead the IRS considers these expenses one at 
a time, on a case by case basis, in conjunction with other 
factors that must be considered. Not surprisingly, it was 
difficult for the EOUST to deal with these expenses; ``We do 
not know whether the bankruptcy courts will apply this or a 
similar criterion for allowing expenses in proposed chapter 13 
plans. The situation may well promote considerable litigation. 
As local standards evolve for each expense in this category, 
more debtors are likely to claim the maximum allowable amount 
on their monthly expenses.''
    This discussion has focused on only a fraction of the 
issues raised by the means test in section 102 of S. 625.\26\ 
Whether or not there should be a set formula to determine 
access to bankruptcy, this test fails to meet even the most 
basic criteria of fairness and clarity. The Committee was 
presented with a compromise amendment by Senator Schumer that 
addressed many of these problems by rejecting the use of the 
IRS expense standards, but that amendment was defeated. We 
witnessed a similar event with respect to the House bill; 
Chairman Henry Hyde sought to eliminate the use of the IRS 
expense standards and make other helpful changes that would 
have improved the operation and the fairness of the means test. 
Although Chairman Hyde's amendments originally passed by a 
narrow margin, they were later defeated after cries of 
``legicide'' by principal sponsor Rep. Gekas. Chairman Hyde 
made one more attempt on the House floor but his reasonable 
amendment was defeated. The resulting means test in S. 625 
hardly can be said to promote personal responsibility when it 
favors higher income individuals with more property and debts 
over lower income families with a more modest set of property 
and debts.
---------------------------------------------------------------------------
    \26\ Other problems include the fact that the means test is based 
on a 5 year repayment schedule when 3 year repayment schedules already 
have a high failure rate, the calculation of monthly income that leads 
to a higher estimate of the ability to pay and the presumption that all 
payments will be made uniformly over a period of 5 years when in 
reality the payments are concentrated in a shorter period in a higher 
amount.
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B. Provisions Favoring Particular Interests

    Most discussions of bankruptcy reform have centered on the 
means test, and yet that provision is merely the tip of the 
iceberg of this bill, which contains dozens of provisions 
requested by the consumer credit industry. Looking only at the 
first few titles of the bill, House Judiciary Committee 
Chairman Henry Hyde noted at the markup of the substantially 
similar bill, H.R. 833, that the bill contains at least 25 
provisions favorable to creditors. On the floor, Chairman 
Hyde's estimate grew to at least 75 provisions.
    There certainly is nothing wrong with ensuring that 
creditors receive fair and just treatment in bankruptcy. 
However, the bankruptcy system has had a long tradition of 
promoting equitable treatment of creditors in accordance with a 
carefully considered priority scheme. This bill turns that 
approach on its head by adding provisions to aid certain types 
of creditors without fully considering how this will affect 
other creditors or the underlying goals of this bill. As 
Senator Feingold noted, the bill seems to be at war with 
itself.
    Thus, notwithstanding the intention to increase unsecured 
creditor distributions through imposing a means test (section 
102) and extending the duration of chapter 13 repayment plans 
to 5 years if a case was converted from chapter 7 to further 
increase those distributions (section 318), the bill counters 
the benefits for unsecured creditors by inflating the amount of 
claims secured only partially by collateral (section 306),\27\ 
and expands the universe of interests secured by homes that 
cannot be modified. Because secured creditors generally have 
priority over unsecured creditors when plan payments are 
determined, these new provisions will expand the proportion of 
income that must be committed to secured claims and likely will 
consume any extra amounts that otherwise would have been 
committed to unsecured creditors--leading either to ``zero 
percent'' plans that pay nothing to unsecured creditors or the 
inability to confirm a repayment plan at all.
---------------------------------------------------------------------------
    \27\ Among other changes, section 306 provides that debts secured 
by cars incurred within 5 years before bankruptcy shall be treated as 
fully secured, regardless of the value of the car. Debts secured by 
other any other items incurred within 6 months before bankruptcy shall 
be treated as fully secured, regardless of the value of the collateral.
---------------------------------------------------------------------------
    The bill increases postbankruptcy competition as well. The 
bill excepts from discharge a wider range of credit card debts 
and retail charge card debts (sections 310, 314) \28\ and may 
increase unsecured creditors' leverage for obtaining 
reaffirmations of debt without imposing any meaningful change 
in reaffirmation approval procedures (section 204). However, 
the enhanced treatment for secured creditors extends to 
postbankruptcy as well (e.g., sections 304, 305,\29\ 313 \30\), 
and protects retailers and finance companies with claims 
secured by low value household goods. These provisions are 
likely to lead to increased reaffirmations of nominally secured 
debt, which arguably have greater collection rights than 
unsecured creditors.
---------------------------------------------------------------------------
    \28\ Under section 310, credit card cash advances aggregating more 
than $750 within 70 days before bankruptcy are presumed 
nondischargeable. Debts to a single creditor aggregating more than $250 
for ``luxury goods or services'' incurred within 90 days before 
bankruptcy are presumed nondischargeable. Section 314 adds another 
exception to discharge when the ``debtor incurred the debt to pay such 
a nondischargeable debt with the intent to discharge in bankruptcy the 
newly-created debt.'' Any debts incurred to pay nondischargeable debts 
within 70 days prior to filing are nondischargeable (except in cases 
with filed claims for domestic support obligations). Under subsection 
(b) of section 314, a debtor who completes a 3 to 5 year chapter 13 
plan is prevented from discharging a wider range of debts and will 
remain liable for remaining debts that are nondischargeable on account 
of a false representation, including credit card debts. These 
provisions have been the subject of considerable criticism and yet have 
not been substantially modified.
    \29\ Sections 304 and 305 prohibit the ``ridethrough'' of secured 
debt obligations in chapter 7. If a debtor does not redeem or reaffirm 
a debt secured by personal property, the creditor may take action 
against the property without running afoul of the automatic stay unless 
the court determines on the motion of a trustee that the property is of 
consequential value to the bankruptcy estate. Aside from the technical 
problems with this amendment, it codifies the law of some circuit 
courts and overrules the law of other circuit courts.
    \30\ Section 313 defines ``household goods'' for purposes of 
section 522(f) of the Bankruptcy Code by delineating an exclusive list 
of items that fit the term. This definition not only diverges from the 
approach ultimately taken in the Senate last year, but likely departs 
from the prevailing current interpretations of ``household goods'' in 
section 522(f) and probably will increase litigation. See, e.g., In re 
McGreevy, 955 F.2d 957 (4th Cir. 1992) (defining household goods as 
items of personal property typically found in or around home and used 
by debtor or his dependents to support and facilitate day-to-day living 
within the home, including maintenance and upkeep of the home). The 
list also smacks of arbitrariness in what it includes and excludes. It 
certainly doesn't appear to be based on the needs of diverse American 
middle class families.
---------------------------------------------------------------------------
    Section 311 provides four new automatic stay exceptions for 
residential landlords that basically eliminate the injunction 
against creditor action and breathing spell for renters, 
exacerbating the differential treatment for renters and 
homeowners. Although it may be appropriate to offer an 
expedited procedure for residential landlords when debtors are 
not paying their rent postbankruptcy, some of us believe that 
the existing carveout may undermine the purpose of the 
automatic stay to the detriment of families in bankruptcy and 
their other creditors.

C. Destructive Impact On Chapter 13

    As a result of some of the amendments discussed above, the 
bill may violate its own directive of increasing distributions 
in chapter 13. This was emphasized by Henry Hildebrand, who 
testified before the House Judiciary Subcommittee on Commercial 
and Administrative Law on behalf of the National Association of 
Chapter 13 Trustees on March 17, 1999:

          I wish to make this point extremely clear. In its 
        current form, H.R. 833 will discourage the Chapter 13 
        option for debtors seeking bankruptcy relief, will 
        impose significant hardships and costs on debtors and 
        creditors who are involved in the bankruptcy process, 
        will impose significant unfunded costs on the system, 
        and will result in the inequitable and reduced 
        distribution of any dividend to creditors. * * * For 
        purposes of this testimony today, however, we would 
        like to sound the clarion bell of warning that the 
        current draft of the bill will decimate many Chapter 13 
        programs across the country. The tragic thing about 
        this fact is that the policies sought to be addressed 
        by Congress can be achieved without such a destructive 
        impact.'' \31\
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    \31\ http://www.house.gov/judiciary/106-hild.htm

    Hildebrand's comments are, for the most part, transferable 
to S. 625, which contains three out of four of the provisions 
in the House bill that decrease the success of chapter 13: the 
``no stripdown'' provision (section 306), narrowing of the 
chapter 13 superdischarge (sections 315, 707), and the 
prebankruptcy credit counseling requirement that continues to 
be applicable to chapter 13 and may delay filings until debtors 
no longer can work out their problems in chapter 13 (section 
105).

D. Absence of provisions addressing coercive creditor practices and 
        providing consumer protections

    One of the best attributes of the bankruptcy bill that 
passed the Senate last year was its balanced approach. Although 
it contained scores of provisions requested by the consumer 
credit industry, it also recognized the problems created by 
creditor overreaching and abuse. None of our work in this 
regard can be found in S. 625.
    The solicitation and enforcement of reaffirmation 
agreements are a critical component of this debate. A 
reaffirmation is an agreement made between a debtor and 
creditor such that the debtor remains legally liable for a debt 
after bankruptcy that otherwise would have been discharged. 
Reaffirmation agreements almost were not a part of the new 
bankruptcy laws in 1978. Now, they have a pervasive effect on 
the law and significantly affect the extent to which debt 
relief is achieved in bankruptcy.
    Reaffirmations that are technically legal but are the 
product of coercive practices undercut bankruptcy's fresh 
start. Each reaffirmed debt competes for the debtor's scarce 
income with other debts that survive bankruptcy--such as, child 
support, alimony, taxes, student loans, mortgages and car 
payments. Although reaffirmations may be prudent in some cases, 
they defy logic in others. Experience has shown that debtors' 
attorneys have not been able to perform the requisite screening 
of these agreements.
    Some reaffirmation agreements are illegal because they are 
not filed with the court. Most recently, Sears Roebuck admitted 
to criminal fraud, agreeing to pay $60 million--the largest 
ever bankruptcy fraud criminal fine. This fine was in addition 
to the several hundred million dollars already committed by 
Sears upon settlement with Attorneys General and in a private 
class action suit.\32\ Sears is not alone. Federated Department 
stores--which includes Bloomingdale's, Macy's, and Sterns--
agreed to pay $14.64 million in settlement of several state 
suits. Montgomery Ward, GE Capital Corp, Discover Card, May 
Department Stores, AT&T, Circuit City, J.C. Penney, Beneficial 
National Bank, and Greenwood Trust, among others have faced 
similar problems.
---------------------------------------------------------------------------
    \32\ Susan Chandler, Sears fraud fine is $60 million, Chicago 
Tribune (Feb. 10, 1999) (reporting that Sears agreed to plead guilty to 
count of criminal bankruptcy fraud and pay $60 million fine, based on 
admission that Sears had been illegally collecting discharged debt 
since mid-1980s); John McCormick, The Sorry Side of Sears, Newsweek 
(Feb. 22, 1999).
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    Proponents of this legislation assert that these lawsuits 
demonstrate that ``the system works'' as it is. Even if it was 
accurate to say that current law sufficiently addresses 
creditor abuse, that position does not take into account the 
new leverage acquired by creditors in this bill. By allowing 
creditors to threaten section 707(b) motions, increasing the 
ability of creditors tothreaten to repossess household goods, 
expanding credit card nondischargeability in several respects, and 
heightening the entitlements of any creditor that takes a security 
interest in worthless items, S. 625 bolsters the leverage of aggressive 
creditors to coerce reaffirmations without significantly improving the 
protections afforded by reaffirmation review.
    Section 204 of S. 625 entitles a debtor to a hearing 
regarding a reaffirmation of an unsecured debt, but makes the 
requirement waivable by debtors represented by counsel. The 
provision also authorizes greater law enforcement on the state 
and federal levels to address illegal reaffirmation agreements. 
This provision may represent a good step in the right 
direction, but is not likely to have an appreciable effect on 
current reaffirmation practices, nor are the other provisions 
in title II that on their surface could pass for consumer 
protections. Unfortunately, many people reaffirm debts simply 
because the creditor asked them to do so, whether or not they 
can afford to pay the debts that led them to bankruptcy in the 
first place, and will waive their review rights without 
realizing the implications. Reaffirmations are solicited in the 
hallways of the court house after the section 341 meeting of 
creditors or by phone at night. The threats of 
nondischargeability or repossession that lead to reaffirmation 
are implied or sometimes overt. Whether or not a creditor's 
threat of repossession of nondischargeability is viable, in the 
real world, bankrupt debtors with an average income of under 
$20,000 per year cannot afford to fight. This inequality of 
bargaining power will only be heightened by the special 
interest provisions of S. 625. Last year's Senate bill would 
have been far more effective in ensuring proper review of 
reaffirmation agreements of unsecured and nominally secured 
debts. Reaffirmations, like other extensions of credit, also 
should be accompanied by disclosures so that the debtor can 
understand the new legal commitment and the total cost.
    S. 625, like other bankruptcy reform bills, has been 
premised on the need to restore personal responsibility. 
Regardless of our doubts that this bill properly rewards 
personal responsibility in its approach to bankruptcy reform, 
the time to instill personal responsibility is not when a 
family is in the thick of financial trouble. Rather, the 
personally responsible consumer is one who is educated about 
the various consumer credit products that she is offered, often 
unsolicited. To the extent that bankruptcy is a symptom of a 
problem--overuse of credit that makes consumers more vulnerable 
to other financial shocks caused by divorce, layoffs, and 
medical problems--rather than the problem in and of itself, we 
will never solve a bankruptcy crisis if we do not look beyond 
the Bankruptcy Code. As previously noted, even if S. 625 
prevented the filing of the most aggressive estimates of 
abusers, the filing rate will not drop appreciably. History 
teaches us that trends in the bankruptcy filing rate has 
followed trends in the debt-income ratio of American families. 
Default rates are unlikely to decline if we do not look at debt 
generally.
    Credit cards, debit cards, retail charge cards, ``live 
checks,'' high loan to value home equity loans can be 
productive tools for American families, but they also can 
attribute to the consumers' downfall if consumers do not 
understand the terms and the financial impact. We can hardly 
blame consumers for sometimes misunderstanding the consequences 
of credit usage. Unlike home mortgages and car loans, which 
disclose the total cost and how long it will take to pay, open 
end lines of credit are more mysterious because the Truth in 
Lending Act does not require the same types of disclosures. The 
consumer may understand that making smaller payments will 
produce finance charges, but she may not understand that a 
manageable debt can turn into an unmanageable debt in a very 
short period if the debtor pays the 2.5 percent minimum balance 
or even a bit more. These concerns are heightened by the 
expansion of credit availability to teenagers and other groups 
that may be less likely to fully understand the consequences. 
The problem is further exacerbated by the frequent changes in 
terms on open end credit and the sales of accounts; even if the 
consumer closely studied the terms when she first received a 
credit card, those terms may have changed with little or no 
notification.\33\
---------------------------------------------------------------------------
    \33\ See, e.g., Robert D. Hershey, Sales of Credit Accounts Are 
Hurting Many Consumers, the New York Times (March 2, 1999) (citing R.K. 
Hammer Investment Bankers statistic that 32 million people had their 
credit card accounts sold in 1998).
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    With these concerns in mind, we worked hard last year to 
promote personal responsibility on several fronts. We agreed to 
support a bill that held consumers to a higher standard when 
they attempted to obtain bankruptcy relief, but insisted that 
this be coupled by reasonable attempts to ensure that consumers 
have better tools to help themselves stay out of trouble. The 
result was a series of compromise provisions that ask consumer 
credit issuers to give potential borrowers and their customers 
just a bit more information about the product they are using. 
Although there may be a cost to consumer lenders to implement 
these additional disclosures, the benefits could be found in 
lower default rates and fewer bankruptcies.
    However, once the bill got to the conference committee, 
Senate Democrats were excluded from deliberations. The 
resulting Conference Report on H.R. 3150 took an even more 
aggressive approach to restricting bankruptcy access in a 
variety of ways, but made a mockery of our concerns about 
consumer credit. The Conference Report stripped away our 
carefully crafted compromise provisions and substituted them 
with a series of much weaker provisions. This year's House 
bill, H.R. 833, continues to include those Conference Report 
provisions.
    S. 625 is devoid of any consumer credit provisions. In 
light of our very significant concerns, this is hardly a minor 
omission. We have heard several times that such provisions were 
omitted to avoid a sequential referral to the Banking 
Committee, but this explanation provides us with little solace, 
particularly because the majority was unwilling to commit to 
supporting these provisions on the floor.
    To facilitate consumers' understanding of the actual cost 
of credit, section 209 of last year's Senate bill, as passed by 
the Senate by a vote of 97 to 1, amended the Truth in Lending 
Act to implement additional disclosure requirements for open 
end credit plans (e.g., credit cards) similar to those 
applicable to closed end credit plans (e.g., car loans or 
mortgages). In particular, this provision would require a 
credit card lender to disclose (1) the required minimum monthly 
payment on the borrower's balance in dollar amount and as a 
percentageof the balance; (2) the number of months it would 
take to pay the entire balance if only borrower makes the minimum 
monthly payments and incurs no additional debt; and (3) the total cost 
to the consumer of paying the balance in full if the consumer makes 
only the minimum monthly payments and incurs no additional debt. In 
addition, when sending a credit solicitation, lenders would have to 
include (1) a worksheet to aid consumers in determining their ability 
to assume more debt; (2) a statement that ``preapproval for this credit 
card does not mean that we have reviewed your individual financial 
circumstances. You should review your own budget before accepting this 
offer of credit;'' and (3) notification that the consumer is entitled 
to a copy of his credit report. The Federal Reserve would be required 
to publish model forms within 180 days after the date of enactment. 
This provision goes to the heart of many Senators' concerns. If we are 
going to limit the safety valves available to assist indebted 
consumers, we--and the credit industry--will be remiss if we fail to 
help consumers understand the true cost of credit card borrowing.
    Section 207 of last year's bill amended the Truth in 
Lending Act to require additional tax-related disclosures by 
lenders who extend credit when the loan exceeds the fair value 
of the collateral (so-called high loan to value mortgages). The 
lender would have to disclose in credit applications and 
advertisements that the interest on the portion of the credit 
extension that is greater than fair market value of the 
dwelling is not tax deductible. Most American families do not 
have the luxury to speak with a tax accountant or financial 
advisor every time they borrow money. It is remarkable that 
there could be any objection to this provision, which merely 
requests a restatement of the law that may prevent confusion 
among some consumers.
    Section 405 of last year's bill amended the Truth in 
Lending Act to prohibit creditors from refusing to renew, 
continuing to offer credit, or charging a fee solely because a 
consumer has not incurred finance charges in connection with an 
extension of credit. If responsible behavior is the goal, then 
this provision is consistent with that message insofar as it 
prevents creditors from penalizing their most responsible 
borrowers who pay their credit card bills in full each month.
    Section 208 of last year's bill amended the Electronic Fund 
Transfer Act to delineate the circumstances in which consumers 
are liable for unauthorized electronic fund transfers. Another 
element of personal responsibility is taking care to prevent 
unauthorized use of debit cards, which have a wider range of 
risks.
    Section 206 of last year's bill amended 11 U.S.C. 
Sec. 502(b) to disallow secured claims that violate sections 
129(a)-(i) of the Truth in Lending Act, so that lenders who 
comply with TILA are not forced to take a smaller distribution 
in bankruptcy on account of lenders who violate TILA.
    Section 213 of last year's bill expressed the sense of 
Congress that some lenders may be offering credit 
indiscriminately without determining whether consumers are 
reasonably able to repay such debt, which leads to higher 
levels of insolvency among consumers. The provision then 
directed the Federal Reserve to conduct a study of consumer 
credit industry practices of soliciting and extending credit 
indiscriminately and the effects of these practices on the 
aggregate consumer debt level and insolvency. A report on this 
study was due not later than 24 months after the enactment of 
this Act, and the report may be accompanied by regulations 
requiring additional disclosures to consumers and other actions 
necessary to ensure responsible industry-wide practices.
    Section 214 of last year's bill directed the Federal 
Reserve, in consultation with the Department of the Treasury, 
credit industry, and consumer groups, to prepare a study 
regarding the adequacy of information received by consumers 
regarding the creation of security interests in connection with 
credit cards and retail charge cards. The study was to include 
findings regarding whether consumers understand that items 
purchased may constitute collateral and the legal consequences 
of that situation. The study also shall include findings on 
whether creditors holding these security interests use such 
interests to coerce reaffirmations. The Federal Reserve would 
be asked to make recommendations regarding the practicality and 
efficacy of additional disclosures. The Federal Reserve would 
have to prepare this study within 180 days after enactment of 
this act. Unlike other secured credit, retail credit is no 
cheaper than general credit cards; in fact, often it is more 
expensive. These retail security interests were at issue in the 
illegal reaffirmation cases. This study would confirm the 
suspicions of many observers that consumers are often unaware 
that they have granted security interests in the items that 
they purchase, including gifts that they will give to others.
    As noted elsewhere, economists have warned that 
restrictions of the nature that are contained in S. 625 will 
increase, not decrease, consumer lending to lower income and 
marginal borrowers. That factor heightens the need for these 
provisions. With these types of provisions, last year's bill 
went from being imbalanced to a far more sensible and effective 
piece of legislation that we could support. We believe that S. 
625 needs a lot more work in several respects, but it is 
unlikely to pass muster if it fails to address this very 
significant issue in a serious and straightforward manner.

E. Lack of Privacy Safeguards

    The right to privacy is a personal and fundamental right 
protected by the Constitution of the United States. 
Unfortunately, S. 625 does nothing to safeguard personal 
privacy in bankruptcy or consumer credit transactions. In fact, 
this bill adds to the growing privacy concerns of Americans by 
encroaching on the right to keep personal tax, financial and 
medical information confidential.
    Section 315 of S. 625 requires debtors to file with the 
court copies of their tax returns for the three years preceding 
their bankruptcy filings as well as tax returns filed while the 
bankruptcy was pending. Creditors and other parties in interest 
would be free to copy anypart of the debtor's personal tax 
returns without any showing of need or justification. Indeed, the 
copies of each debtor's personal tax returns would be kept in court 
records open to the public.
    Tax returns are generally entitled to confidential 
treatment. These government-mandated filings often contain 
detailed personal information that may not be relevant in a 
bankruptcy proceeding. Creditor representatives could easily 
use salient facts in these personal tax returns for direct 
marketing, sale to outside parties or other non-bankruptcy 
related purposes.
    People who have fallen on hard times or who have suffered a 
devastating medical crisis should not have to sacrifice their 
dignity and privacy. We should not enact a scheme that requires 
the loss of personal privacy as an automatic consequence of a 
bankruptcy filing.
    Moreover, we have serious questions about the practical 
consequences of the mandatory filing of copies of past personal 
tax returns as a requirement for bankruptcy filing. If this 
requirement was in effect last year, the 1.4 million Americans 
who filed for bankruptcy would have produced at least 4.2 
million copies of their tax returns.
    Keeping millions of tax returns in public court files will 
be burdensome and of dubious value. Some have estimated that it 
will cost about $8 million annually to pay for the clerical 
help to maintain all these tax returns and take up 20 miles of 
shelf space to store all these tax returns. Like other parts of 
this bill, the tax return filing requirement will prove to be 
unworkable in the real world. There are alternatives for 
verifying debtor income that are more workable, less costly and 
still protect personal privacy.
    As with coercive creditor practices, this bill also ignores 
the abuses of some financial institutions that invade the 
personal privacy of debtors and consumers to sell or share 
their personal financial and medical information.\34\
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    \34\ Abuses arising from sharing information without a consumer's 
knowledge or permission have already taken place. For example, the 
Securities and Exchange Commission in May 1998 took enforcement action 
against a large national bank (Nations Bank) that gave an affiliated 
stock broker (Nations Securities) lists of customers with maturing CDs. 
The broker made misrepresentations selling securities to customers, 
many of whom were elderly and novice investors. More abuses are easy to 
imagine.
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    Our right of privacy has become one of the most vulnerable 
rights in the information age. The digitalization of 
information and the explosion in the growth of computing and 
electronic networking offer tremendous potential benefits to 
the way Americans live, work, conduct commerce, and interact 
with their government. But the new technology also presents new 
threats to our individual privacy and security, in particular, 
our ability to control the terms under which our personal 
information is acquired, disclosed, and used.
    Financial conglomerates, for example, are offering a wide 
variety of services, each of which requires a customer to 
provide financial, medical or other personal information. But 
nothing in the law prevents subsidiaries within the 
conglomerate from sharing this information for uses other than 
the use the customer thought he or she was providing it for. In 
fact, under current Federal law, a financial institution may 
sell, share, or publish savings account balances, certificates 
of deposit maturity dates and balances, stock and mutual fund 
purchases and sales, life insurance payments and health 
insurance claims.
    As President Clinton recently warned: ``Although consumers 
put a great value on privacy of their financial records, our 
laws have not caught up to technological developments that make 
it possible and potentially profitable for companies to share 
financial data in new ways. Consumers who undergo physical 
exams to obtain insurance, for example, should not have to fear 
the information will be used to lower their credit card limits 
or deny them mortgages.'' We agree.
    S. 625, however, does not provide for any privacy 
protection for consumer account information held by financial 
institutions and other creditors. We believe that consumers 
deserve the basic privacy rights of notice and choice about the 
use of their personal financial information. Financial 
institutions should be required to inform consumers of plans to 
share or sell their financial information and consumers should 
have control over using and sharing of all their financial 
information.
    An area of particular concern to us is safeguarding medical 
information. Medical records contain the most intimate, 
sensitive information about a person and must be safeguarded. 
Yet, cross-industry mergers and consolidations have given banks 
and other financial institutions unprecedented access to 
consumers' medical records. We support legislation requiring 
medical information, such as that gathered from life insurance 
records, not be shared within financial services conglomerates.
    We were disappointed that the majority dropped title XI, 
Health Care and Employee Benefits, from S. 625 during Committee 
consideration of the bill. That section of the original bill 
protected patient privacy when a hospital, nursing home, HMO or 
other institution holding medical records is involved in a 
bankruptcy proceeding that leads to liquidation. Senators 
Grassley, Torricelli and Leahy have introduced these same 
provisions as separate legislation, S. 840, and we hope that 
these important privacy protections will be returned to S. 625 
during Senate consideration of bankruptcy reform legislation.
    We believe that Congress must update our bankruptcy and 
banking laws to provide for fundamental privacy protection of 
the personal tax, financial and medical information of all 
Americans.

F. Business Bankruptcy Issues

    The consumer provisions of S. 625 have attracted most of 
the attention, but we cannot forget that this bill, unlike last 
year's Senate bankruptcy bill, contains dozens of provisions 
affectingbusiness bankruptcy cases. The business bankruptcy 
provisions change the law and the leverage among parties and will have 
profound effects on whether and how struggling businesses reorganize. 
Business bankruptcy amendments must be adopted prudently because the 
effects of business bankruptcy reform do not stop at the door of the 
bankruptcy courthouse. They pervade out of court workouts and all 
commercial lending transactions.
    Some of the nation's largest businesses have reorganized 
using the bankruptcy system, and the success rate for chapter 
11 has increased since the early days of the Bankruptcy Reform 
Act of 1978. A growing number of businesses in various 
industries and across the country are likely to restructure 
obligations or file for chapter 11 over the next few years. It 
may be sensible to make modest improvements to business 
bankruptcy law, but now is not the time to make radical shifts 
that substantially alter the dynamic of plan negotiations or 
seriously undermine the opportunity for reorganization.\35\
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    \35\ Just this week, the United States Supreme Court issued a 
ruling regarding the requirements for a nonconsensual plan of 
reorganization that will have a substantial impact on business 
bankruptcy reorganization and that changes the law--and the leverage 
among the parties--in at least the 7th and 9th Circuits and in many 
other courts around the country. See Bank of America National Trust and 
Savings Ass'n,--S. Ct. --, 1999 WL 25731 (May 3, 1999) (``We do not 
decide whether the statute includes a new value corollary or exception, 
but hold that on any reading respondent's proposed plan fails to 
satisfy the statute, and accordingly reverse''). One should consider 
the effects of the significant amendments in this bill with this new 
decision in mind.
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    For example, section 404, ``Protection of refinance of 
security interest,'' amends 11 U.S.C. Sec. 547(e)(2) so that a 
transfer is deemed to be made at the time such transfer takes 
effect between the transferor and the transferee if the 
transferee perfects its security interest within 30 days 
thereafter, rather than 10 days. This provision will harm the 
interests of and unfairly trap creditors who extend credit in 
reliance of the lack of a perfected security interest in 
specified collateral.\36\
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    \36\ See generally Hearing Regarding the Bankruptcy Reform Act of 
1999 (H.R. 833), United States House of Representatives, Committee on 
the Judiciary, Subcommittee on Commercial and Administrative Law (March 
17, 1999) (statement of the National Bankruptcy Conference).
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    Section 405, ``Executory contracts and unexpired leases,'' 
replaces a flexible 60-day period with a rigid 120-day period 
to assume or reject a nonresidential real property lease. It 
provides that the court may extend the deadline past 120 days 
only on the motion of the nondebtor-lessor, unlike current law 
that permits the court to extend the deadline for cause on the 
motion of any party. This provision will be particularly 
troublesome for seasonal businesses, will preclude the 
reorganization of some businesses, and will force some debtors 
in possession to make premature decisions regarding their 
leases, to the potential detriment of other creditors. If a 
debtor in possession is required to assume the lease within 120 
days and later cannot confirm a plan and must liquidate, the 
lessor will be entitled to be paid 100 cents on the dollar 
while other creditors receive much less.
    Section 408, ``Limitation,'' extends the period for 
reclamation of goods under 11 U.S.C. Sec. 546(c)(1)(B) from 20 
to 45 days. This amendment is an unwarranted expansion of 
reclamation rights that is prejudicial to the interests of 
other creditors. Trade creditors would be better served to 
lobby state legislatures, not Congress, for expansion of 
reclamation rights because reclamation rights are a matter of 
state law, not federal law.
    Section 413, ``Period for filing plan under chapter 11,'' 
limits the ability of a chapter 11 debtor in possession to 
obtain extensions of its exclusive right to file a chapter 11 
plan to 18 or 20 months, respectively. This provision may lead 
to more nonconsensual plans, which require costly litigation 
and often are not in the best interest of creditors. Some of 
the largest chapter 11 cases have taken several years for 
reorganization, particularly if the case involves mass tort or 
contract liabilities or complex operational problems, but 
ultimately work to the benefit of all parties. To amend the law 
in this fashion, when workouts and reorganizations are on the 
rise and the Supreme Court just ruled on nonconsensual plan 
requirements, would be a grave mistake.
    Section 903, ``Asset-backed securitizations,'' explicitly 
excludes from ``property of the estate'' cash, receivables, 
securities, and other financial assets transferred by the 
debtor in connection with an asset securitization under which 
investment grade rated securities have been issued. Under this 
provision, the debtor is considered to have transferred assets 
prepetition if the assets were transferred pursuant to a 
written agreement that states that the assets were conveyed 
with the intention of removing them from the estate of the 
debtor, regardless of whether the debtor holds an interest in 
the issuer or securities held by the issuer, whether the debtor 
has continuing obligations to repurchase, service, or supervise 
the servicing of eligible assets, or the characterization of 
the transfer for other purposes. This provision hurts creditors 
and decrease the likelihood that a business can reorganize 
because the business will have no cash collateral to fund 
operations. Rating agencies and private parties should not be 
authorized to make the legal determination of whether an asset 
is property of a bankruptcy estate. This provision also impedes 
on states' rights. Transactions that are not sales under state 
law should not be treated as sales by federal bankruptcy law to 
the detriment of the estate and unsecured creditors.
    Section 1101, ``Definitions,'' includes a change in the 
definition of a ``single asset real estate'' debtor which 
eliminates an important limitation on the operation of the 
rules applicable to these debtors: the requirement that only 
businesses with debts up to $4 million be subject to special 
rules limiting the automatic stay. This amendment removes the 
$4 million cap. Although the amendment is in the ``technical 
corrections'' title, it is hardly a technical change.
    In 1994, the Bankruptcy Code was amended to add special 
rules for ``single asset real estate'' (``SARE'') debtors in 
response to a trend that developed during the decline in the 
real estatemarket. Real estate development projects, such as 
office buildings and apartment complexes, in default on their mortgage 
obligations due to poor market conditions, would file chapter 11 
bankruptcy cases in order to forestall foreclosure by the primary 
secured creditor, rather than to engage in a bona fide business 
reorganization.
    In response to these cases, Congress added the SARE 
definition to the Bankruptcy Code along with a special 
limitation on the automatic stay. Under these rules, a secured 
creditor can move to lift the automatic stay (and take the 
property back) if the SARE debtor either has not filed a 
realistic reorganization plan within 90 days of the bankruptcy 
filing or commenced monthly interest payments on their mortgage 
loans. This specially crafted remedy is in addition to the 
secured creditor's other remedies under the Bankruptcy Code.
    The definition of ``single asset real estate'' was not well 
drafted. Notwithstanding the widely recognized prototype SARE 
debtor, businesses with significant real estate components, 
such as hotels, casinos, shopping centers, nursing homes, and 
office complexes of all types are fair game under the current 
definition, even where they have none of the attributes of the 
classic SARE.\37\ A sudden takeover of the property by the 
secured creditor places those working at the site (either 
employed by the debtor; employed by a management company hired 
by the debtor, or employed by tenants of the debtor) at risk of 
losing their jobs.\38\
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    \37\ Some courts have looked to the type of enterprise and have 
ruled that obvious non-real estate businesses, such as manufacturing 
operations, are not ``SARE'' debtors because they are conducting a 
business activity on land and not holding real estate for income. The 
closer cases are enterprises such as hotels, shopping centers, and 
office buildings, because they can be single projects or parcels and 
generate their income through the collection of rents.
    \38\ For example, the lender may attempt to lower the costs of 
operating the building by replacing the building employees. Tenants may 
be displaced (and employees terminated) absent ``non-disturbance'' 
clauses that are not affected by bankruptcy or foreclosure.
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    The significant limiting factor in the application of these 
rules has been the $4 million cap. The ``technical'' change to 
eliminate the cap would place a wide variety of properties--
large and small--at risk of foreclosure and threaten jobs at 
these properties. Absent a definitional or other change that 
specifically excludes properties housing significant business 
enterprises, whether or not related to the real estate 
business, there should be no expansion in the SARE definition 
and the $4 million cap should remain intact. Where true single 
asset cases are being filed, the courts have determined how to 
deal with them, using either the ``bad faith'' rules or other 
Code provisions for lifting the automatic stay. Expanding the 
scope of businesses subject to the ``fast track'' pay-or-lose-
the-property rules unfairly expands the leverage of the secured 
creditor at the expense of all other parties in the case.
    In addition, the bill contains provisions drafted with the 
intent to eject nonviable ``small business'' cases from chapter 
11 and to minimize creditors' costs, particularly in chapter 11 
cases lacking active creditor participation. In an effort to 
create an early detection system to identify and dispense with 
small businesses not worth saving, the small business 
provisions may foreclose the possibility of reorganization of 
small businesses that deserve to be reorganized. The 
contemplated changes could deny tens of thousands of businesses 
meaningful opportunities to restructure their obligations and 
to continue operations through effective reorganization under 
chapter 11 to the detriment of suppliers, employees, 
communities, and the economy at large.
    The provisions of the small business proposal impose more 
onerous and costly requirements on small businesses than they 
do on big businesses. Under the bill, small business debtors 
\39\ have 90 days to file a plan, and can get extensions only 
by proving by a preponderance of the evidence that it is more 
likely than not that they will confirm a plan of reorganization 
(section 427), and they must confirm the plan in 150 days with 
extensions granted on same standard (section 428), with no 
court discretion to override for extenuating circumstances 
(section 429). Large business debtors have the exclusive right 
to file a plan for 120 days and may obtain extensions ``for 
cause,'' a more flexible standard that requires less proof.\40\
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    \39\ A small business is defined in section 422 of the bill as one 
with $4 million or less in total debt, excluding cases with active 
creditors' committees. Data from several sources suggest that this 
definition is likely to incorporate 85 percent of all chapter 11 cases, 
and closer to 100 percent in districts that rarely or never get big 
cases.
    \40\ 11 U.S.C. Sec. 1121. Section 413 of bill disallows extensions 
of a large business chapter 11 debtor's exclusive right to file a 
chapter 11 plan of reorganization beyond 18 months. Although this 
undoubtedly is more generous than the timetable contemplated by the 
small business provisions, this absolute restriction does not take into 
consideration the fact that many large and successful cases today have 
longer exclusivity periods due to delays attributable to working 
through complex problems (e.g., mass tort liability), and that an 
absolute restriction will significantly alter the leverage among the 
parties.
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    The bill requires that small business debtors comply with a 
host of new bureaucratic filing requirement and periodic 
reports (section 424). Large businesses are not subject to 
these requirements. Senior management of small business debtors 
must attend a variety of meetings at the U.S. trustee's 
discretion (section 426). Senior management of large businesses 
does not.
    Under this bill, small business debtors are subject to 
extra layer of scrutiny by the U.S. trustee (section 427), who 
must assess whether the debtor lacks business viability and 
should be dismissed out of bankruptcy. Large business debtors 
are not. Moreover, small business debtors are subject to repeat 
filing restrictions (section 432). Large business debtors are 
not. We are not suggesting that large businesses should be 
subject to all of these provisions. We are suggesting, however, 
that these provisions should be reconsidered. With some careful 
redrafting, it may be possible to accomplish the original 
intent of these provisions--in their current form, they do not.
    In addition, the bill contains an entire title dedicated 
entirely to tax provisions. Some are the product of compromises 
made by the ad hoc tax group that advised the National 
Bankruptcy Review Commission. Others are, without question, 
special interest provisions that go much farther than necessary 
to favor taxing authorities over private creditors.
    These hardly are the type of amendments that should be 
tagging along with other legislation. They are significant, 
controversial, and deserve to be considered independently. If 
we do not take a step back to reconsider the effects of these 
provisions and how they would work collectively, we may regret 
our actions.

          The Effect of S. 625 on Vulnerable American Families

    By some accounts, S. 625 will lead to more financial 
hardship among American families, not less. Notwithstanding 
concerns about the bill's provisions expressed by a countless 
number of commenters, including conservative economists, 
victims rights groups, bankruptcy experts, and the First Lady, 
the bill continues to provide special treatment for credit card 
debt and the consumer credit industry, generally, to the 
detriment of numerous vulnerable Americans. In general, this 
bill takes a good idea--reducing the number of bankruptcy 
filings--and twists it into a bad deal for some of our most 
vulnerable Americans.

A. ExSpouses and Children

    S. 625, like the bankruptcy bills in the 105th Congress, 
has been criticized for its effects on single parents and 
children, both as debtors and as creditors trying to collect 
past-due support. The provisions producing these concerns do 
not explicitly mention ex-spouses, children or support 
obligations. Some provisions increase dividends and collection 
rights for the consumer credit industry through unduly rigid 
repayment plans, additional exceptions to discharge, or 
provisions enhancing creditors' leverage to obtain 
reaffirmations of debt at the expense of priority creditors 
(such as child support recipients). Other provisions inflate 
the claims and entitlements of secured lenders, leaving a 
smaller proportion of income available for payment of other 
claims, including priority claims. In addition, numerous 
provisions complicate bankruptcy procedure or encourage 
unilateral action by particular creditors such that scarce 
resources will be consumed through litigation, administrative 
and legal costs, or through addressing the consequences of 
ejection from the system.
    During the weeks preceding the Judiciary Committee markup 
of S. 1301 last session, several Members of Congress raised 
concerns about the bill's effect on the payment of spousal and 
child support obligations. Specifically, on May 5, 1998, 31 
Senators wrote Chairman Hatch and Ranking Member Leahy that,

         Under current law, outstanding spouse and child 
        support, in addition to past taxes and educational 
        loans, are debts that cannot be discharged in 
        bankruptcy like other debts. Thus, for example, when a 
        non-custodial parent files for bankruptcy and is able 
        to discharge certain debts, the custodial parent is 
        better able to retrieve child support without competing 
        with commercial creditors for the limited resources 
        available post-bankruptcy. This treatment is wholly 
        appropriate: a child is not something one borrows, 
        rather, he or she is someone to whom one has a moral 
        and legal obligation * * * [p]rovisions in S. 1301 and 
        H.R. 3150 would dramatically alter the priority placed 
        on this support. The legislation effectively places 
        spousal and child support obligations on equal footing 
        with some consumer debt. This means that custodial 
        parents and ex-spouses may have to compete in 
        bankruptcy and post-bankruptcy courts with the vast 
        resources of these commercial lenders with little 
        likelihood of success. (Emphasis added)

    Instead of addressing the provisions producing these 
concerns, some proponents of a bankruptcy overhaul put forth a 
set of amendments that enhance the legal status of support 
obligations and, in particular, bolster the rights of state 
enforcement agencies. While those amendments include some well-
intentioned proposals, they do not clear the way for women and 
children to collect past due and current support obligations 
and in some instances increase competition for scarce resources 
by expanding the rights of government creditors.
    Subtitle B of title II of S. 625 is dedicated exclusively 
to providing legal enhancements for the collection of support 
obligations. To a large extent, these provisions build on the 
support amendments developed during the 105th Congress, with 
some further changes at the margins, with varying degrees of 
success in improving the provisions. At the outset, it is 
important to understand the scope of ``domestic support 
obligations'' under these amendments. Section 211 adds a broad 
definition of ``domestic support obligation'' that includes any 
debt, whether accrued before or after the bankruptcy filing, 
and whether the debt is owed to the exspouse and child or to 
the government. There will be times when the government's 
interest in collecting past due support will conflict with the 
interest of an exspouse and child in collecting current 
support.
    At the heart of the rhetoric surrounding the domestic 
support obligation provisions is section 212, which amends 11 
U.S.C. Sec. 507(a), the provision that determines priorities in 
distribution among expenses and debts. The amendment moves 
domestic support obligations from ``seventh priority'' to 
``first priority.'' Support obligations owed to the government 
are entitled to ``first priority'' as well under this bill, and 
recent amendments make it unclear whether the support recipient 
gets to take her share before the state, or vice versa. By 
moving domestic support obligations to first priority, the 
amendment displaces the expenses of administering the 
bankruptcy estate. See 11 U.S.C. Sec. Sec. 507(a)(1), 503(b). 
The trustee administering the estate in a bankruptcy case must 
be able to incur expenses to liquidate property and make 
distributions to creditors, including support recipients. If a 
debtor has significant support obligations, and support is 
``first priority,'' the trustee will not be able to liquidate 
and distribute property. Instead, the trustee may have to 
``abandon''--give back to the debtor--the property instead of 
distributing the proceeds to support recipients or any other 
creditors. Thus, while it may be legally correct to say that 
this bill puts child support ``first'' under section 507(a) of 
the Bankruptcy Code, that statement is a bit misleading. Italso 
is misleading to suggest that moving to ``first priority'' from 
``seventh priority'' makes a significant difference: debts with second 
through sixth priorities almost never appear in consumer cases (e.g., 
grain storage facility operators, debts of fishermen, retail layaway 
claims). Even if this amendment were likely to be effective, it will 
affect only a fraction of 1 percent of all chapter 7 cases.
    The bill also attempts to ensure that debtors in repayment 
plans satisfy all of their past and current support obligations 
by imposing extra requirements that explicitly provide for this 
payment. Although this goal is laudable, some of what the 
provision does is already accomplished by current law. Current 
law already requires 100 percent payment to priority claims, 
including prepetition support obligations, which must be paid 
in full under chapter 13 law unless the holder of the claim 
agrees to different treatment. 11 U.S.C. Sec. 1322(a)(2). 
Nothing in current chapter 13 law excuses otherwise applicable 
requirements to pay postpetition child support, and other 
provisions of Subtitle B explicitly provide that wage orders 
remain in place, for those who have them or are in the process 
of obtaining them, notwithstanding the filing of a chapter 13 
and the automatic stay. In addition, section 212 gives 
postpetition obligations priority claim status, and thus those 
must be paid in full even absent additional language. There has 
been some controversy about the treatment of obligations owed 
to a state enforcement agency that will not directly benefit 
the actual support recipients, as requiring full payment of 
those obligations and making those obligations entirely 
nondischargeable may prevent the debtor from receiving a 
discharge of other debts and also may make it more difficult 
for that debtor to make support payments going forward. That 
issue concerns us as well.
    Section 215 amends 11 U.S.C. Sec. 523(a)(15) to except from 
discharge all debts arising from property settlements. Since 
1994, this provision has permitted a court to except from 
discharge a property settlement (not in the nature of support) 
unless the court finds (1) that the debtor is unable to pay the 
obligation or (2) that discharging the debt results in a 
benefit to the debtor that outweighs the detrimental 
consequences to the ex-spouse or children. The amendment 
eliminates these two conditions, making all non-support 
property settlements nondischargeable.
    There will be times when this change to the treatment of 
property settlements works real hardship on spouses and 
children collecting support. Sometimes a custodial parent and 
child file for bankruptcy after they have difficulty collecting 
payments from a deadbeat spouse and thus cannot meet their day 
to day obligations. As a result of this amendment, some 
financially troubled spouses and children, who file for 
bankruptcy because they have not been receiving their support 
payments, will be unable to discharge debts they may owe to 
their wealthier spouses as a result of a property settlement. 
In addition, some exspouses do not receive support because they 
are financially independent or have remarried and joined 
financially stable households. In such a case, there may not be 
a public policy reason to make a property settlement debt 
nondischargeable to the remarried spouse when doing so would 
work extreme hardship on the debtor. Another scenario that 
reveals the odd effects of this amendment is when a debtor has 
been married and divorced twice. The first former spouse may 
need child support from the debtor. The second former spouse 
may be wealthy and remarried and does not receive support from 
the debtor but has a property settlement with the debtor. If 
this amendment becomes law, the support obligation to the first 
spouse and the property settlement to the second spouse would 
both be nondischargeable and have the same status after 
bankruptcy; if the debtor lacks sufficient funds to pay both, 
the support recipient, who has fewer resources to seek 
collection, may suffer.
    Section 216 permits nondischargeable domestic support 
obligations to be collected from property--even if state law 
exempts that property--after bankruptcy. In light of the 
attention given to whether bankruptcy intrudes on states' 
rights in the homestead exemption context, it is puzzling that 
this provision seems to have escaped from controversy. This 
provision violates states' rights to govern the exemption of 
property after bankruptcy. It overrides wage exemptions, 
property exemptions, and state laws protecting tenancies by the 
entireties. It is unclear whether this provision actually will 
benefit families or whether it instead will benefit government 
agencies, particularly because overriding homestead exemptions 
may have the effect of removing families (e.g., a former debtor 
and his second wife and children) from their homes.
    Although we commend some of these efforts to improve the 
legal rights of support recipients, these provisions are simply 
not responsive to the concerns that have been repeatedly 
identified as harmful to the interests of financially 
struggling women and children, whether debtors or creditors. 
The few small amendments that have been made to other 
provisions have been largely illusory.\41\
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    \41\ For example, section 314 adds another exception to discharge 
when the ``debtor incurred the debt to pay such a nondischargeable debt 
with the intent to discharge in bankruptcy the newly-created debt,'' 
and any debts incurred to pay nondischargeable debts within 70 days 
prior to filing are nondischargeable--except in cases with filed claims 
for domestic support obligations. In no-asset cases, claims do not have 
to be filed, so already this carveout for domestic support obligations 
is not likely to be helpful in over 95 percent of chapter 7 cases. Even 
if it does apply, it helps only with debts incurred within the 70 day 
presumptive period. Women and children in intact families receive no 
parallel protection, creating a questionable message. Critics of these 
types of provisions certainly never intended to suggest that there 
should be different rules regarding credit card debts for divorced 
families and intact families.
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B. Older Americans and Minorities

    A common fallacy of this bill is that it affects only high 
income or abusive debtors. The pages and pages of consumer 
bankruptcy amendments in this bill are not limited to high 
income debtors or abusive debtors. With all of the focus on 
means testing, there has been little or no discussion of how 
all of the new consumer provisions will work together and how 
they will affect current bankruptcy law and practice. Our 
interpretation is that when taken together, these provisions--
whether intentionally or unintentionally --substantially 
increase the complexity of bankruptcy and decrease the debt 
relief available to honest but unfortunate individuals and families who 
are important to us and their communities. These changes may not be 
significant impediments for abusive debtors, who tend to have greater 
resources and can work the system to their advantage or who can access 
other methods of self-protection. Rather, the effects will be felt most 
by the most vulnerable sectors of the population, including older 
Americans, and African-American and Latino families who own homes.
    This disproportionate effect is especially disturbing when 
one realizes that the bill specifically declines to address 
some high end abuses. The retention of unlimited homestead 
exemptions is one significant example. Debtors in some states 
are entitled to exemptions of only a few thousand dollars and 
must give up their homes if they have equity that exceeds this 
modest amount. In neighboring states, debtors with a million 
dollars of equity can discharge their debts and keep their 
homes. Sections 307 and 308 of the bill purport to address 
exemptions through targeting asset transfers and imposing 
longer domicile requirements, but savvy individuals can 
circumvent those provisions with relative ease. Indeed, the 
approach taken in those provisions not only is inadequate to 
curb high end abuse, but actually might result in the denial of 
exemptions altogether for low and middle income families, again 
an example of how the lack of precision in addressing abuses 
can have devastating and unintended effects on people that are 
rarely represented in this debate.\42\ Even though there are 
few debtors with such substantial assets, this inequity is 
particularly disturbing as this bill narrows access to 
meaningful debt relief for hardworking middle class 
families.\43\
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    \42\ Under section 307 of the bill, to be subject to the exemption 
laws of a State, a debtor must be domiciled in a State for the 730 days 
immediately preceding bankruptcy, not just the greater portion of that 
period. Extending the domicile requirement was intended to catch people 
who move to a State with more generous exemptions before filing for 
bankruptcy. However, the provision leaves ambiguous the rights of 
debtors who have not lived in a State for 730 days prior to filing for 
bankruptcy. Lower and middle class families, who may have moved due to 
a job transfer or to take care of elderly relatives, may be deprived of 
all property exemptions necessary to protect their most basic 
necessities, such as clothing, household goods, an old car for job 
transportation, and limited equity in a home.
    \43\ At the Judiciary Committee markup, Senator Grassley 
successfully introduced an amendment to include postpetition earnings 
for individual chapter 11 debtors as ``property of the estate.'' This 
so-called ``super-rich'' amendment, which would have been considered 
rather controversial had it been vetted among the bankruptcy community, 
is undoubtedly a significant change to bankruptcy law but is not the 
most direct or effective method of controlling higher income debtors 
and in any event is not responsive to our concerns regarding the 
disparate effects of this bill.
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1. Older Americans

            a. Who is filing?
    We may not be surprised that older Americans who file for 
bankruptcy often cite catastrophic medical problems as the 
cause of their financial distress, but perhaps more eye-opening 
is the fact that older Americans also cite employment problems 
as the reason they filed for bankruptcy.\44\ Today, Americans 
work longer and harder into their senior years and a growing 
percentage of the population is over the age of 85, and 
predominantly female. Some, particularly those over 65, cannot 
find a replacement job. Others may be able to find alternative 
employment but at substantially lower wages or without the 
health and other benefits that become increasingly important 
with age. These circumstances do not show up in our low 
unemployment rates--which often are touted as proof that we 
should not be seeing so many bankruptcies--but they nonetheless 
may produce a severe financial shock.
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    \44\ Teresa A. Sullivan, Elizabeth Warren, and Jay Lawrence 
Westbrook, From Golden Years to Bankrupt Years, Norton Bank. L. 
Adviser, p. 4 (July 1998) (finding that job and medical problems are 
the reasons for filing most frequently by bankrupt debtors over 50).
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    Older Americans, particularly those who are under 65 and do 
not yet have access to the social safety nets of Social 
Security and Medicare, sometimes resort to short-term, high-
interest credit when faced with unemployment because they 
assume that their unemployment will be temporary and their use 
will serve as a bridge to cover necessities until they start 
receiving paychecks again. Due to their age, however, many of 
these individuals never earn a salary comparable to that which 
they lost; thus, they find themselves unable to deal with the 
debt they have incurred. When they have nowhere else to turn, 
they sometimes turn to the safety valve of bankruptcy.
    Older Americans are also more frequent victims of predatory 
lending practices. Although these practices should be addressed 
independently of bankruptcy, sometimes bankruptcy is the most 
viable avenue for an elderly person to address the financial 
consequences of being victimized by those practices. One in ten 
older Americans in one empirical study reported that they filed 
bankruptcy after unsuccessfully attempting to negotiate with 
their creditors.\45\ Their creditors threatened them with 
seizure of property or placed harassing collection calls. Some 
of them explained that they had been the victims of credit 
scams previously mentioned and they were seeking relief in the 
bankruptcy courts.
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    \45\ Id., at 8.
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            b. Effects of S. 625
    In a variety of ways, S. 625 makes the consumer bankruptcy 
system a less viable approach for rehabilitation. The most 
obvious example is the means test (section 102). The problem 
may not be the concept of means testing, but rather the complex 
mechanism that has been established for all debtors to prove 
ability to pay that is likely to produce troubles for senior citizens 
who file for bankruptcy. The definition of current monthly income 
provided by the bill not only is broad, but may make the debtor's 
income look higher than it actually is, creating an illusion of the 
ability to pay where there is no such ability. First, the definition 
requires that income be calculated by taking an average of monthly 
income over the past 6 months. This means that a senior who was working 
through November, lost his or her job in December, could not find 
alternative work and files for bankruptcy in February will have an 
average income that is higher than the amount that the senior actually 
receives and can use to pay debts in February. In addition, the 
definition is extremely broad and may require that payments for 
Medicare, or other Social Security Act payments, be included in the 
amounts assumed to be available to pay prebankruptcy creditors. The IRS 
expense standards tend to give smaller allowances to lower income 
people and therefore are likely to discriminate against seniors on 
fixed incomes, who then will have the burden to prove ``special 
circumstances,'' a standard that sounds less onerous than 
``extraordinary circumstances'' but in reality is not. Seniors also 
will have to validate each and every expense to be counted as ``other 
necessary expenses,'' regardless of their income, because the ability 
to pay certification requirement has no safe harbors. All of these 
issues may arise even if the senior's case is never alleged to be 
abusive. The inevitable increase in legal costs alone may preclude the 
senior of attempting to obtain debt relief.
    The means test is not the first hurdle for seniors in 
financial trouble. Under this bill, individuals are not 
eligible for bankruptcy, even chapter 13, unless they have 
attempted credit counseling within 180 days prior to bankruptcy 
(section 105). Some seniors do not drive or may live far away 
from these counseling facilities, but not so far that the U.S. 
trustee has deemed services to be unavailable. A senior may be 
facing an imminent collection action that cannot be addressed 
by consumer credit counseling, since she never considered 
bankruptcy, she did not know to get counseling in advance. The 
counseling requirement may be waived by the court if a debtor 
certifies the existence of exigent circumstances and the debtor 
requested counseling services but was unable to obtain services 
for a 5-day period, but the senior is not guaranteed to get 
this waiver even if she hires a lawyer to represent her to 
obtain the waiver, and the waiver expires 30 days after the 
bankruptcy filing. Senator Feingold attempted to ensure that 
the counseling requirement was sufficiently flexible to account 
for such circumstances, but the Judiciary Committee rejected 
those efforts.
    For those seniors that make it through this eligibility 
maze imposed by the prebankruptcy counseling requirement and 
means testing, they have seen only the beginning. The bill 
establishes a host of new administrative requirements, 
including the submission of 3 years worth of tax returns 
(section 315). Failure to comply with these requirements may 
trigger automatic dismissal, and the new repeat filing 
restrictions may prevent the senior from obtaining relief in a 
subsequent case.
    If the senior's case continues, she may not get the same 
protection from the automatic stay that current law would have 
provided. Failure to give notice to creditors in the precise 
format they requested may permit a creditor with actual 
knowledge of the bankruptcy case to take action against the 
senior notwithstanding the automatic stay (section 315). In 
addition, if the senior rents an apartment, she cannot be sure 
that bankruptcy will protect her against her landlord because 
section 311 of this bill expands the rights of residential 
landlords to commence or continue eviction actions against 
debtors without first seeking leave from the bankruptcy court, 
even if the senior is currently paying rent. Debtors who are 
homeowners are not deprived of this protection.
    Even after the senior receives a discharge, she will 
continue to feel the effects of this bill because the new 
exceptions to discharge for credit card debts (sections 310, 
314) are likely to encumber her limited fixed income, whether 
or not she incurred those debts with bad intent. The realities 
of bankruptcy practice and the inequality of resources have 
taught us that exceptions to discharge do not work in a 
mechanical fashion. The bankruptcy system does not run debtors 
through x-ray machines to determine which debtors incurred 
debts that fit the exceptions to discharge. Rather, exceptions 
to discharge often expand the leverage of creditors willing to 
be the most aggressive to push the law to its limits. 
Financially troubled seniors, like other consumers in financial 
trouble, are ill-equipped to fight an allegation that a debt is 
nondischargeable through a full blown trial, regardless of the 
merits, and instead will concede nondischargeability or 
reaffirm the debt. This already is the case today, but the 
problem will grow by the addition of these new provisions, 
particularly if there are not corresponding changes to impose 
much-needed mandatory court review of reaffirmations of 
partially secured debt and unsecured debt. We should not be 
surprised if more seniors emerge from the bankruptcy system 
saddled with high interest credit card debt as a result of this 
bill.
    Given the interest in increasing chapter 13 success, one 
would think our seniors would fare better if they agree to 
undertake a chapter 13 repayment plan. Unfortunately, that 
probably will not be the case. First, section 318 requires that 
debtors whose cases are converted commit to 5 year plans even 
though so many 3 year plans fail.\46\ Second, section 306 of 
the bill substantially alters the treatment of secured debt in 
a fashion that will require full payment of many debts even if 
the collateral is nearly worthless. This means that if a 
creditor convinces a senior to give the creditor a blanket lien 
on all of her possessions and small household goods in exchange 
for a loan, those debts are treated as fully secured; the 
senior then will have to pay in full or surrender her property. 
Section 306 also overrides some state laws in determining that 
creditors secured by mobile homes and trailers, whether or not 
affixed to property, are entitled to all of the special 
protections granted to mortgage lenders for brick and mortar 
homes. This means that the senior will not be able to modify 
that loan at all, even though trailers are depreciating 
collateral and the loan was priced to reflect that risk.\47\ 
Even if the senior makes it all the way through a chapter 13 
payment plan, section 310 may prevent her from discharging the 
remaining credit card debt and the interest that accrued in the 
preceding 5 years.
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    \46\ Section 130 of the House bill, H.R. 833, requires that all 
chapter 13 plans be structured using the formula under the means test. 
Putting aside the logistical difficulties of this approach, it has the 
consequence of making all plans 5 years even for debtors who are 
permitted to confirm 3 year plans. Although this is not yet part of the 
Senate bill, the events of last year's conference process suggest that 
it would not be surprising if section 130 became part of the conference 
committee report.
    \47\ See also Letter from AARP Executive Director Horace Deets to 
Conferees (Oct. 1, 1998) (discussing the Bankruptcy Reform Act of 1998) 
(``These amendments would be problematic for a large portion of low and 
moderate income elderly American homeowners whose primary residence is 
in manufactured housing. It is important to note that loans secured by 
manufactured homes are more like personal property loans than real 
property home mortgages. Manufactured home loans cost significantly 
more than real property mortgages (for on-site built homes), averaging 
2 to 3 percent above conventional mortgage finance. Further, like 
personal property, manufactured homes rapidly depreciate in value.'').
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    Our contention is not that S. 625 systematically seeks out 
to harm the interest of seniors. However, we already are all 
too aware that Social Security and Medicare are often 
insufficient to allow seniors to maintain their financial 
stability and they clearly have less earning potential than 
younger Americans to make up the difference. This bill makes 
one of the few remaining safeguards, the bankruptcy system, 
less effective in protecting older Americans from financial 
ruin.\48\
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    \48\ Even an amendment that previously was not controversial--the 
implementation of a uniform retirement fund exemption--is under attack. 
Although Chairman Hatch was successful adding it back into the bill, 
the provision is subject to proposals to scale back on this protection 
of a senior's own personal safety valve.
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    Perhaps a legislative judgment has been made that 
bankruptcy relief is not the appropriate safety valve for 
seniors facing hard times. However, it is not clear that the 
proponents of the bill have considered what will happen to our 
growing population of seniors if this safety valve becomes too 
expensive and cumbersome to provide the necessary relief, but 
their age or physical condition impose practical impediments to 
obtaining gainful employment. If we are asking our seniors to 
turn elsewhere for help when they face financial disaster after 
a long life of hard work and contributions to their 
communities, we need to identify an alternative or we will have 
a crisis far more severe than the ``bankruptcy crisis.''

2. Minority homeowners

            a. Who is filing?
    Minority homeowners tend to commit a larger percentage of 
their take-home pay to their mortgages than the average 
homeowner; often, their homes represent virtually all of their 
family wealth. Thus, it should not be surprising that when 
faced with a period of unemployment or temporarily disabling 
illness, they are more vulnerable and likely to need bankruptcy 
protection to save their homes. By some estimates, African 
American and Latino families are 600 percent more likely to 
seek bankruptcy protection to prevent the loss of their homes. 
These families, who may have already faced discrimination in 
home mortgage lending and housing purchases, and who often face 
inequality in hiring opportunities, seek bankruptcy protection 
to stabilize their economic circumstances and protect the 
middle class lives they have struggled to achieve. Although 
bankruptcy may be unpleasant, it can be a homesaver for these 
families.
            b. Effect of S. 625
    S. 625 will make bankruptcy less effective as a financial 
stabilization and home saving mechanism, which will fall 
especially hard on minority homeowners. This is attributable to 
several factors, some of which have been mentioned and cited 
previously, and goes well beyond the means test that so 
frequently has been the center of attention. The resulting 
complexity and cost of the bankruptcy system as a result of S. 
625 makes bankruptcy a less viable alternative for these 
struggling families. In addition, mortgage lenders and 
homeowners currently fare better in chapter 7, in which the 
debtor obtains a discharge in relatively short order than in 
chapter 13 in which the debtor stretches disposable income as 
far as it will go and often fails but does not discharge any 
debts; by channeling more debtors into chapter 13, the 
likelihood of failure and repossession increases for minority 
homeowners. At the same time that the bill channels more 
debtors into chapter 13, amendments to chapter 13 decrease the 
likelihood of successful plan completion and property 
retention. Those who remain eligible for chapter 7 are likely 
to receive a narrower discharge and thus may face an increased 
struggle to keep paying their mortgages postbankruptcy due to 
heightened competition for limited funds.
    As a general matter, S. 625 makes a zealous effort to 
increase everyone's share of a debtor's limited resources, and 
as a result, it tries to increase distributions for credit card 
companies, nominally secured retail creditors, nominally 
secured finance companies, car lenders, car lessors, rent-to-
own companies, credit unions, tort victims, support recipients, 
and landlords, among others. The intentions to help some or all 
of these groups may be laudable, but a family in bankruptcy 
simply cannot pay its same limited income two, three or four 
times. Attempts to do so will be a recipe for disaster and 
inevitably will increase the proportion of financially 
vulnerable families that surrender their property or are 
subject to repossession because they cannot concentrate their 
postbankruptcy income on mortgage payments and other critical 
expenses.
    By increasing the complexity of the system, channeling more 
debtors into a less workable chapter 13, and by making 
conflicting policy choices that stretch debtors' resources 
beyond the breaking point, the bill makes it more difficult to 
save a home in bankruptcy. Nothing in this bill is likely to 
change the fact that African-American and Latino families tend 
to dedicate a larger percentage of their income to their homes. 
Those who are ``house poor'' remain more financially vulnerable 
and some will still resort to bankruptcy. But bankruptcy may 
not help them. Others may not file if entry to the system is 
too costly and complicated and instead will be the subject of 
state debt collection actions. Although this maybe consistent 
with the goal of lowering bankruptcy filing rates, consideration of the 
benefits--and costs--of this bill is incomplete without these issues in 
mind. Once these families lose their homes, the likelihood of future 
homeownership may be slim. In other areas of the law, we place a high 
premium on homeownership that sometimes outweighs other considerations. 
The bankruptcy system acts consistently with that view now, but S. 625 
will make a considerable change.

C. Access to Justice For Low Income Debtors

    The people who use the bankruptcy system may be diverse in 
many ways, but most of them share several characteristics: they 
have low incomes and debts that exceed their ability to pay 
them. Some of these families may bear the attributes of the 
middle class in some respects, but others--perhaps as many as a 
quarter or third--are truly poor. Some observers believe that 
impoverished families do not need bankruptcy because they 
generally are judgment proof. This view does not take into 
account the variety of circumstances that explain why our 
poorest citizens need debt relief. For example, poor families 
carrying uncollectible debts may be prevented from obtaining 
access to public housing, or they may need assistance in 
regaining utility services. For the most part, these people do 
not have assets and do not have the ability to pay. The 
question not one of misuse of the system, but rather one of 
access.

1. Disincentives to Represent Consumer Debtors

    From beginning to end, the bill is likely to increase costs 
that will fall the hardest on poorer families. Increased 
complexity as previously described, is not the only culprit. 
Rather, the bill will limit lower income debtor representation 
by imposing financial disincentives on professionals to 
represent debtors. For example, section 102 of the bill 
requires that a debtor's attorney reimburse the trustee if the 
debtor's case is converted or dismissed because the debtor is 
found to have the ability to pay a portion of her debts. This 
creates a conflict of interest between a debtor's attorney and 
his client.\49\
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    \49\ The lawyer faces dubious incentives to counsel the client to 
file chapter 13, or not to file at all, in order to protect the 
attorney's financial interests. Rule 1.7(b) of the Rules of 
Professional Conduct specifically prohibits a lawyer from handling a 
case ``if representation of that client may be materially limited by 
the lawyer's . . . own interests.'' Under this bill, debtors' attorneys 
would arguably be in violation of this Rule on a regular basis, setting 
the stage for extremely problematic attorney-client dynamics that will 
ultimately harm vulnerable consumers.
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    This provision marginally improved last year under the 
leadership of Senators Feingold and Specter. Their amendment 
permitted imposition of this penalty only if the attorney was 
not substantially justified in helping a client file under 
chapter 7. The provision, however, still takes an unprecedented 
and unwarranted step,\50\ and because this bill creates 
entirely new requirements and standards, lawyers are not likely 
to know what will be considered not substantially justified. 
Every other fee-shifting provision in federal law that holds 
the attorney liable is premised on affirmative wrongdoing by 
the attorney, and there is no legitimate basis for different 
and more punitive standards for consumer bankruptcy attorneys. 
Our justice system recognizes that every one deserves 
representation, yet this provision undermines that basic 
principle.
---------------------------------------------------------------------------
    \50\ The amendments originally offered by Senators Specter and 
Feingold were designed to ensure that the chapter 7 trustee was 
compensated for his or her efforts in seeking the dismissal or 
conversion of potentially abusive cases. However, Senator Grassley made 
clear last year that this provision was inserted not to ensure 
reimbursement of trustees, but rather to discourage lawyers from 
directing their clients to chapter 7.
---------------------------------------------------------------------------
    This provision may achieve its goal of keeping some debtors 
from seeking access to the system altogether, but also will 
produce a greater number of pro se filings, some of whom will 
be given assistance by nonlawyer petition preparers. Pro se 
cases already are more likely to be dismissed for procedural 
mistakes, and the inherent disadvantages of filing pro se will 
be exacerbated by this bill due to the increase in the number 
of administrative rules and hair triggers for case dismissal. 
Many debtors who file for bankruptcy without lawyers will be 
denied debt relief due to administrative error and will have a 
difficult time re-entering the system due to the new repeat 
filing prohibitions.\51\
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    \51\ Although Senator Feinstein's amendment to revise section 110 
of the Bankruptcy Code takes an important step toward preventing 
petition preparers from engaging in the unauthorized practice of law, 
it remains unfortunate that this bill seeks to limit the options for 
legal representation.
---------------------------------------------------------------------------
    Deterring lawyers from representing debtors may have an 
effect on the filing rate, but it will not keep out the abusive 
cases and it will occur at a potentially steep cost. Preventing 
financially burdened families from having decent legal 
representation is an untenable policy.\52\
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    \56\ The House Judiciary Committee amended H.R. 833 to provide that 
debtors' attorneys face sanctions for helping their clients file under 
chapter 7 only if the debtor's actions were sanctionable under Rule 
9011 of the Federal Rules of Bankruptcy Procedure. This approach is 
much preferred. However, it remains troublesome that both bills 
continually single out attorneys who represent consumer debtors, when 
all attorneys should be subject to similar standards.
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2. Filing Fee Waivers

    Low income consumers' access to debt relief may be 
prohibitively expensive for another reason. Currently the 
filing fee for consumer bankruptcy is $175, a considerable 
amount of money for low income filers in need of bankruptcy 
protection. Filing fees may be increasedthis year by another 
$25 dollars, which does not account for the fee increase that this bill 
is likely to produce. Except in bankruptcy, indigent individuals may 
file civil actions in federal courts by obtaining a fee waiver.\53\ 
``In enacting the federal in forma pauperis statute, Congress `intended 
to guarantee that no citizen shall be denied an opportunity to 
commence, prosecute, or defend an action, civil or criminal, in any 
court of the United States, solely because * * * poverty makes it 
impossible * * * to pay or secure the costs' of litigation.''\54\ A 
debtor may be able to pay the bankruptcy filing fee in 
installments,\55\ but even the installments can be too much for a poor 
person and failure to submit the installments in a timely fashion leads 
to dismissal of those cases.
---------------------------------------------------------------------------
    \53\ 28 U.S.C. Sec. Sec. 1915, 1930. In United States v. Kras, 409 
U.S. 434 (1973), the U.S. Supreme Court held that an individual does 
not have the fundamental right to file a bankruptcy petition. In a 
strong dissent, Justice Marshall stated that ``I find nothing in the 
majority's opinion to convince me that due process is afforded a person 
who cannot receive a discharge in bankruptcy because he is too poor.'' 
Id. at 460 (Marshall, J., dissenting).
    \54\ Denton v. Hernandez, 112 S. Ct. 1728, 1733 (1992), citing 
Adkins v. E.I. DuPont de Nemours & Co., 335 U.S. 331, 342 (1948).
    \55\ ``An individual commencing a voluntary case or a joint case 
under title 11 may pay such fee in installments.'' 28 U.S.C. Sec.  
1930(a)(6). See also Fed. R. Bankr. P. 1006(b) (delineating procedure 
for accepting application to pay filing fee in installments).
---------------------------------------------------------------------------
    In 1994, Congress authorized and directed the Judicial 
Conference of the United States to create a pilot program and 
study the effect of waiving the filing fee for individual 
Chapter 7 debtors.\56\ The Judicial Conference Committee on the 
Administration of the Bankruptcy System oversaw the 
implementation of the 6-district program that lasted from 
October of 1994 through September of 1997 and submitted its 
final report to Congress on the program last year.\57\ The 
pilot program took place in the Southern District of Illinois, 
the District of Montana, the Eastern District of New York, the 
Eastern District of Pennsylvania, the Western District of 
Tennessee, and the District of Utah. This study showed that fee 
waivers enabled low income consumers to use the bankruptcy 
system, but did not change filing patterns or produce 
incentives for people to file who otherwise would not.\58\
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    \56\ H.R. 2519, ``Department of Commerce, Justice, and State, the 
Judiciary and Related Agencies Appropriations Act, 1994,'' Pub. L. No. 
103-121, 107 STAT. 1153.
    \57\ Federal Judicial Center, Implementing and Evaluating the 
Chapter 7 Filing Fee Waiver Program; Report to the Committee on the 
Administration of the Bankruptcy System of the Judicial Conference of 
the United States (1998).
    \58\ ``It is clear, however, that only a small fraction of the 
increased filings are due to the program. The percentage increase in 
chapter 7 filings and total consumer filings is basically the same in 
all pilot courts, including and excluding the fee-waiver cases.'' Id.
---------------------------------------------------------------------------
    Experiences with the fee waiver pilot program suggest that 
fee waivers may be especially helpful for low income women who 
have nowhere to turn for financial support for themselves and 
their children. The Committee on Bankruptcy Issues of the Third 
Circuit Task Force on Equal Treatment in the Courts found a 
higher single-female filing rate and fewer joint filings for 
fee waiver cases than non-fee waiver cases in the Eastern 
District of Pennsylvania and concluded that the fee waiver 
program may have enhanced womens' access to debt relief and a 
chance to start anew, a finding consistent with the views of a 
working committee of the Second Circuit Task Force on Gender, 
Racial, and Ethnic Fairness in the Courts.\59\
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    \59\ Id.
---------------------------------------------------------------------------
    Filing for bankruptcy may not be a fundamental right, but a 
``needs based'' bankruptcy system should accommodate our most 
needy constituents who have few, if any, alternative safety 
valves to help them get back on their feet. Last year, the 
Senate approved an amendment on the floor that authorized fee 
waivers for indigent debtors, but that amendment did not 
survive the partisan conference committee process. The House 
Judiciary Committee voted to include a fee waiver provision in 
their bankruptcy bill, H.R. 833. Unfortunately, the Senate 
Judiciary Committee rejected the efforts of Senators Specter 
and Feingold to insert a similar provision into S. 625 by a tie 
vote of 9 to 9. If this bill will permit higher income debtors 
to use bankruptcy to keep fancy homes while they discharge 
substantial debts, at the very least we should establish access 
to the system for low income people to erase a few hundred or 
few thousand dollars of old and uncollectible debt that keeps 
them moving forward.

                               Conclusion

    We would support reasonable bankruptcy reform. We have zero 
tolerance for abuse of the bankruptcy system. Unfortunately, S. 
625 is not a bill that we can support in its current form. As a 
practical matter it will make bankruptcy unavailable for the 
honest but unfortunate families for whom the system was 
intended and who will never be able to repay their debts. 
Keeping those families in financial bondage will be a mistake 
in the long run. This bill also will distort the treatment of 
creditors, preferring those with the strongest lobby to those 
who deserve equal treatment. Bankruptcy reform must not favor 
those with political clout and extensive lobbying resources to 
the detriment of those with limited influence in the 
legislative process, including ex-spouses, children, tort 
victims, and employees. Bankruptcy reform must be coupled with 
a consideration of contemporary consumer credit practices, with 
enhanced disclosures to promote educated consumers of credit.
    Regardless of the policies that Congress chooses to 
implement, legislation must be undertaken with care and 
precision. The ambiguities and unintended consequences produced 
by careless drafting fall hardest on our most vulnerable 
constituents, whether debtors or creditors in a bankruptcy 
case, who hardly can afford to litigate questions of 
Congressional intent. The ambiguities in S. 625 will make the 
system cumbersome and costly--hardly the model of progressive 
reform. Before legislation is signed into law, these problems 
should be resolved, and Congress should adopt measures that 
ensure balance and equity between debtors and creditors. It is 
only through efforts such as these that Congress can truly 
``reform'' the bankruptcy system for the benefit of all 
Americans.

                                   Patrick Leahy.
                                   Russ Feingold.
                                   Ted Kennedy.
                                   Charles E. Shumer.

                     XXII. CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 625, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in brackets, new matter is 
printed in italic, and existing law in which no change is 
proposed is shown in roman):

UNITED STATES CODE

           *       *       *       *       *       *       *


                          TITLE 11--BANKRUPTCY

Chapter                                                          Section
1. General Provision..............................................   101
     * * * * * * *
15. Ancillary and Other Cross-Border Cases........................  1501

                     CHARTER 1--GENERAL PROVISIONS

                                                                    Sec.
101. Definitions.
     * * * * * * *
111. Credit counseling services; financial management instructional 
          courses.

Sec. 101. Definitions

    [In this title --] In this title:
          (1) The term ``accountant'' means accountant 
        authorized under applicable law to practice public 
        accounting, and includes professional accounting 
        association, corporation, or partnership, if so 
        authorized[;].
          (2) The term ``affiliate'' means--
                  (A) * * *

           *       *       *       *       *       *       *

                  (D) entity that operates the business or 
                substantially all of the property of the debtor 
                under a lease or operating agrement[;].
          [(4)] (3) The term ``attorney'' means attorney, 
        professional law association, corporation, or 
        partnership, authorized under applicable law to 
        practice law[;].
          [(5)] (4) The term ``claim'' means--
                  (4) * * *
                  (B) right to an equitable remedy for breach 
                of performance if such breach gives rise to a 
                right to payment, whether or not such right to 
                an equitable remedy is reduced to judgment, 
                fixed, contingent, matured, unmatured, 
                disputed, undisputed, secured, or unsecured[;].
          [(6)] (5) The term ``commodity broker'' means futures 
        commission merchant, foreign futures commission 
        merchant, clearing organization, leverage transaction 
        merchant, or commodity options dealer, as defined in 
        section 761 of this title, with respect to which there 
        is a customer, as defined in section 761 of this 
        title[;].
          [(7)] (6) The term ``community claim'' means claim 
        that rose before the commencement of the case 
        concerning the debtor for which property of the kind 
        specified in section 541(a)(2) of this title is liable, 
        whether or not there is any such property at the time 
        of the commencement of the case[;].
          [(8)] (7) The term ``consumer debt'' means debt 
        incurred by an individual primarily for a personal, 
        family, or household purpose[;].
          [(9)] (8) The term ``corporation''--
                  (A) includes--

           *       *       *       *       *       *       *

                  (B) does not include limited partnership[;].
          [(10)] (9) The term ``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;

           *       *       *       *       *       *       *

                 (C) entity that has a community claim[;].
          (10) The term ``current monthly income''--
                  (A) means the average monthly income from all 
                sources which the debtor, or in a joint case, 
                the debtor and the debtor's spouse, receive 
                without regard to whether the income is taxable 
                income, derived during the 180-day period 
                preceding the date of determination; and
                  (B) includes any amount paid by an entity 
                other than the debtor (or, in a joint case, the 
                debtor and the debtor's spouse), on a regular 
                basis to the household expenses of the debtor 
                or the debtor's dependents (and, in a joint 
                case, the debtor's spouse if not otherwise a 
                dependent).
          (11) The term ``custodian'' means--
                  (A) receiver or trustee of any of the 
                property of the debtor, appointed in a case or 
                proceeding not under this title;

           *       *       *       *       *       *       *

                  (C) trustee, receiver, or agent under 
                applicable law, or under a contract, that is 
                appointed or authorized to take charge of 
                property of the debtor for the purpose of 
                enforcing a lien against such property, or for 
                the purpose of general administration of such 
                property for the benefit of the debtor's 
                creditors[;].
          (12) The term ``debt'' means liability on a claim[;].
          [(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;]
          (13) The term ``debtor'' means person or municipality 
        concerning which a case under this title has been 
        commenced[;].
          (13A) ``debtor's principal residence''--
                  (A) means a residential structure, including 
                incidental property, without regard to whether 
                that structure is attached to real property; 
                and
                  (B) includes an individual condominium or 
                cooperative unit;
          [(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) had 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) The term ``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.
          (15) The term ``domestic support obligation'' means a 
        debt that accrues before or after the entry of an order 
        for relief under this title that is--
                  (A) owed to or recoverable by--
                          (i) a spouse, former spouse, or child 
                        of the debtor or such child's parent or 
                        legal guardian; or
                          (ii) a governmental unit;
                  (B) in the nature of alimony, maintenance, or 
                support (including assistance provided by a 
                governmental unit) of such spouse, former 
                spouse, or child of the debtor or such child's 
                parent or legal guardian, without regard to 
                whether such debt is expressly so designated;
                  (C) established or subject to establishment 
                before or after entry of an order for relief 
                under this title, by reason of applicable 
                provisions of--
                          (i) a separation agreement, divorce 
                        decree, or property settlement 
                        agreement;
                          (ii) an order of a court of record; 
                        or
                          (iii) a determination made in 
                        accordance with applicable 
                        nonbankruptcy law by a governmental 
                        unit; and
                  (D) not assigned to a nongovernmental entity, 
                unless that obligation is assigned voluntarily 
                by the spouse, former spouse, child, or parent 
                or legal guardian of the child for the purpose 
                of collection the debt.
          [(15)] (16) The term ``entity'' includes person, 
        estate, trust, governmental unit, and United States 
        trustee[;].
          [(16)] (17) The term ``equity security'' means--
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) warrant or right, other than a right to 
                convert, to purchase, sell, or subscribe to a 
                share, security, or interest of a kind 
                specified in subparagraph (A) or (B) of this 
                paragraph[;].
          [(17)] (18) The term ``equity security holder'' means 
        holder of an equity security of the debtor[;].
          [(18)] (19) The term ``family farmer'' means--
                  (A) individual or individual and spouse 
                engaged in a farming operation whose aggregate 
                debts do not exceed $1,500,000 and not less 
                than 80 percent of whose aggregate 
                noncontingent, liquidated debts (excluding a 
                debt for the principal residence of such 
                individual or such individual and spouse unless 
                such debt arises out of a farming operation), 
                on the date the case is filed, arise out of a 
                farming operation owned or operated by such 
                individual or such individual and spouse, and 
                such individual or such individual and spouse 
                receive from such farming operation more than 
                50 percent of such individual's or such 
                individual and spouse's gross income for [the 
                taxable year preceding the taxable year] at 
                least 1 of the 3 calendar years preceding the 
                year in which the case concerning such 
                individual or such individual and spouse was 
                filed; or

           *       *       *       *       *       *       *

                  (B) corporation or partnership in which more 
                than 50 percent of the outstanding stock or 
                equity is held by one family, or by one family 
                and the relatives of the members of such 
                family, and such family or such relatives 
                conduct the farming operation, and
                          (i) more than 80 percent of the value 
                        of its assets consists of assets 
                        related to the farming operation;

           *       *       *       *       *       *       *

                          (iii) if such corporation issues 
                        stock, such stock is not publicly 
                        traded[;].
          [(19)] (20) The term ``family farmer with regular 
        annual income'' means family farmer whose annual income 
        is sufficiently stable and regular to enable such 
        family farmer to make payments under a plan under 
        chapter 12 of this title[;].
          [(20)] (21) The term ``farmer'' means (except when 
        such term appears in the term ``family farmer'') person 
        that received more than 80 percent of such person's 
        gross income during the taxable year of such person's 
        gross income during the taxable year of such person 
        immediately preceding the taxable year of such person 
        during which the case under this title concerning such 
        persons was commenced from a farming operation owned or 
        operated by such person[;].
          [(21)] (22) The term ``farming operation'' includes 
        farming, tillage of the soil, dairy farming, ranching, 
        production or raising of crops, poultry, or livestock, 
        and production of poultry or livestock products in an 
        unmanufactured state[;].
          [(21A)] (23) The term ``farmout agreement'' means a 
        written agreement in which--
                  (A) * * *

           *       *       *       *       *       *       *

                  (B) such other entity (either directly or 
                through its agents or its assigns), as 
                consideration, agrees to perform drilling, 
                reworking, recompleting, testing, or similar or 
                related operations, to develop or produce 
                liquid or gaseous hydrocarbons on the 
                property[;].
          [(21B] (24) The term ``Federal depository 
        institutions regulatory agency'' means--
                 (A) * * *

           *       *       *       *       *       *       *

                  (D) with respect to any insured depository 
                institution for which the Federal Deposit 
                Insurance Corporation has been appointed 
                conservator or receiver, the Federal Deposit 
                Insurance Corporation[;].
          [(22) ``financial institution'' means a person that 
        is a commercial or savings bank, industrial savings 
        bank, savings and loan association, or trust company 
        and, when any such person is acting as agent or 
        custodian for a customer in connection with a 
        securities contract, as defined in section 741 of this 
        title, such customer;]
          (25) The term ``financial institution'' means--
                  (A)(i) a Federal reserve bank, or an entity 
                that is a commercial or savings bank, 
                industrial savings bank, savings and loan 
                association, trust company, or receiver or 
                conservator for such entity; and
                  (ii) if such Federal reserve bank, receiver, 
                or conservator or entity is acting as agent or 
                custodian for a customer in connection with a 
                securities contract, as defined in section 741, 
                such customer; or
                  (B) in connection with a securities contract, 
                as defined in section 741 of this title, an 
                investment company registered under the 
                Investment Company Act of 1940.
          (26) The term ``financial participant'' means an 
        entity that is a party to a securities contract, 
        commodity contract or forward contract, or on the date 
        of the filing of the petition, has a commodity contract 
        (as defined in section 761) with the debtor or any 
        other entity (other than an affiliate) of a total gross 
        dollar value of not less than $1,000,000,000 in 
        notional or actual principal amount outstanding on any 
        day during the previous 15-month period, or has gross 
        mark-to-market positions of not less than $100,000,000 
        (aggregated across counterparties) in any such 
        agreement or transaction with the debtor or any other 
        entity (other than an affiliate) on any day during the 
        previous 15-month period.
          [(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;]
          (27) The term ``foreign proceeding'' means a 
        collective judicial or administrative proceeding in a 
        foreign country, 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.
          (27A) ``incidental property'' means, with respect to 
        a debtor's principal residence--
                  (A) property commonly conveyed with a 
                principal residence in the area where the real 
                estate is located;
                  (B) all easements, rights, appurtenances, 
                fixtures, rents, royalties, mineral rights, oil 
                or gas rights or profits, water rights, escrow 
                funds, or insurance proceeds; and
                  (C) all replacements or additions;
         (28) The term ``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.
          [(25)](29) The term ``forward contract'' [means a 
        contract] means--
                  (A) a contract (other than a commodity 
                contract) for the purchase, sale, or transfer 
                of a commodity, as defined in section 761(8) of 
                this title, or any similar good, article, 
                service, right, or interest which is presently 
                or in the future becomes the subject of dealing 
                in the forward contract trade more than two 
                days after the date the contract is entered 
                into, including, but not limited to, a 
                repurchase transaction, reverse repurchase 
                transaction, consignment, lease, swap, hedge 
                transaction, deposit, loan, option, allocated 
                transaction, unallocated transaction[, or any 
                combination thereof or option thereon;] , or 
                any other similar agreement.
                  (B) a combination of agreements or 
                transactions referred to in subpagragrphs (A) 
                and (C);
                  (C) an option to enter into an agreement or 
                transaction referred to in subparagraph (A) or 
                (B);
                  (D) a master netting agreement that provides 
                for an agreement or transaction referred to in 
                subparagraph (A), (B), or (C), together with 
                all supplements to such master netting 
                agreement, without regard to whether such 
                master netting agreements provides for an 
                agreement or transaction that is not a forward 
                contract under this paragraph, except that such 
                master netting agreement shall be considered to 
                be a forward contract under this paragraph only 
                with respect to each agreement or transaction 
                under such master netting agreement that is 
                referred to in subparagraph (A), (B) or (C); or
                  (E) a security agreement or arrangement, or 
                other credit enhancement, directly pertaining 
                to a contract, option, agreement, or 
                transaction referred to in subparagraph (A), 
                (B), (C), or (D), but not to exceed the actual 
                value of such contract, option, agreement, or 
                transaction on the date of the filing of the 
                petition.
          [(26) ``forward contract merchant'' means a person 
        whose business consists in whole or in part of entering 
        into forward contracts as or with merchants in a 
        commodity, as defined in section 761(8) of this title, 
        or any similar good, article, service, right, or 
        interest which is presently or in the future becomes 
        the subject of dealing in the forward contract trade;]
          (30) The term ``forward contract merchant'' means a 
        Federal reserve bank, or an entity, the business of 
        which consists in whole or in part of entering into 
        forward contracts as or with merchants or in a 
        commodity, as defined or in section 761, or any similar 
        good, article, service, right, or interest that is 
        presently or in the future becomes the subject of 
        dealing or in the forward contract trade.
          [(27)] (31) The term ``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[;].
          [(28)] (32) The term ``indenture'' means mortgage, 
        deed of trust, or indenture, under which there is 
        outstanding a security, other than a voting-trust 
        certificate, constituting a claim against the debtor, a 
        claim secured by a lien on any of the debtor's 
        property, or an equity security of the debtor[;].
          [(29)] (33) The term ``indenture trustee'' means 
        trustee under an indenture[;].
          [(30)] (34) The term ``individual with regular 
        income'' means individual whose income is sufficiently 
        stable and regular to enable such individual to make 
        payments under a plan under chapter 13 of this title, 
        other than a stockbroker or a commodity broker[;].
          [(31)] (35) The term ``insider'' includes--
                  (A) if the debtor is an individual--

           *       *       *       *       *       *       *

                  (F) managing agent of the debtor[;].
          [(32)] (36) The term ``insolvent'' means--
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) with reference to a municipality, 
                financial condition such that the municipality 
                is--
                          (i) generally not paying its debts as 
                        they become due unless such debts are 
                        the subject of a bona fide dispute; or
                          (ii) unable to pay its debts as they 
                        become due[;].
          [(33)] (37) The term ``institution-affiliated 
        party''--
                  (A) * * *
                  (B) with respect to an insured credit union, 
                has the meaning given it in section 206(r) of 
                the Federal Credit Union Act[;].
          [(34)] (38) The term ``insured credit union'' has the 
        meaning given it in section 101(7) of the Federal 
        Credit Union Act[;]
          [(35)] (39) The term ``insured depository 
        instituion''--
                  (A) has the meaning given it in section 
                3(c)(2) of the Federal Deposit Insurance Act; 
                and
                  (B) includes an insured credit union (except 
                in the case of [paragraphs (21B) and (33)(A)] 
                paragraphs (24) and (37) of this subsection[;].
          [(35A)] (40) The term ``intellectual property'' 
        means--
                  (A) trade secret;

           *       *       *       *       *       *       *

                  (F) mask work protected under chapter 9 or 
                title 17; to the extent protected by applicable 
                nonbankruptcy law [; and].
          [(36)] (41) The term ``judicial lien'' means lien 
        obtained by judgment, levy, sequestration, or other 
        legal or equitable process or proceeding[;].
          [(37)] (42) The term ``lien'' means charge against or 
        interest in property to secure payment of a debt or 
        performance of an obligation[;].
          [(38)] (43) The term ``margin payment'' means, for 
        purposes of the forward contract provisions of this 
        title, payment or deposit of cash, a security or other 
        property, that is commonly known in the forward 
        contract trade as original margin, initial margin, 
        maintenance margin, or variation margin, including 
        mark-to-market payments, or variation payments[; and].
          (44) The term ``master netting agreement''--
                  (A) means an agreement providing for the 
                exercise of rights, including rights of 
                netting, setoff, liquidation, termination, 
                acceleration, or closeout, under or in 
                connection with 1 or more contracts that are 
                described in any 1 or more of paragraphs (1) 
                through (5) of section 561(a), or any security 
                agreement or arrangement or other credit 
                enhancement related to 1 or more of the 
                foregoing; except that
                  (B) if a master netting agreement contains 
                provisions relating to agreements or 
                transactions that are not contracts described 
                in paragraphs (1) through (5) of section 
                561(a), the master netting agreement shall be 
                deemed to be a master netting agreement only 
                with respect to those agreements or 
                transactions that are described in any 1 or 
                more of the paragraphs (1) through (5) of 
                section 561(a).
          (45) The term ``master netting agreement 
        participant'' means an entity that, at any time before 
        the filing of the petition, is a party to an 
        outstanding master netting agreement with the debtor.
          [(39)] (46) The term ``mask work'' has the meaning 
        given it in section 901(a)(2) of title 17.
          [(40)] (47) The term ``municipality'' means political 
        subdivision or public agency or instrumentality of a 
        State[;].
          [(41)] (48) The term ``person'' includes individual, 
        partnership, and corporation, but does not include 
        governmental unit, except that a governmental unit 
        that--
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) is the legal or beneficial owner of an 
                asset of--
                          (i) an employee * * *
                          (ii) an eligible deferred 
                        compensation plan, as defined in 
                        section 457(b) of the Internal Revenue 
                        Code of 1986;
                shall be considered, for purposes of section 
                1102 of this title, to be a person with respect 
                to such asset or such benefit[;].
          [(42)] (49) The term ``petition'' means petition, 
        filed under section 301, 302, 303, or 304 of this 
        title, as the case may be, commencing a case under this 
        title[;].
          [(42A)] (50) The term ``production payment'' means a 
        term overriding royalty satisfiable in cash or in 
        kind--
                  (A) * * *
                  (B) from a specified volume, or a specified 
                value, from the liquid or gaseous hydrocarbon 
                produced from such property, and determined 
                without regard to production costs[;].
          [(43)] (51) The term ``purchaser'' means transferee 
        of a voluntary transfer, and includes immediate or 
        mediate transferee of such a transferee[;].
          [(44)] (52) The term ``railroad'' means common 
        carrier by railroad engaged in the transportation of 
        individuals or property or owner of trackage facilities 
        leased by such a common carrier[;].
          [(45)] (53) The term ``relative'' means individuals 
        related by affinity or consanguinity within the third 
        degree as determined by the common law, or individual 
        in a step or adoptive relationship within such third 
        degree[;].
          [(46)] (54) The term ``repo participant'' means an 
        entity that, on any day during the period beginning 90 
        days before the date of the filing of the petition, has 
        an outstanding repurchase agreement with the debtor[;].
          [(47) ``repurchase agreement'' (which definition also 
        applies to a reverse repurchase agreement) means an 
        agreement, including related terms, which provides for 
        the transfer of certificates of deposit, eligible 
        bankers' acceptances, or securities that are direct 
        obligations of, or that are fully guaranteed as to 
        principal and interest by, the United States or any 
        agency of the United States against the transfer of 
        funds by the transferee of such certificates of 
        deposit, eligible bankers' acceptances, or securities 
        with a simultaneous agreement by such transferee to 
        transfer to the transferor thereof certificates of 
        deposit, eligible bankers' acceptances or securities as 
        described above, at a date certain not later than one 
        year after such transfers or on demand, against the 
        transfer of funds;]
          (55) The term ``repurchase agreement'' and ``reverse 
        repurchase agreement''--
                  (A) mean--
                          (i) an agreement, including related 
                        terms, which provides for the transfer 
                        of--
                                  (I) a certificate of deposit, 
                                mortgage related security (as 
                                defined in section 3 of the 
                                Securities Exchanged Act of 
                                1934), mortgage loan, interest 
                                in a mortgage related security 
                                or mortgage loan, eligible 
                                bankers' acceptance, or 
                                qualified foreign government 
                                security (defined for purposes 
                                of this paragraph to mean a 
                                security that is a direct 
                                obligation of, or that is fully 
                                guaranteed by the central 
                                government of a member of the 
                                Organization for Economic 
                                Cooperation and Development; or
                                  (II) a security that is a 
                                direct obligation of, or that 
                                is fully guaranteed by, the 
                                United States or an agency of 
                                the United States against the 
                                transfer of funds by the 
                                transferee of such certificate 
                                of deposit, eligible bankers' 
                                acceptance, security, loan, or 
                                interest;
                        with a simultaneous agreement by such 
                        transferee to transfer to the 
                        transferor thereof a certificate of 
                        deposit, eligible bankers' acceptance, 
                        security, loan, or interest of the kind 
                        described in subclause (I) or (II), at 
                        a date certain that is not later than 1 
                        year after the date of the transferor's 
                        transfer or on demand, against the 
                        transfer of funds;
                          (ii) a combination of agreements or 
                        transactions referred to in clauses (i) 
                        and (iii);
                          (iii) an option to enter into an 
                        agreement or transaction referred to in 
                        clause (i) or (ii); or
                          (iv) a master netting agreement that 
                        provides for an agreement or 
                        transaction referred to in clause (i), 
                        (ii), or (iii), together with all 
                        supplements to such master netting 
                        agreement, without regard to whether 
                        such master netting agreement provides 
                        for an agreement or transaction that is 
                        not a repurchase agreement under this 
                        subparagraph, except that such master 
                        netting agreement shall be considered 
                        to be a repurchase agreement under this 
                        subparagraph only with respect to each 
                        agreement or transaction under such 
                        master netting agreement that is 
                        referred to in clause (i), (ii), or 
                        (iii); or
                          (v) a security agreement or 
                        arrangement, or other credit 
                        enhancement, directly pertaining to a 
                        contract referred to in clause (i), 
                        (ii), (iii), or (iv), but not to exceed 
                        the actual value of such contract on 
                        the date of the filing of the petition; 
                        and
                  (B) do not include a repurchase obligation 
                under a participation in a commercial mortgage 
                loan.
          [48] (56) The term ``securities clearing agency'' 
        means person that is registered as a clearing agency 
        under section 17A of the Securities Exchange Act of 
        1934, or exempt from such registration under such 
        section pursuant to an order of the Securities and 
        Exchange Commission or whose business is confirmed to 
        the performance of functions of a clearing agency with 
        respect to exempted securities as defined in section 
        3(a)(12) of such Act for the purposes of such section 
        17A[;].
          (57) The term ``securities self regulatory 
        organization'' means either a securities association 
        registered with the Securities and Exchange Commission 
        under section 15A of the Securities Exchange Act of 
        1934 (15 U.S.C. 78o-3) or a national securities 
        exchange registered with the Securities and Exchange 
        Commission under section 6 of the Securities Exchange 
        Act of 1934 (15 U.S.C. 78f).
          [(49)] (58) The term ``security''--
                  (A) includes--
                          (i) note;

           *       *       *       *       *       *       *

                          (xv) certificate of interest or 
                        participation in, temporary or interim 
                        certificate for, receipt for, or 
                        warrant or right to subscribe to or 
                        purchase or sell, a security; but
                  (B) does not include--
                          (i) currency, check, draft, bill of 
                        exchange, or bank letter of credit;

           *       *       *       *       *       *       *

                          (vii) debt or evidence of 
                        indebtedness for goods sold and 
                        delivered or services rendered[;].
          [(50)] (59) The term ``security agreement'' means 
        agreement that creates or provides for a security 
        interest[;].
          [(51)] (60) The term ``security interest'' means lien 
        created by an agreement[;].
          [(51A)] (61) The term ``settlement payment'' means, 
        for purposes of the forward contract provisions of this 
        title, a preliminary settlement payment, a partial 
        settlement payment, an interim settlement payment, a 
        settlement payment on account, a final settlement 
        payment, a net settlement payment, or any other similar 
        payment commonly used in the forward contract 
        trades[;].
          [(51B)] (62) The term ``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 who 
        is not a family farmer 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;]
          (63) The term ``small business case'' means a case 
        filed under chapter 11 of this title in which the 
        debtor is a small business debtor.
          (64) The term ``small business debtor''--
                  (A) subject to subparagraph (B), means a 
                person (including any affiliate of such person 
                that is also a debtor under this title) that 
                has aggregate noncontingent, liquidated secured 
                and unsecured debts as of the date of the 
                petition or the order for relief in an amount 
                not more than $4,000,000 (excluding debts owed 
                to 1 or more affiliates or insiders) for a case 
                in which the United States trustee has 
                appointed under section 1102(a)(1) a committee 
                of unsecured creditors that the court has 
                determined is sufficiently active and 
                representative to produce effective oversight 
                of the debtor; and
                  (B) does not include any member of a group of 
                affiliated debtors that has aggregate 
                noncontingent liquidated secured and unsecured 
                debts in an amount greater than $4,000,000 
                (excluding debt owed to 1 or more affiliates or 
                insiders).
        [(52)] (65) The term ``State'' includes the District of 
        Columbia and Puerto Rico, except for the purpose of 
        defining who may be a debtor under chapter 9 of this 
        title[;].
          [(53)] (66) The term ``statutory lien'' means lien 
        arising solely by force of a statute on specified 
        circumstances or conditions, or lien of distress for 
        rent, whether or not statutory, but does not include 
        security interest or judicial lien, whether or not such 
        interest or lien is provided by or is dependent on a 
        statute and whether or not such interest or lien is 
        made fully effective by statute[;].
          [(53A)] (67) The term ``stockbroker'' means person--
                  (A) with respect to which there is a 
                customer, as defined in section 741 of this 
                title; and
                  (B) that is engaged in the business of 
                effecting transactions in securities--
                          (i) for the account of others; or
                          (ii) which members of the general 
                        public, from or for such person's own 
                        account[;].
          [(53B) ``swap agreement'' means--
                  [(A) an agreement (including terms and 
                conditions incorporated by reference therein) 
                which is a rate swap agreement, basis swap, 
                forward rate agreement, commodity swap, 
                interest rate option, forward foreign exchange 
                agreement, spot foreign exchange agreement, 
                rate cap agreement, rate floor agreement, rate 
                collar agreement, currency swap agreement, 
                cross-currency rate swap agreement, currency 
                option, any other similar agreement (including 
                any option to enter into any of the foregoing);
                  [(B) any combination of the foregoing; or
                  [(C) a master agreement for any of the 
                foregoing together with all supplements;]
          (68) The term ``swap agreement''--
                  (A) means--
                          (i) an agreement, including the terms 
                        and conditions incorporated by 
                        reference in such agreement, that is--
                                  (I) an interest rate swap, 
                                option, future, or forward 
                                agreement, including a rate 
                                floor, rate cap, rate collar, 
                                cross-currency rate swap, and 
                                basis swap;
                                  (II) a spot, same day-
                                tomorrow, tomorrow-next, 
                                forward, or other foreign 
                                exchange or precious metals 
                                agreement;
                                  (III) a currency swap, 
                                option, future, or forward 
                                agreement;
                                  (IV) an equity index or an 
                                equity swap, option, future, or 
                                forward agreement;
                                  (V) a debt index or a debt 
                                swap, option, future, or 
                                forward agreement;
                                  (VI) a credit spread or a 
                                credit swap, option, future, or 
                                forward agreement; or
                                  (VII) a commodity index or a 
                                commodity swap, option, future, 
                                or forward agreement;
                          (ii) an agreement or transaction that 
                        is similar to an agreement or 
                        transaction referred to in clause (i) 
                        that--
                                  (I) is currently, or in the 
                                future becomes, regularly 
                                entered into in the swap market 
                                including terms and conditions 
                                incorporated by reference 
                                therein); and
                                  (II) is a forward, swap, 
                                future, or option on a rate, 
                                currency, commodity, equity 
                                security, or other equity 
                                instrument, on a debt security 
                                or other debt instrument, or on 
                                an economic index or measure of 
                                economic risk or value;
                          (iii) a combination of agreements or 
                        transactions referred to in clauses (i) 
                        and (ii);
                          (iv) an option to enter into an 
                        agreement or transaction referred to in 
                        this subparagraph;
                          (v) a master netting agreement that 
                        provides for an agreement or 
                        transaction referred to in clause (i), 
                        (ii), (iii), or (iv), together with all 
                        supplements to such master netting 
                        agreement and without regard to whether 
                        such master netting agreement contains 
                        an agreement or transaction described 
                        in any such clause, but only with 
                        respect to each agreement or 
                        transaction referred to in any such 
                        clause that is under such master 
                        netting agreement; except that
                  (B) the definition under subparagraph (A) is 
                applicable for purposes of this title only, and 
                shall not be construed or applied so as to 
                challenge or affect the characterization, 
                definition, or treatment of any swap agreement 
                under any other statute, regulation, or rule, 
                including the Securities Act of 1933, the 
                Securities Exchange Act of 1934, the Public 
                Utility Holding Company Act of 1935, the Trust 
                Indenture Act of 1939, the Investment Company 
                Act of 1940, the Investment Advisers Act of 
                1940, the Securities Investor Protection Act of 
                1970, the Commodity Exchange Act, and the 
                regulations prescribed by the Securities and 
                Exchange Commission or the Commodity Futures 
                Trading Commission.
          [(53C)] (69) The term ``swap participant'' means an 
        entity that, at any time before the filing of the 
        petition, has an outstanding swap agreement with the 
        debtor [;].
          [(53D)] (70) The term ``timeshare plan'' means and 
        shall include that interest purchased in any 
        arrangement, plan, scheme, or similar device, but not 
        including exchange programs, whether by membership, 
        agreement, tenancy in common, sale, lease, deed, rental 
        agreement, license, right to use agreement, or by any 
        other means, whereby a purchaser, in exchange for 
        consideration, receives a right to use accommodations, 
        facilities, or recreational sites, whether improved or 
        unimproved, for a specific period of time less than a 
        full year during any given year, but not necessarily 
        for consecutive years, and which extends for a period 
        of more than three years. A ``timeshare interest'' is 
        that interest purchased in a timeshare plan which 
        grants the purchaser the right to use and occupy 
        accommodations, facilities, or recreational sites, 
        whether improved or unimproved, pursuant to a timeshare 
        plan[;].
          [(54) ``stockbroker'' means person--
                  [(A) with respect to which there is a 
                customer, as defined in section 741(2) of this 
                title; and
                  [(B) that is engaged in the business of 
                effecting transactions in securities--
                          [(i) for the account of others; or
                          [(ii) with members of the general 
                        public, from or for such person's own 
                        account;]
          (71) The term ``transfer'' means--
                  (A) the creation of a lien;
                  (B) the retention of title as a security 
                interest;
                  (C) the foreclosure of a debtor's equity of 
                redemption; or
                  (D) each mode, direct or indirect, absolute 
                or conditional, voluntary or involuntary, of 
                disposing of or parting with--
                          (i) property; or
                          (ii) an interest in property.
          [(55)] (72) The term ``United States'', when used in 
        a geographical sense, includes all locations where the 
        judicial jurisdiction of the United States extends, 
        including territories and possessions of the United 
        States[;].
          [(56)] (73) The term ``swap participant'' means an 
        entity that, at any time before the filing of the 
        petition, has an outstanding swap agreement with the 
        debtor[;].
          [(56A)] (74) The term ``term overriding royalty'' 
        means an interest in liquid or gaseous hydrocarbons in 
        place or to be produced from particular real property 
        that entitles the owner thereof to a share of 
        production, or the value thereof, for a term limited by 
        time, quantity, or value realized[;].
          [(57)] (75) The term ``timeshare plan'' means and 
        shall include that interest purchased in any 
        arrangement, plan, scheme, or similar device, but not 
        including exchange programs, whether by membership, 
        agreement, tenancy in common, sale, lease, deed, rental 
        agreement, license, right to use agreement, or by any 
        other means, whereby a purchaser, in exchange for 
        consideration, receives a right to use accommodations, 
        facilities, or recreational sites, whether improved or 
        unimproved, for a specific period of time less than a 
        full year during any given year, but not necessarily 
        for consecutive years, and which extends for a period 
        of more than three years. A ``timeshare interest'' is 
        that interest purchased in a timeshare plan which 
        grants the purchaser the right to use and occupy 
        accommodations, facilities, or recreational sites, 
        whether improved or unimproved, pursuant to a timeshare 
        plan.
          [(54)] (76) The term ``transfer'' means every mode, 
        direct or indirect, absolute or conditional, voluntary 
        or involuntary, of disposing of or parting with 
        property or with an interest in property, including 
        retention of title as a security interest and 
        foreclosure of the debtor's equity of redemption[;].
          [(55)] (77) The term ``United States'', when used in 
        a geographical sense, includes all locations where the 
        judicial jurisdiction of the United States extends, 
        including territories and possessions of the United 
        States[;].
          [(56)] (78) The term ``intellectual property'' 
        means--
                  (A) trade secret;

           *       *       *       *       *       *       *

                  (F) mask work protected under chapter 9 of 
                title 17; to the extent protected by applicable 
                nonbankruptcy law[; and].
          (79) The term [(57)] ``mask work'' has the meaning 
        given it in section 901(a)(2) of title 17.

           *       *       *       *       *       *       *


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, 304, 555 through 557, 559, and 560 apply in a 
case under chapter 15.

           *       *       *       *       *       *       *

    (i) Chapter 12 of this title applies only in a case under 
such chapter.
    (j) Chapter 15 applies only in a case under such chapter, 
except that--
          (1) sections 1513 and 1514 apply in all cases under 
        this title; and
          (2) section 1505 applies to trustees and to any other 
        entity (including an examiner) authorized by the court 
        under chapter 7, 11, or 12, to debtors in possession 
        under chapter 11 or 12, and to debtors under chapter 9 
        who are authorized to act under section 1505.

Sec. 104. Adjustment of dollar amounts

    (a) The Judicial Conference of the United States shall 
transmit to the Congress and to the President before May 1, 
1985, and before May 1 of every sixth year after May 1, 1985, a 
recommendation for the uniform percentage adjustment of each 
dollar amount in this title and in section 1930 of title 28.
    (b)(1) On April 1, 1998, and at each 3-year interval ending 
on April 1 thereafter, each dollar amount in effect under 
sections 109(e), 303(b), 507(a), 522(d), 522(f)(3), and 
523(a)(2)(C) immediately before such April 1 shall be 
adjusted--

           *       *       *       *       *       *       *

    (3) Adjustments made in accordance with paragraph (1) shall 
not apply with respect to cases commenced before the date of 
such adjustments.
    (4) The dollar amount in section 101(18) shall be adjusted 
at the same times and in the same manner as the dollar amounts 
in paragraph (1) of this subsection, beginning with the 
adjustment to be made on April 1, 2001.

Sec. 105. Power of court

    (a) The court * * *

           *       *       *       *       *       *       *

    (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;
          (2) [unless inconsistent with another provision of 
        this title or with applicable Federal Rules of 
        Bankruptcy Procedure,] 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) sets a date by which the debtor, 
                        or trustee if one has been appointed, 
                        shall file a disclosure statement and 
                        plan;

           *       *       *       *       *       *       *

                          (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), 
        except as provided in section 1121(e)(3).

           *       *       *       *       *       *       *


Sec. 108. Extension of time

    (a) If applicable * * *

           *       *       *       *       *       *       *

    (c) Except as provided in section 524 of this title, if 
applicable nonbankruptcy law, an order entered in a 
nonbankruptcy proceeding, or an agreement fixes a period for 
commencing or continuing a civil action in a court other than a 
bankruptcy court on a claim against the debtor, or against an 
individual with respect to which such individual is protected 
under section 1201 or 1301 of this title, and such period has 
not expired before the date of the filing of the petition, then 
such period does not expire until the later of--
          (1) the end of such period, including any suspension 
        of such period occurring on or after the commencement 
        of the case; or
          (2) 30 days after notice of the termination or 
        expiration of the stay under section 362, [922, 1201, 
        or] 922, 1201, or 1301 of this title, as the case may 
        be, with respect to such claim.

Sec. 109. Who may be a debtor

    (a) Notwithstanding any other provision of this section, 
only a person that resides or has a domicile, a place of 
business, or property in the United States, or a municipality, 
may be a debtor under this title.
    (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

           *       *       *       *       *       *       *

    (g) Notwithstanding any other provision of this section, no 
individual or family farmer may be a debtor under this title 
who has been a debtor in a case pending under this title at any 
time in the preceding 180 days if--
          (1) the case * * *
          (2) the debtor requested and obtained the voluntary 
        dismissal of the case following the filing of a request 
        for relief from the automatic stay provided by section 
        362 of this title.
    (h)(1) Subject to paragraphs (2) and (3), and 
notwithstanding any other provision of this section, an 
individual may not be a debtor under this title unless that 
individual has, during the 180-day period preceding the date of 
filing of the petition of that individual, received from an 
approved nonprofit credit counseling service described in 
section 111(a) an individual or group briefing that outlined 
the opportunities for available credit counseling and assisted 
that individual in performing a related budget analysis.
    (2)(A) Paragraph (1) shall not apply with respect to a 
debtor who resides in a district for which the United States 
trustee or bank-

ruptcy administrator of the bankruptcy court of that district 
determines that the approved nonprofit credit counseling 
services for that district are not reasonably able to provide 
adequate services to the additional individuals who would 
otherwise seek credit counseling from those programs by reason 
of the requirements of paragraph (1).
    (B) Each United States trustee or bankruptcy administrator 
that makes a determination described in subparagraph (A) shall 
review that determination not later than 1 year after the date 
of that determination, and not less frequently than every year 
thereafter.
    (3)(A) Subject to subparagraph (B), the requirements of 
paragraph (1) shall not apply with respect to a debtor who 
submits to the court a certification that--
          (i) describes exigent circumstances that merit a 
        waiver of the requirements of paragraph (1);
          (ii) states that the debtor requested credit 
        counseling services from an approved nonprofit credit 
        counseling service, but was unable to obtain the 
        services referred to in paragraph (1) during the 5-day 
        period beginning on the date on which the debtor made 
        that request; and
          (iii) is satisfactory to the court.
    (B) With respect to a debtor, an exemption under 
subparagraph (A) shall cease to apply to that debtor on the 
date on which the debtor meets the requirements of paragraph 
(1), but in no case may the exemption apply to that debtor 
after the date that is 30 days after the debtor files a 
petition.

Sec. 110. Penalty for persons who negligently or fraudulently prepare 
                    bankruptcy petitions

    (a) In this section--
          (1) ``bankruptcy petition preparer'' means a person, 
        other than an attorney or an employee of an attorney, 
        who, under the direct supervision of an attorney, 
        prepares for compensation a document for filing; and

           *       *       *       *       *       *       *

    (b)(1) A bankruptcy petition preparer who prepares a 
document for filing shall sign the document and print on the 
document the preparer's name and address. If a bankruptcy 
petition preparer is not an individual, then an officer, 
principal, responsible person, or partner of the preparer shall 
be required to--
    (A) sign the document for filing; and
    (B) print on the document the name and address of that 
officer, principal, responsible person or partner.
    [(2) A bankruptcy petition preparer who fails to comply 
with paragraph (1) may be fined not more than $500 for each 
such failure unless the failure is due to reasonable cause.]
    (2)(A) Before preparing any document for filing or 
accepting any fees from a debtor, the bankruptcy petition 
preparer shall provide to the debtor a written notice to 
debtors concerning bankruptcy petition preparers, which shall 
be on an official form issued by the Judicial Conference of the 
United States.
    (B) The notice under subparagraph (A)--
          (i) shall inform the debtor in simple language that a 
        bankruptcy petition preparer is not an attorney and may 
        not practice law or give legal advice;
          (ii) may contain a description of examples of legal 
        advice that a bankruptcy petition preparer is not 
        authorized to give, in addition to any advice that the 
        preparer may not give by reason of subsection (e)(2); 
        and
          (iii) shall--
                  (I) be signed by--
                          (aa) the debtor; and
                          (bb) the bankruptcy petition 
                        preparer, under penalty of perjury; and
                  (II) be filed with any document for filing.
    (c)(1) A bankruptcy petition preparer who prepares a 
document for filing shall place on the document, after the 
preparer's signature, an identifying number that identifies 
individuals who prepared the document.
    [(2) For purposes] (2)(A) Subject to subparagraph (B), for 
purposes of this section, the identifying number of a 
bankruptcy petition preparer shall be the Social Security 
account number of each individual who prepared the document or 
assisted in its preparation.
    (B) If a bankruptcy petition preparer is not an individual, 
the identifying number of the bankruptcy petition preparer 
shall be the Social Security account number of the officer, 
principal, responsible person, or partner of the preparer.
    [(3) A bankruptcy petition preparer who fails to comply 
with paragraph (1) may be fined not more than $500 for each 
such failure unless the failure is due to reasonable cause.]
    [(d)(1)] (d) A bankruptcy petition preparer shall, not 
later than the time at which a document for filing is presented 
for the debtor's signature, furnish to the debtor a copy of the 
document.
    [(2) A bankruptcy petition preparer who fails to comply 
with paragraph (1) may be fined not more than $500 for each 
such failure unless the failure is due to reasonable cause.]
    (e)(1) A bankruptcy petition preparer shall not execute any 
document on behalf of a debtor.
    [(2) A bankruptcy petition preparer may be fined not more 
than $500 for each document executed in violation of paragraph 
(1).]
    (a)(A) a bankruptcy petition preparer may not offer a 
potential bankruptcy debtor any legal advice, including any 
legal advice described in subparagraph (B).
    (B) The legal advice referred to in subparagraph (A) 
includes advising the debtor--
          (i) whether--
                  (I) to file a petition under this title, or
                  (II) commencing a case under chapter 7, 11, 
                12, or 13 is appropriate;
          (ii) whether the debtor's debts will be eliminated or 
        discharged in a case under this title;
          (iii) whether the debtor will be able to retain the 
        debtor's home, car, or other property after commencing 
        a case under this title;
          (iv) concerning--
                  (I) the tax consequences of a case brought 
                under this title; or
                  (II) the dischargeability of tax claims;
          (v) whether the debtor may or should promise to repay 
        debts to a creditor or enter into a reaffirmation 
        agreement with a creditor to reaffirm a debt;
          (vi) concerning how to characterize the nature of the 
        debtor's interests in property or the debtor's debts; 
        or
          (vii) concerning bankruptcy procedures and rights.
    [(f)(1)](f) A bankruptcy petition preparer shall not use 
the word ``legal'' or any similar term in any advertisements, 
or advertise under nay category that includes the word 
``legal'' or any similar term.
    [(2) A bankruptcy petition preparer shall be fined not more 
than $500 for each violation of paragraph (a).]
    [(g)(1)](g) A bankruptcy petition preparer shall not 
collect or receive any payment from the debtor or on behalf of 
the debtor for the court fees in connection with filing the 
petition.
    [(2) A bankruptcy petition preparer shall be fined not more 
than $500 for each violation of paragraph (1).]
    (h)(1) The Supreme Court may promulgate rules under section 
2075 of title 28, or the Judicial Conference of the United 
States may prescribe guidelines, for setting a maximum 
allowable fee chargeable by a bankruptcy petition preparer. A 
bankruptcy petition preparer shall notify the debtor of any 
such maximum amount before preparing any document for filing 
for a debtor or accepting any fee from the debtor.
    [(h)(1)] (2) [Within 10 days after the date of the filing 
of a petition, a bankruptcy petition preparer shall file a] A 
declaration under penalty of perjury by the bankruptcy petition 
preparer shall be filed together with the petition, disclosing 
any fee received from or on behalf of the debtor within 12 
months immediately prior to the filing of the case, and any 
unpaid fee charged to the debtor. If rules or guidelines 
setting a maximum fee for services have been promulgated or 
prescribed under paragraph (1), the declaration under this 
paragraph shall include a certification that the bankruptcy 
petition preparer complied with the notification requirement 
under paragraph (1).
    [(2) (3) The court shall disallow and order the immediate 
turnover to the bankruptcy trustee of any fee referred to in 
paragraph (1) found to be in excess of the value of services 
rendered for the documents prepared. An individual debtor may 
exempt any funds so recovered under section 522(b).]
    (3)(A) The court shall disallow and order the immediate 
turnover to the bankruptcy trustee any fee referred to in 
paragraph (2) found to be in excess of the value of any 
services--
          (i) rendered by the preparer during the 12-month 
        period immediately preceding the date of filing of the 
        petition; or
          (ii) found to be in violation of any rule or 
        guideline promulgated or prescribed under paragraph 
        (1).
    (B) All fees charged by a bankruptcy petition preparer may 
be forfeited in any case in which the bankruptcy petition 
preparer fails to comply with this subsection or subsection 
(b), (c), (d), (e), (f), or (g).
    (C) An individual may exempt any funds recovered under this 
paragraph under section 522(b).
    [(3)] (4) The debtor, the trustee, a creditor, [or the 
United States trustee] the United States trustee, or the court, 
on the initiative of the court, may file a motion for an order 
under paragraph (2).
    [(4)] (5) A bankruptcy petition preparer shall be fined not 
more than $500 for each failure to comply with a court order to 
turn over funds within 30 days of service of such order,
    [(i)(1) If a bankruptcy case or related proceeding is 
dismissed because of the failure to file bankruptcy papers, 
including papers specified in section 521(1) of this title, the 
negligence or intentional disregard of this title or the 
Federal Rules of Bankruptcy Procedure by a bankruptcy petition 
preparer, or if a bankruptcy petition preparer violates this 
section or commits any fraudulent, unfair, or deceptive act, 
the bankruptcy court shall certify that fact to the district 
court, and the district court, on motion of the debtor, the 
trustee, or a creditor and after a hearing, shall order the 
bankruptcy petition preparer to pay to the debtor--]
    (i) If a bankruptcy petition preparer violates this section 
or commits any act that the courts finds to be fraudulent, 
unfair, or deceptive, on motion of the debtor, trustee, or 
United States trustee, and after the court holds a hearing with 
respect to that violation or act, the court shall order the 
bankruptcy petition preparer to pay to the debtor--

           *       *       *       *       *       *       *

    (j)(1) A debtor for whom a bankruptcy petition preparer has 
prepared a document for filing, the trustee, a creditor, or the 
United States trustee in the district in which the bankruptcy 
petition preparer resides, has conducted business, or the 
United States trustee in any other district in which the debtor 
resides may bring a civil action to enjoin a bankruptcy 
petition preparer from engaging in any conduct in violation of 
this section or from further acting as a bankruptcy petition 
preparer.
    (2)(A) In an action under paragraph (1), of the court finds 
that--
          (i) a bankruptcy petition preparer has--
                  (I) engaged in conduct in violation of this 
                section or of any provision of this title [a 
                violation of which subjects a person to 
                criminal penalty];

           *       *       *       *       *       *       *

    (B) If the court, finds a bankruptcy petition preparer has 
continually engaged in conduct described in subclause (I), 
(II), or (III) of clause (i) and that an injunction prohibiting 
such conduct that would not be sufficient to prevent such 
person's interference with the proper administration of this 
title, [or has not paid a penalty] has not paid a penalty 
imposed under this section, the court may enjoin the person 
from acting as a bankruptcy petition preparer.
    (3) The court, as part of its contempt power, may enjoin a 
bankruptcy petition preparer that has failed to comply with a 
previous order issued under this section. The injunction under 
this paragraph may be issued upon motion of the court, the 
trustee, or the United States trustee.
    [(3)] (4) The court shall award to a debtor, trustee, or 
creditor that brings a successful action under this subsection 
reasonable [attorney's] attorneys' fees and costs of the 
action, to be paid by the bankruptcy petition preparer.
    (k) Nothing in this section shall be construed to permit 
activities that are otherwise prohibited by law, including 
rules and laws that prohibit the unauthorized practice of law.
    (l)(1) A bankruptcy petition preparer who fails to comply 
with any provision of subsection (b), (c), (d), (e), (f), (g), 
or (h) may be fined not more than $500 for each such failure.
    (2) The court shall triple the amount of a fine assessed 
under paragraph (1) in any case in which the court finds that a 
bankruptcy petition preparer--
          (A) advised the debtor to exclude assets or income 
        that should have been included on applicable schedules;
          (B) advised the debtor to use a false Social Security 
        account number;
          (C) failed to inform the debtor that the debtor was 
        filing for relief under this title; or
          (D) prepared a document for filing in a manner that 
        failed to disclose the identity of the preparer.
    (3) The debtor, the trustee, a creditor, or the United 
States trustee may file a motion for an order imposing a fine 
on the bankruptcy petition preparer for each violation of this 
section.
    (4) All fines imposed under this section shall be paid to 
the United States trustee, who shall deposit an amount equal to 
such fines in a special account of the United States Trustee 
System Fund referred to in section 586(e)(2) of title 28. 
Amounts deposited under this paragraph shall be available to 
fund the enforcement of this section on a national basis.

Sec. 111. Credit counseling services; financial management 
                    instructional courses

    (a) The clerk of each district shall maintain a list of 
credit counseling services that provide 1 or more programs 
described in section 109(h) and a list of instructional courses 
concerning personal financial management that have been 
approved by--
          (1) the United States trustee; or
          (2) the bankruptcy administrator for the district.

           *       *       *       *       *       *       *


                     CHAPTER 3--CASE ADMINISTRATION


                  Subchapter I--Commencement of a Case

Sec.
301. Voluntary cases.
     * * * * * * *
[304. Cases ancillary to foreign proceedings.]
Sec. 304. Cases ancillary to foreign proceedings.
     * * * * * * *
307. United States trustee.
308. Debtor reporting requirements.

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) A case ancillary to a foreign proceeding is commenced 
by the filing with the bankruptcy court of a petition under 
this section by a foreign representative.
    [(b) Subject to the provisions of subsection (c) of this 
section, if a party in interest does not timely controvert the 
petition, or after trial, the court may--
          [(1) enjoin the commencement or continuation of--
                  [(A) any action against--
                          [(i) a debtor with respect to 
                        property involved in such foreign 
                        proceeding; or
                                  [(ii) such property; or
                  (B) the enforcement of any judgment against 
                the debtor with respect to such property, or 
                any act or the commencement or continuation of 
                any judicial proceeding to create or enforce a 
                lien against any judicial proceeding to create 
                or enforce a lien against the property of such 
                estate;
          [(2) order turnover of the property of such estate, 
        or the proceeds of such property, to such foreign 
        representative; or
          [(3) order other appropriate relief.
    [(c) In determining whether to grant relief under 
subsection (b) of this section, the court shall be guided by 
what will best assure an economical and expeditious 
administration of such estate, consistent with--
          [(1) just treatment of all holders of claims against 
        or interests in such estate;
          [(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 such estate;
          [(4) distribution of proceeds of such estate 
        substantially in accordance with the order prescribed 
        by this title;
          [(5) comity; and
          [(6) if appropriate, the provision of an opportunity 
        for a fresh start for the individual that such foreign 
        proceeding concerns.]

Sec. 304. Cases ancillary to foreign proceedings

    (a) For purposes of this section--
          (1) the term ``domestic insurance company'' means a 
        domestic insurance company, as such term is used in 
        section 109(b)(2);
          (2) the term ``foreign insurance company'' means a 
        foreign insurance company, as such term is used in 
        section 109(b)(3);
          (3) the term ``United States claimant'' means a 
        beneficiary of any deposit referred to in subsection 
        (b) or any multibeneficiary trust referred to in 
        subsection (b);
          (4) the term ``United States creditor'' means, with 
        respect to a foreign insurance company--
                  (i) a United States claimant; or
                  (ii) any business entity that operates in the 
                United States and that is a creditor; and
          (5) the term ``United States policyholder'' means a 
        holder of an insurance policy issued in the United 
        States.
    (b) The court may not grant relief under chapter 15 of this 
title with respect to any deposit, escrow, trust fund, or other 
security required or permitted under any applicable state 
insurance law or regulation for the benefit of claim holders in 
the United States.

           *       *       *       *       *       *       *

    (d) Any provisions of this title resulting to securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements, or master meeting agreements shall 
apply in a case ancillary to a foreign proceeding under this 
section or any other section of this title, so that enforcement 
of contractual provisions of such contracts and agreements in 
accordance with their terms--
          (1) shall not be stayed or otherwise limited by--
                  (A) operation of any provision of this title; 
                or
                  (B) order of a court in any case under this 
                title;
          (2) shall limit avoidance powers to the same extent 
        as in a proceeding under chapter 7 or 11; and
          (3) shall not be limited based on the presence or 
        absence of assets of the debtor in the United States.

           *       *       *       *       *       *       *


Sec. 308. Debtor reporting requirements

    (1) For purposes of this section, the term 
``profitability'' means, with respect to a debtor, the amount 
of money that the debtor has earned or lost during current and 
recent fiscal periods.
    (2) A small business debtor shall file periodic financial 
and other reports containing information including--
          (A) the debtor's profitability;
          (B) reasonable approximations of the debtor's 
        projected cash receipts and cash disbursements over a 
        reasonable period;
          (C) comparisons of actual cash receipts and 
        disbursements with projections in prior reports;
          (D)(i) whether the debtor is--
                  (I) in compliance in all material respects 
                with postpetition requirements imposed by this 
                title and the Federal Rules of Bankruptcy 
                Procedure; and
                  (II) timely filing tax returns and paying 
                taxes and other administrative claims when due; 
                and
          (ii) if the debtor is not in compliance with the 
        requirements referred to in clause (i)(I) or filing tax 
        returns and making the payments referred to in clause 
        (i)(II), what the failures are and how, at what cost, 
        and when the debtor intends to remedy such failures; 
        and
          (iii) 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. 328. Limitation on compensation of professional persons

    (a) The trustee, or a committee appointed under section 
1102 of this title, with the court's approval, may employ or 
authorize the employment of a professional person under section 
327 or 1103 of this title, as the case may be, on any 
reasonable terms and conditions of employment, including on a 
retainer, on an hourly basis, on a fixed or percentage fee 
basis, or on a contingent fee basis. Notwithstanding such terms 
and conditions, the court may allow compensation different from 
the compensation provided under such terms and conditions after 
the conclusion of such employment, if such terms and conditions 
prove to have been improvident in light of developments not 
capable of being anticipated at the time of the fixing of such 
terms and conditions.

           *       *       *       *       *       *       *


Sec. 330. Compensation of officers

    (a)(1)* * *

           *       *       *       *       *       *       *

    (3)(A) In determining the amount of reasonable compensation 
to be awarded to an examiner, trustee under chapter 11, or 
professional person, the court shall consider the nature, the 
extent, and the value of such services, taking into account all 
relevant factors, including
          [(A)] (i) the time spent on such services;
          [(B)] (ii) the rates charged for such services;
          [(C)] (iii) whether the services were necessary to 
        the administration of, or beneficial at the time at 
        which the service was rendered toward the completion 
        of, a case under this title;
          [(D)] (iv) whether the services were performed within 
        a reasonable amount of time commensurate with the 
        complexity, importance, and nature of the problem, 
        issue, or task addressed; [and]
          (v) with respect to a professional person, whether 
        the person is board certified or otherwise has 
        demonstrated skill and experience in the bankruptcy 
        field; and
          [(E)] (vi) whether the compensation is reasonable 
        based on the customary compensation charged by 
        comparably skilled practitioners in cases other than 
        cases under this title.
    (B) In determining the amount of reasonable compensation to 
be awarded a trustee, the court shall treat such compensation 
as a commission based on the results achieved.

           *       *       *       *       *       *       *


                     Subchapter III--Administration


Sec. 341. Meetings of creditors and equity security holders

    (a) * * *

           *       *       *       *       *       *       *

    (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 Federal or State law that is not 
a bankruptcy law, or other requirement that representation at 
the meeting of creditors under subsection (a) be by an 
attorney, a creditor holding a consumer debt or any 
representative of the creditor (which may include an entity or 
an employee of an entity and may be a representative for more 
than one creditor) shall be permitted to appear at and 
participate in the meeting of creditors 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) There * * *
    [(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, that 
individual shall be given or obtain (as required in section 
521(a)(1), as part of the certification process under 
subchapter I of chapter 5) a written notice prescribed by the 
United States trustee for the district in which the petition is 
filed under section 586 of title 28.
    (2) The notice shall contain the following:
          (A) A brief description of chapters 7, 11, 12, and 13 
        and the general purpse, benefits, and costs of 
        proceeding under each of those chapters.
          (B) A brief description of services that may be 
        available to that individual from a credit counseling 
        service that is approved by the United States trustee 
        for that district.
    (c)(1) 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].
    (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)(1) Notice given a creditor other than as provided in 
this section shall not be effective notice until that notice 
has been brought to the attention of the creditor. If the 
creditor designates a person or department to be responsible 
for receiving notices concerning bankruptcy cases and 
establishes reasonable procedures so that bankruptcy notices 
received by the creditor are to be delivered to such department 
or person, notice shall not be considered to have been brought 
to the attention of the creditor until received by such person 
or department.
    (2) No sanction under section 362(h) or any other sanction 
that a court may impose on account of violations of the stay 
under section 362(a) or failure to comply with section 542 or 
543 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)(1) 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, applicable rule, other provision of 
law, or order of the court, shall identify the department, 
agency, or instrumentality through which the debtor in 
indebted.
    (2) The debtor shall identify (with information such as a 
taxpayer identification number, loan, account or contract 
number, or real estate parcel number, if applicable), and 
describe the underlying basis for the claim of the governmental 
unit.
    (3) If the liability of the debtor 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 that individual, entity, 
organization, or name.
    (h) The clerk shall keep and update on a quarterly basis, 
in such form and manner as the Director of the Administrative 
Office of the United States Courts prescribes, a register in 
which a governmental unit may designate or redesignate a 
mailing address for service of notice in cases pending in the 
district. The clerk shall make such register available to 
debtors.
    (i) A notice that does not comply with subsections (d) and 
(e) shall not be effective unless the debtor demonstrates by 
clear and convincing evidence that--
          (1) timely notice was given in a manner reasonably 
        calculated to satisfy the requirements of this section; 
        and
         (2) either--
                  (A) the notice was timely sent to the address 
                provided in the register maintained by the 
                clerk of the district in which the case was 
                pending for such purposes; or
                  (B) no address was provided in such list for 
                the governmental unit and that an officer of 
                the governmental unit who is responsible for 
                the matter or claim had actual knowledge of the 
                case in sufficient time to act.

           *       *       *       *       *       *       *


Sec. 346. Special tax provisions

    (a) * * *

           *       *       *       *       *       *       *

    (g) (1) Neither gain nor loss shall be recognized on a 
transfer--
          (A) * * *

           *       *       *       *       *       *       *

          (C) in a case under chapter 11 or 12 or this title 
        concerning a corporation, of property from the estate 
        to a corporation that is an affiliate participating in 
        a joint plan with the debtor, or that is a successor to 
        the debtor under the plan[, except that gain or loss 
        may be recognized to the same extent that such transfer 
        results in the recognition of gain or loss under 
        section 371 of the Internal Revenue Code of 1986].

           *       *       *       *       *       *       *


Sec. 348. Effect of conversion

    (a) Conversion * * *

           *       *       *       *       *       *       *

    (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) valuation 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 a case 
        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--
                  (i) the claim of any creditor holding 
                security as of the date of the petition shall 
                continue to be secured by that security unless 
                the full amount of such claim determined under 
                applicable nonbankruptcy law has been paid in 
                full as of the date of conversion, 
                notwithstanding any valuation or determination 
                of the amount of an allowed secured claim made 
                for the purposes of the chapter 13 proceeding; 
                and
                  (ii) unless a prebankruptcy default has been 
                fully cured under the plan at the time of 
                conversion, in any proceeding under this title 
                or otherwise, the default shall have the effect 
                given under applicable nonbankruptcy law.
    (2) If the debtor converts a case under chapter 13 of this 
title to a case under another chapter under this title in bad 
faith, the property of the estate in the converted case shall 
consist of the property of the estate as of the date of 
conversion.

           *       *       *       *       *       *       *


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) the commencement * * *

           *       *       *       *       *       *       *

          (7) the setoff of any debt owing to the debtor that 
        arose before the commencement of the case under this 
        title against any claim against the debtor; [and]
          (8) the commencement or continuation of a proceeding 
        before the United States Tax Court concerning the 
        debtor[.], with respect to a tax liability for a 
        taxable period ending before the order for relief under 
        section 301, 302, or 303; and
          (9) any communication (other than a recitation of the 
        creditor's legal rights) threatening a debtor (for the 
        purpose of coercing an agreement for the reaffirmation 
        of debt), at any time after the commencement and before 
        the granting of a discharge in a case under this title, 
        of an intention to--
                  (A) file a motion to--
                          (i) determine the dischargeability of 
                        a debt; or
                          (ii) under section 707(b), dismiss or 
                        convert a case; or
                  (B) repossess collateral from the debtor to 
                which the stay applies.
    (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) under * * *
          [(2) under subsection (a) of this section--
                  [(A) of the commencement or continuation of 
                an action or proceeding for--
                          [(i) the establishment of paternity; 
                        or
                          [(ii) the establishment or 
                        modification of an order for alimony, 
                        maintenance, or support; or
                  [(B) of the collection of alimony, 
                maintenance, or support from property that is 
                not property of the estate;]
          (2) under subsection (a)--
                  (A) of the commencement of an action or 
                proceeding for--
                          (i) the establishment of paternity; 
                        or
                          (ii) the establishment or 
                        modification of an order for domestic 
                        support obligations; or
                  (B) the collection of a domestic support 
                obligation from property that is not property 
                of the estate;

           *       *       *       *       *       *       *

          (5) under subsection (a) with respect to the 
        withholding of income--
                  (A) for payment of a domestic support 
                obligation for amounts that initially become 
                payable after the date the petition was filed; 
                and
                  (B) for payment of a domestic support 
                obligation for amounts payable before the date 
                the petition was filed, and owed directly to 
                the spouse, former spouse, or child of the 
                debtor, or the parent or guardian of such 
                child;

           *       *       *       *       *       *       *

          (6) under subsection (a) of this section, of the 
        setoff by a commodity broker, forward contract 
        merchant, stockbroker, [financial institutions,] 
        financial institution, financial participant or 
        securities clearing agency of any mutual debt and claim 
        under or in connection with commodity contracts, as 
        defined in section 761 of this title, forward 
        contracts, or securities contracts, as defined in 
        section 741 of this title, that constitutes the setoff 
        of a claim against the debtor for 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, arising out of commodity contracts, forward 
        contracts, or securities contracts against cash, 
        securities, or other property held by, pledged to, and 
        under the control of, or due from such commodity 
        broker, forward contract merchant, stockbroker, 
        [financial institutions,] financial institution, 
        financial participant or securities clearing agency to 
        margin, guarantee, secure, or settle commodity 
        contracts, forward contracts, or securities contracts;
          (7) under subsection (a) of this section, of the 
        setoff by a repo participant, of any mutual debt and 
        claim under or in connection with repurchase agreements 
        that constitutes the setoff of a claim against the 
        debtor for a margin payment, as defined in section 741 
        or 761 of this title, or settlement payment, as defined 
        in section 741 of this title, arising out of repurchase 
        agreements against cash, securities, or other property 
        held by, pledged to, and under the control of, or due 
        from such repo participant to margin, guarantee, secure 
        or settle repurchase agreements;

           *       *       *       *       *       *       *

          (9) under subsection (a), of--
                  (A) an audit by a government unit to 
                determine tax liability;
                  (B) the issuance to the debtor by a 
                governmental unit of a notice of tax 
                deficiency;
                  (C) a demand for tax returns; [or]
                  (D) the making of an assessment 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).

           *       *       *       *       *       *       *

          [(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]
          (17) under subsection (a), of the setoff by a swap 
        participant of a mutual debt and claim under or in 
        connection with a swap agreement that constitutes the 
        setoff of a claim against the debtor for a payment or 
        transfer due from the debtor under or in connection 
        with a swap agreement against a payment due to the 
        debtor from the swap participant under or in connection 
        with a swap agreement or against cash, securities, or 
        other property held by, pledged to, and under the 
        control of, or due from such swap participant to 
        guarantee, secure, or settle a swap agreement;
          (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) with respect to--
                  (A) the withholding, suspension, or 
                restriction of drivers' licenses, professional 
                and occupational licenses, and recreational 
                licenses under State law, as specified in 
                section 466(a)(16) of the Social Security Act 
                (42 U.S.C. 666(a)(16));
                  (B) the reporting of overdue support owed by 
                an absent parent to any consumer reporting 
                agency as specified in section 466(a)(7) of the 
                Social Security Act (42 U.S.C. 666(a)(7));
                  (C) the interception of tax refunds, as 
                specified in sections 464 and 466(a)(3) of the 
                Social Security Act (42 U.S.C. 664 and 
                666(a)(3)), if such tax refund is payable 
                directly to a spouse, former spouse, or child 
                of the debtor, or the parent or legal guardian 
                of such child; or
                  ``(D) the enforcement of medical obligations 
                as specified under title IV of the Social 
                Security Act (42 U.S.C. 601 et seq.);
          (20) under subsection (a), of withholding of income 
        from a debtor's wages and collection of amounts 
        withheld, pursuant to the debtor's agreement 
        authorizing that withholding and collection for the 
        benefit of a pension, profit-sharing, stock bonus, or 
        other plan established under section 401, 403, 408, 
        408A, 414, 457, or 501(a) of the Internal Revenue Code 
        of 1986 that is sponsored by the employer of the 
        debtor, or an affiliate, successor, or predecessor of 
        such employer--
                  (A) to the extent that the amounts withheld 
                and collected are used solely for payments 
                relating to a loan from a plan that satisfies 
                the requirements of section 408(b)(1) of the 
                Employee Retirement Income Security Act of 1974 
                or is subject to section 72(p) of the Internal 
                Revenue Code of 1986; or
                  (B) in the case of a loan from a thrift 
                savings plan described in subchapter III of 
                title 5, that satisfies the requirements of 
                section 8433(g) of such title;
          (21) under subsection (a), of any act to enforce any 
        lien against or security interest in real property 
        following the entry of an order under section 362(d)(4) 
        as to that property in any prior bankruptcy case for a 
        period of 2 years after entry of such an order, except 
        that the debtor, in a subsequent case, may move the 
        court for relief from such order based upon changed 
        circumstances or for other good cause shown, after 
        notice and a hearing;
          (22) under subsection (a), of any act to enforce any 
        lien against or security interest in real property--
                  (A) if the debtor is ineligible under section 
                109(g) to be a debtor in a bankruptcy case; or
                  (B) if the bankruptcy case was filed in 
                violation of a bankruptcy court order in a 
                prior bankruptcy case prohibiting the debtor 
                from being a debtor in another bankruptcy case;
          (23) under subsection (a)(3), of the continuation of 
        any eviction, unlawful detainer action, or similar 
        proceeding by a lessor against a debtor involving 
        residential real property in which the debtor resides 
        as a tenant under a rental agreement;
          (24) under subsection (a)(3), of the commencement of 
        any eviction, unlawful detainer action, or similar 
        proceeding by a lessor against a debtor involving 
        residential real property in which the debtor resides 
        as a tenant under a rental agreement that has 
        terminated under the lease agreement or applicable 
        State law;
          (25) under subsection (a)(3), of eviction actions 
        based on endangerment to property or person or the use 
        of illegal drugs;
          (26) under subsection (a), of--
                  (A) the commencement or continuation of an 
                investigation or action by a securities self 
                regulatory organization to enforce such 
                organization's regulatory power;
                  (B) the enforcement of an order or decision, 
                other than for monetary sanctions, obtained in 
                an action by the securities self regulatory 
                organization to enforce such organization's 
                regulatory power; or
                  (C) 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;
          (27) under subsection (a), of the setoff of an income 
        tax refund, by a governmental unit, with respect to a 
        taxable period that ended before the order for relief 
        against an income tax liability for a taxable period 
        that also ended before the order for relief, unless--
                  (A) before that setoff, an action to 
                determine the amount or legality of that tax 
                liability under section 505(a) was commenced; 
                or
                  (B) in any case in which 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, in which case the 
                governmental unit may hold the refund pending 
                the resolution of the action;
          (28) under subsection (a), of the setoff by a master 
        netting agreement participant of a mutual debt and 
        claim under or in connection with 1 or more master 
        netting agreements or any contract or agreement subject 
        to such agreements that constitutes the setoff of a 
        claim against the debtor for any payment or other 
        transfer of property due from the debtor under or in 
        connection with such agreements or any contract or 
        agreement subject to such agreements against any 
        payment due to the debtor from such master netting 
        agreement participant under or in connection with such 
        agreements or any contract or agreement subject to such 
        agreements or against cash, securities, or other 
        property held by, pledged or and under the control of, 
        or due from such master netting agreement participant 
        to margin, guarantee, secure, or settle such agreements 
        or any contract or agreement subject to such 
        agreements, to the extent such participant is eligible 
        to exercise such offset rights under paragraph (6), 
        (7), or (17) for each individual contract covered by 
        the master netting agreement in issue.
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. Nothing in paragraph (20) may be 
construed to provide that any loan made under a governmental 
plan under section 414(d), or a contract or account under 
section 403(b), of the Internal Revenue Code of 1986 
constitutes a claim or a debt under this title.
    (c) 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[.] ,
          (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 the debtor was pending within 
        the preceding 1-year period but was dismissed, other 
        than a case refiled under a chapter other than chapter 
        7 after dismissal under section 707(b)--
                  (A) the stay under subsection (a) with 
                respect to any action taken with respect to a 
                debt or property securing such debt or with 
                respect to any lease will terminate with 
                respect to the debtor on the 30th day after the 
                filing of the later case;
                  (B) upon motion by a party in interest for 
                continuation of the automatic stay and upon 
                notice and a hearing; the court may extend the 
                stay in particular cases as to any or all 
                creditors (subject to such conditions or 
                limitations as the court may then impose) after 
                notice and a hearing completed before the 
                expiration of the 30-day period only if the 
                party in interest demonstrates that the filing 
                of the later case is in good faith as to the 
                creditors to be stayed; and
                  (C) for purposes of subparagraph (B), a case 
                is presumptively filed not in good faith (but 
                such presumption may be rebutted by clear and 
                convincing evidence to the contrary)--
                          (i) as to all creditors, if--
                                  (I) more than 1 previous case 
                                under any of chapter 7, 11, or 
                                13 in which the individual was 
                                a debtor was pending within the 
                                preceding 1-year period;
                                  (II) a previous case under 
                                any of chapter 7, 11, or 13 in 
                                which the individual was a 
                                debtor was dismissed within 
                                such 1-year period, after the 
                                debtor failed to--
                                          (aa) file or amend 
                                        the petition or other 
                                        documents as required 
                                        by this title or the 
                                        court without 
                                        substantial excuse (but 
                                        mere inadvertence or 
                                        negligenceshall not be 
a substantial excuse unless the dismissal was caused by the negligence 
of the debtor's attorney);
                                          (bb) provide adequate 
                                        protection as ordered 
                                        by the court; or
                                          (cc) perform the 
                                        terms of a plan 
                                        confirmed by the court; 
                                        or
                                  (III) there has not been a 
                                substantial change in the 
                                financial or personal affairs 
                                of the debtor since the 
                                dismissal of the next most 
                                previous case under chapter 7, 
                                11, or 13, or any other reason 
                                to conclude that the later case 
                                will be concluded--
                                          (aa) if a case under 
                                        chapter 7, with a 
                                        discharge; or
                                          (bb) if a case under 
                                        chapter 11 or 13, with 
                                        a confirmed plan which 
                                        will be fully 
                                        performed; and
                          (ii) as to any creditor that 
                        commenced an action under section (d) 
                        in a previous case in which the 
                        individual was a debtor if, as of the 
                        date of dismissal of such case, that 
                        action was still pending or had been 
                        resolved by terminating, conditioning, 
                        or limiting the stay as to actions of 
                        such creditor; and
          (4)(A)(i) if a single or joint case is filed by or 
        against an individual debtor under this title, and if 2 
        or more single or joint cases of the debtor were 
        pending within the previous year but were dismissed, 
        other than a case refiled under section 707(b), the 
        stay under subsection (a) shall not go into effect upon 
        the filing of the later case; and
          (ii) on request of a party in interest, the court 
        shall promptly enter an order confirming that no stay 
        is in effect;
          (B) if, within 30 days after the filing of the later 
        case, a party in interest requests the court may order 
        the stay to take effect in the case as to any or all 
        creditors (subject to such conditions or limitations as 
        the court may impose), after notice and hearing, only 
        if the party in interest demonstrates that the filing 
        of the later case is in good faith as to the creditors 
        to be stayed;
          (C) a stay imposed under subparagraph (B) shall be 
        effective on the date of entry of the order allowing 
        the stay to go into effect; and
          (D) for purposes of subparagraph (B), a case is 
        presumptively not filed in good faith (but such 
        presumption may be rebutted by clear and convincing 
        evidence to the contrary)--
                  (i) as to all creditors if--
                          (I) 2 or more previous cases under 
                        this title in which the individual was 
                        a debtor were pending within the 1-year 
                        period;
                          (II) a previous case under this title 
                        in which the individual was a debtor 
                        was dismissed within the time period 
                        stated in this paragraph after the 
                        debtor failed to file or amend the 
                        petition or other documents as required 
                        by this title or the court without 
                        substantial excuse (but mere 
                        inadvertence or negligence shall not be 
                        substantial excuse unless the dismissal 
                        was caused by the negligence of the 
                        debtor's attorney), failed to 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 or the next most previous 
                        case under this title, or any other 
                        reason to conclude that the later case 
                        will not be concluded, if a case under 
                        chapter 7, with a discharge, and if a 
                        case under chapter 11 or 13, with a 
                        confirmed plan that will be fully 
                        performed; or
                  (ii) as to any creditor that commenced an 
                action under subsection (d) in a previous case 
                in which the individual was a debtor if, as of 
                the date of dismissal of such case, such action 
                was still pending or had been resolved by 
                terminating, conditioning, or limiting the stay 
                as to action of such creditor.
    (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) for cause, including the lack of adequate 
        protection of an interest in property of such party in 
        interest;

           *       *       *       *       *       *       *

                  (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 
                that--
                          (i) may, in the debtor's sole 
                        discretion, notwithstanding section 
                        363(c)(2), 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); and
                          (ii) are in an amount equal to 
                        interest at the then applicable 
                        nondefault contract rate of interest on 
                        the value of the creditor's interest in 
                        the real estate; or
          (4) with respect to a stay of an act against real 
        property under subsection (a), by a creditor whose 
        claim is secured by an interest in such real estate, if 
        the court finds that the filing of the bankruptcy 
        petition was part of a scheme to delay, hinder, and 
        defraud creditors that involved either--
                  (A) transfer of all or part ownership of, or 
                other interest in, the real property without 
                the consent of the secured creditor or court 
                approval; or
                  (B) multiple bankruptcy filings affecting the 
                real property.
        If recorded in compliance with applicable State laws 
        governing notices of interests or liens in real 
        property, an order entered under this subsection shall 
        be binding in any other case under this title 
        purporting to affect the real property filed not later 
        than 2 years after that recording, except that a debtor 
        in a subsequent case may move for relief from such 
        order based upon changed circumstances or for good 
        cause shown, after notice and a hearing.
    (e)(1) 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.
    (2) Notwithstanding paragraph (1), in the case of an 
individual filing under chapter 7, 11, or 13, the stay under 
subsection (a) shall terminate on the date that is 60 days 
after a request is made by a party in interest under subsection 
(d), unless--
          (A) a final decision is rendered by the court during 
        the 60-day period beginning on the date of the request; 
        or
          (B) that 60-day period is extended--
                  (i) by agreement of all parties in interest; 
                or
                  (ii) by the court for such specific period of 
                time as the court finds is required for good 
                cause, as described in findings made by the 
                court.

           *       *       *       *       *       *       *

    (g) In any hearing under subsection (d) or (e) of this 
section concerning relief from the stay of any act under 
subsection (a) of this section--
          (1) the party requesting such relief has the burden 
        of proof on the issue of the debtor's equity in 
        property; and
          (2) the party opposing such relief has the burden of 
        proof on all other issues.
    (h)(1) Subject to paragraph (2), in an individual case 
under 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 period of time set by 
section 521(a)(2) to--
          (A) file timely any statement of intention required 
        under section 521(a) with respect to that property or 
        to indicate therein that the debtor--
                  (i) will either surrender the property or 
                retain the property; and
                  (ii) if retaining the property, will, as 
                applicable--
                          (I) redeem the property under section 
                        722;
                          (II) reaffirm the debt the property 
                        secures under section 524(c); or
                          (III) assume the unexpired lease 
                        under section 365(p) if the trustee 
                        does not do so; or
          (B) take timely the action specified in that 
        statement of intention, as the statement may be amended 
        before expiration of the period for taking action, 
        unless the statement of intention specified 
        reaffirmation and the creditor refuses to reaffirm on 
        the original contract terms.
    (2) Paragraph (1) shall not apply if 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.
    (i) If a case commenced under chapter 7, 11, or 13 is 
dismissed due to the creation of a debt repayment plan, for 
purposes of subsection (c)(3), any subsequent case commenced by 
the debtor under any such chapter shall not be presumed to be 
filed not in good faith.
    [(h) An] (j)(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 attorney's 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, the recovery under paragraph (1) against such 
entity shall be limited to actual damages.
    (k)(1) Except as provided in paragraph (2), the filing of a 
petition under chapter 11 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--
          (A) is a debtor in a small business case pending at 
        the time the petition is filed;
          (B) was a debtor in a small business case that was 
        dismissed for any reason by an order that became final 
        in the 2-year period ending on the date of the order 
        for relief entered with respect to the petition;
          (C) was a debtor in a small business case in which a 
        plan was confirmed in the 2-year period ending on the 
        date of the order for relief entered with respect to 
        the petition; or
          (D) is an entity that has succeeded to substantially 
        all of the assets or business of a small business 
        debtor described in subparagraph (A), (B), or (C).
    (2) Paragraph (1) does not apply to the filing of a 
petition if the debtor proves by a preponderance of the 
evidence that--
          (A) the filing of that petition resulted from 
        circumstances beyond the control of the debtor not 
        foreseeable at the time the case then pending was 
        filed; and
          (B) it is more likely than not that the court will 
        confirm a feasible plan, but not a liquidating plan, 
        within a reasonable period of time.
    (l) Limitation.--The exercise of rights not subject to the 
stay arising under subsection (a) pursuant to paragraph (6), 
(7), or (17) of subsection (b) shall not be stayed by an order 
of a court or administrative agency in any proceeding under 
this title.

Sec. 363. Use, sale, or lease of property

    (a) In this * * *

           *       *       *       *       *       *       *

    (d) The trustee may use, sell, or lease property under 
subsection (b) or (c) of this section [only to the extent not 
inconsistent with any relief granted under section 362(c), 
362(d), 362(e), or 362(f) of this title.]--
          (1) in accordance with applicable nonbankruptcy law 
        that governs the transfer of property by a corporation 
        or trust that is not a moneyed, business, or commercial 
        corporation or trust; and
          (2) to the extent not inconsistent with any relief 
        granted under subsection (c), (d), (e), or (f) of 
        section 362.

           *       *       *       *       *       *       *


Sec. 365. Executory contracts and unexpired leases

    (a) Except * * *

           *       *       *       *       *       *       *

    (d)(1) In a case under chapter 7 of this title, if the 
trustee does not assume or reject an executory contract or 
unexpired lease of residential real property or of personal 
property of the debtor within 60 days after the order for 
relief, or within such additional time as the court, for cause, 
within such 60-day period, fixes, then such contract or lease 
is deemed rejected.

           *       *       *       *       *       *       *

    [(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)(A) Subject to subparagraph (B), in any case under any 
chapter of this title, an unexpired lease of non-residential 
real property under which the debtor is the lessee shall be 
deemed rejected and the trustee shall immediately surrender 
that nonresidential real property to the lessor if the trustee 
does not assume or reject the unexpired lease by the earlier 
of--
          (i) the date that is 120 days after the date of the 
        order for relief; or
          (ii) the date of the entry of an order confirming a 
        plan.
    (B) The court may extend the period determined under 
subparagraph (A) only upon a motion of the lessor.

           *       *       *       *       *       *       *

    (o) In a case under chapter 11 of this title, the trustee 
shall be deemed to have assumed (consistent with the debtor's 
other obligations under section 507), and shall immediately 
cure any deficit under, 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, and any claim for a subsequent 
breach of the obligations thereunder shall be entitled to 
priority under section 507. This subsection shall not extend 
any commitment that would otherwise be terminated by any act of 
such an agency.
    (p)(1) If a lease of personal property is rejected or not 
timely assumed by the trustee under subsection (d), the leased 
property is no longer property of the estate and the stay under 
section 362(a) is automatically terminated.
    (2)(A) 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 contract.
    (B) If within 30 days after notice is provided under 
subparagraph (A), the debtor notifies the lessor in writing 
that the lease is assumed, the liability under the lease will 
be assumed by the debtor and not by the estate.
    (C) The stay under section 362 and the injunction under 
section 524(a)(2) shall not be violated by notification of the 
debtor and negotiation of cure under this subsection.
    (3) In a case under chapter 11 in which the debtor is an 
individual and in a case under chapter 13, if the debtor is the 
lessee with respect to personal property and the lease is not 
assumed in the plan confirmed by the court, the lease is deemed 
rejected as of the conclusion of the hearing on confirmation. 
If the lease is rejected, the stay under section 362 and any 
stay under section 1301 is automatically terminated with 
respect to the property subject to the lease.

Sec. 366. Utility service

    (a) Except as provided in [subsection (b)] subsections (b) 
and (c) of this section, a utility may not alter, refuse, or 
discontinue service to, or discriminate against, the trustee or 
the debtor solely on the basis of the commencement of a case 
under this title or that a debt owed by the debtor to such 
utility for service rendered before the order for relief was 
not paid when due.
    (b) Such utility * * * 
    (c)(1)(A) For purposes of this subsection, the term 
``assurance of payment'' means--
          (i) a cash deposit;
          (ii) a letter of credit;
          (iii) a certificate of deposit;
          (iv) a surety bond;
          (v) a prepayment of utility consumption; or
          (vi) another form of security that is mutually agreed 
        on between the utility and the debtor or the trustee.
    (B) For purposes of this subsection an administrative 
expense priority shall not constitute an assurance of payment.
    (2) Subject to paragraphs (3) through (5), with respect to 
a case filed under chapter 11, a utility referred to in 
subsection (a) may alter, refuse, or discontinue utility 
service, if during the 20-day period beginning on the date of 
filing of the petition, the utility does not receive from the 
debtor or the trustee adequate assurance of payment for utility 
service that is satisfactory to the utility.
    (3)(A) On request of a party in interest and after notice 
and a hearing, the court may order modification of the amount 
of an assurance of payment under paragraph (2).
    (B) In making a determination under this paragraph whether 
an assurance of payment is adequate, the court may not 
consider--
          (i) the absence of security before the date of filing 
        of the petition;
          (ii) the payment by the debtor of charges for utility 
        service in a timely manner before the date of filing of 
        the petition; or
          (iii) the availability of an administrative expense 
        priority.
    (4) Notwithstanding any other provision of law, with 
respect to a case subject to this subsection, a utility may 
recover or set off against a security deposit provided to the 
utility by the debtor before the date of filing of the petition 
without notice or order of the court.

           *       *       *       *       *       *       *


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


                   Subchapter I--Creditors and Claims

Sec.
501. Filing of proofs of claims or interests.

           *       *       *       *       *       *       *


Sec. 511. Rate of interest on tax claims

           *       *       *       *       *       *       *


Sec. 502. Allowance of claims or interests

    (a) A claim * * *
    (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) such claim * * *

           *       *       *       *       *       *       *

          (9) proof of such claims 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, a 
        claim of a governmental unit for a tax with respect to 
        a return filed under section 1309 shall be timely if 
        the claim is filed on or before that date that is 60 
        days after that return was filed in accordance with 
        applicable requirements.

           *       *       *       *       *       *       *

    (g)(1) A claim arising from the rejection, under section 
365 of this title or under a plan under chapter 9, 11, 12, or 
13 of this title, of an executory contract or unexpired lease 
of the debtor that has not been assumed shall be determined, 
and shall be allowed under subsection (a), (b), or (c) of this 
section or disallowed under subsection (d) or (e) of this 
section, the same as if such claim had arisen before the date 
of the filing of the petition.
    (2) A claim for damages calculated in accordance with 
section 561 shall be allowed under subsection (a), (b), or (c) 
of this section, or disallowed under subsection (d) or (e) of 
this section, as if such claim had arisen before the date of 
the filing of the petition.

           *       *       *       *       *       *       *

    (j) A claim * * *
    (k)(1) The court, on the motion of the debtor and after a 
hearing, may reduce a claim filed under this section based in 
whole on unsecured consumer debts by not more than 20 percent 
of the claim, if--
          (A) the claim was filed by a creditor who 
        unreasonably refused to negotiate a reasonable 
        alternative repayment schedule proposed by an approved 
        credit counseling agency acting on behalf of the 
        debtor;
          (B) the offer of the debtor under subparagraph (A)--
                  (i) was made at least 60 days before the 
                filing of the petition; and
                  (ii) provided for payment of at least 60 
                percent of the amount of the debt over a period 
                not to exceed the repayment period of the loan, 
                or a reasonable extension thereof; and
          (C) no part of the debt under the alternative 
        repayment schedule is nondischargeable.
    (2) The debtor shall have the burden of proving, by clear 
and convincing evidence, that--
          (A) the creditor unreasonably refused to consider the 
        debtor's proposal; and
          (B) the proposed alternative repayment schedule was 
        made in the 60-day period specified in paragraph 
        (1)(B)(i).

Sec. 503. Allowance of administrative expenses

    (a) An entity * * *
    (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) the actual, necessary costs and expenses of 
        preserving the estate, including wages, salaries, or 
        commissions for services rendered after the 
        commencement of the case;
          (B) any tax--
                  (i) incurred by the estate, whether secured 
                or unsecured, including property taxes for 
                which liability is in rem, in personam, or 
                both, except a tax of a kind specified in 
                section 507(a)(8) of this title; or
                  (ii) attributable to an excessive allowance 
                of a tentative carryback adjustment that the 
                estate received, whether the taxable year to 
                which such adjustment relates ended before or 
                after the commencement of the case; [and]
          (C) any fine, penalty, or reduction in credit 
        relating to a tax of a kind specified in subparagraph 
        (B) of this paragraph; and
          (D) notwithstanding the requirements of subsection 
        (a), a governmental unit shall not be required to file 
        a request for the payment of a claim described in 
        subparagraph (B) or (C);

           *       *       *       *       *       *       *

          (4) reasonable compensation for professional services 
        rendered by an attorney or an accountant of an entity 
        whose expense is allowable under subparagraph (A), (B), 
        (C), (D), or (E) of paragraph (3) of this subsection, 
        based on the time, the nature, the extent, and the 
        value of such services, and the cost of comparable 
        services other than in a case under this title, and 
        reimbursement for actual, necessary expenses incurred 
        by such attorney or accountant;

           *       *       *       *       *       *       *


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 
substantially 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--

           *       *       *       *       *       *       *


Sec. 506. Determination of secured status

    (a) An allowed * * *
    (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 with respect to 
the property.

           *       *       *       *       *       *       *


Sec. 507. Priorities

    (a) The following expenses and claims have priority in the 
following order:
          (1) First, allowed unsecured claims for domestic 
        support obligations to be paid in the following order 
        on the condition that funds received under this 
        paragraph by a governmental unit in a case under this 
        title be applied and distributed in accordance with 
        applicable nonbankruptcy law;
                  (A) Claims that, as of the date of entry of 
                the order for relief, are owed directly to a 
                spouse, former spouse, or child of the debtor, 
                or the parent or legal guardian of such child, 
                without regard to whether the claim is filed by 
                the spouse, former spouse, child, or such 
                child's parent or legal guardian, or is filed 
                by a governmental unit on behalf of that 
                person.
                  (B) Claims that, as of the date of entry of 
                the order for relief, are assigned by a spouse, 
                former spouse,child of the debtor, or the 
                parent or legal guardian of that child to a 
                governmental unit or are owed directly to a 
                governmental unit under applicable 
                nonbankruptcy law.
          [(1) First] (2) Second, administrative expensive 
        allowed under section 503(b) of this title, and any 
        fees and charges assessed against the estate under 
        chapter 123 of title 28.
          [(2) Second] (3) Third, unsecured claims allowed 
        under section 502(f) of this title.
          [(3) Third] (4) Fourth, allowed unsecured claims, but 
        only to the extent of $4,300 for each individual or 
        corporation, as the case may be, earned within 90 days 
        before the date of the filing of the petition or the 
        date of the cessation of the debtor's business, 
        whichever occurs first, for--

           *       *       *       *       *       *       *

          [(4) Fourth] (5) Fifth, allowed unsecured claims for 
        contributions to an employee benefit plan--

           *       *       *       *       *       *       *

          [(5) Fifth] (6) Sixth, allowed unsecured claims of 
        persons--

           *       *       *       *       *       *       *

          [(6) Sixth] (7) Seventh, allowed unsecured claims of 
        individuals, to the extent of $1,950 for each such 
        individual, arising from the deposit, before the 
        commencement of the case, of money in connection with 
        the purchase, lease, or rental or property, or the 
        purchase of services, for the personal, family, or 
        household use of such individuals, that were not 
        delivered or provided.
          [(7) Seventh, allowed claims for debts to a spouse, 
        former spouse, or child of the debtor, for alimony to, 
        maintenance for, or support of such spouse or child, in 
        connection with a separation agreement, divorce decree 
        or other order of a court of record, determination made 
        in accordance with State or territorial law by a 
        governmental unit, or property settlement agreement, 
        but not to the extent that such debt--
                  [(A) is assigned to another entity, 
                voluntarily, by operation of law, or otherwise; 
                or
                  [(B) includes a liability designated as 
                alimony, maintenance, or support, unless such 
                liability is actually in the nature of alimony, 
                maintenance or support.]
          (8) Eighth, 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 during which the stay of 
                        proceedings was in effect in a prior 
                        case under this title, plus 6 months;
                          [(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 during which an 
                                offer in compromise with 
                                respect to that tax, was 
                                pending or in effect during 
                                that 240-day period, plus 30 
                                days;
                                  (II) the lesser of--
                                          (aa) any time during 
                                        which an installment 
                                        agreement with respect 
                                        to that tax was pending 
                                        or in effect during 
                                        that 240-day period, 
                                        plus 30 days; or
                                          (bb) 1 year; and
                                  (III) any time during which a 
                                stay of proceedings against 
                                collections was in effect in a 
                                prior case under this title 
                                during that 240-day period; 
                                plus 6 months.

           *       *       *       *       *       *       *

          (9) Ninth, 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.

           *       *       *       *       *       *       *

          (10) Tenth, allowed claims for death or personal 
        injuries resulting from the operation of a motor 
        vehicle or vessel if such operations was unlawful 
        because the debtor was intoxicated from using alcohol, 
        a drug, or another substance.

           *       *       *       *       *       *       *


Sec. 511. Rate of interest on tax claims

    If any provision of this title requires the payment of 
interest on a tax claim or the payment of interest to enable a 
creditor to receive the present value of the allowed amount of 
a tax claim, the rate of interest shall be as follows:
          (1) In the case of secured tax claims, unsecured ad 
        valorem tax claims, other unsecured tax claims in which 
        interest is required to be paid under section 
        726(a)(5), and administrative tax claims paid under 
        section 503(b)(1), the rate shall be determined under 
        applicable nonbankruptcy law.
          (2)(A) In the case of any tax claim other than a 
        claim described in paragraph (1), the minimum rate of 
        interest shall be a percentage equal to the sum of--
                  (is) 3; plus
                  (ii) the Federal short-term rate rounded to 
                the nearest full percent, determined under 
                section 1274(d) of the Internal Revenue Code of 
                1986.
          (B) In the case of any claim for Federal income 
        taxes, the minimum rate of interest shall be subject to 
        any adjustment that may be required under section 
        6621(d) of the Internal Revenue Code of 1986.
          (C) In the case of taxes paid under a confirmed plan 
        or reorganization under this title, the minimum rate of 
        interest shall be determined as of the calendar month 
        in which the plan is confirmed.

           *       *       *       *       *       *       *


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 and, if applicable, a 
                        certificate--
                                  (I) of an attorney whose name 
                                is on the petition as the 
                                attorney for the debtor or any 
                                bankruptcy petition preparer 
                                signing the petition under 
                                section 110(b)(1) indicating 
                                that such attorney or 
                                bankruptcy petition preparer 
                                delivered to the debtor any 
                                notice required by section 
                                342(b): or
                                  (II) if no attorney for the 
                                debtor is indicated and no 
                                bankruptcy petition preparer 
                                signed the petition, of the 
                                debtor that such notice was 
                                obtained and read by the 
                                debtor;
                          (iv) copies of any Federal tax 
                        returns, including any schedules or 
                        attachments, filed by the debtor for 
                        the 3-year period preceding the order 
                        for relief;
                          (v) copies of all payment advices or 
                        other evidence of payment, if any, 
                        received by the debtor from any 
                        employer of the debtor in the period 60 
                        days before the filing of the petition;
                          (vi) a statement of the amount of 
                        projected monthly net income, itemized 
                        to show how the amount is calculated; 
                        and
                          (vii) a statement disclosing any 
                        reasonably anticipated increase in 
                        income or expenditures over the 12-
                        month period following the date of 
                        filing;
          (2) if an individual debtor's schedule of assets and 
        liabilities includes [consumer] debts which are secured 
        by property of the estate--

           *       *       *       *       *       *       *

                  (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 period] 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);

           *       *       *       *       *       *       *

          (3) if a trustee is serving in the case  or an 
        auditor appointed under section 586 of title 28, 
        cooperate with the trustee as necessary to enable the 
        trustee to perform the trustee's duties under this 
        title;

           *       *       *       *       *       *       *

          (4) if a trustee is [serving in the case], or an 
        auditor appointed under section 586 of title 28 
        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
    (b) In addition to the requirements under subsection (a), 
an individual debtor shall file with the court--
          (1) a certificate from the credit counseling service 
        that provided the debtor services under section 109(h); 
        and
          (2) a copy of the debt repayment plan, if any, 
        developed under section 109(h) through the credit 
        counseling service referred to in paragraph (1).
          (6) in an individual case under chapter 7, 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 within 45 days after the first meeting of 
        creditors under section 341(a)--
                  (A) enters into an agreement with the 
                creditor under section 524(c) with respect to 
                the claim secured by such property; or
                  (B) redeems such property from the security 
                interest under section 722.
    (b) For purposes of subsection (a)(6), if the debtor fails 
to so act within the 45-day period specified in subsection 
(a)(6), 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.
    (c) If the debtor fails timely to take the action specified 
in subsection (a)(6), or in paragraph (1) or (2) of section 
362(h), with respect to property which a lessor or bailor owns 
and has leased, rented, or bailed to the debtor or as to which 
a creditor holds a security interest not otherwise voidable 
under section 522(f), 544, 545, 547, 548, or 549, nothing in 
this title shall prevent or limit the operation of a provision 
in the underlying lease or agreement that has the effect of 
placing the debtor in default under that 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.
    (d)(1) At any time, a creditor, in the case of an 
individual under chapter 7 or 13, may file with the court 
notice that the creditor requests the petition, schedules, and 
a statement of affairs filed by the debtor in the case and the 
court shall make those documents available to the creditor who 
requests those documents.
    (2)(A) At any time, a creditor in a case under chapter 13 
may file with the court notice that the creditor requests the 
plan filed by the debtor in the case.
    (B) The court shall make such plan available to the 
creditor who requests such plan--
          (i) at a reasonable cost; and
          (ii) not later than 5 days after such request.
    (e) An individual debtor in a case under chapter 7 or 13 
shall file with the court--
          (1) at the time filed with the taxing authority, all 
        tax returns, including any schedules or attachments, 
        with respect to the period from the commencement of the 
        case until such time as the case is closed;
          (2) at the time filed with the taxing authority, all 
        tax returns, including any schedules or attachments, 
        that were not filed with the taxing authority when the 
        schedules under subsection (a)(1) were filed with 
        respect to the period that is 3 years before the order 
        for relief;
           (3) any amendments to any of the tax returns, 
        including schedules or attachments, described in 
        paragraph (1) or (2); and
          (4) in a case under chapter 13, a statement subject 
        to the penalties of perjury by the debtor of the 
        debtor's income and expenditures in the preceding tax 
        year and monthly income, that shows how the amounts are 
        calculated--
                  (A) beginning on the date that is the later 
                of 90 days after the close of the debtor's tax 
                year or 1 year after the order for relief, 
                unless a plan has been confirmed; and
                  (B) thereafter, on or before the date that is 
                45 days before each anniversary of the 
                confirmation of the plan until the case is 
                closed.
    (f)(1) A statement referred to in subsection (e)(4) shall 
disclose--
          (A) the amount and sources of income of the debtor;
          (B) The identity of any person responsible with the 
        debtor for the support of any dependent of the debtor; 
        and
          (C) The identity of any person who contributed, and 
        the amount contributed, to the household in which the 
        debtor resides.
    (2) The tax returns, amendments, and statement of income 
and expenditures described in paragraph (1) shall be available 
to the United States trustee, any bankruptcy administrator, any 
trustee, and any party in interest for inspection and copying, 
subject to the requirements of subsection (g).
    (g)(1) Not later than 30 days after the date of enactment 
of the Bankruptcy Reform Act of 1999, the Director of the 
Administrative Office of the United States Courts shall 
establish procedures for safeguarding the confidentiality of 
any tax information required to be provided under this section.
    (2) The procedures under paragraph (1) shall include 
restrictions on creditor access to tax information that is 
required to be provided under this section.
    (3) Not later than 1 year after the date of enactment of 
the Bankruptcy Reform Act of 1999, the Director of the 
Administative Office of the United States Courts shall prepare 
and submit to Congress a report that--
          (A) assesses the effectiveness of the procedures 
        under paragraph (1); and
          (B) if appropriate, includes proposed legislation 
        to--
                  (i) further protect the confidentiality of 
                tax information; and
                  (ii) provide penalties for the improper use 
                by any person of the tax information required 
                to be provided under this section.
    (h) If requested by the United States trustee or a trustee 
serving in the case, the debtor shall provide--
          (1) a document that establishes the identity of the 
        debtor, including a driver's license, passport, or 
        other document that contains a photograph of the 
        debtor; and
          (2) such other personal identifying information 
        relating to the debtor that establishes the identity of 
        the debtor.
    (i)(1) Notwithstanding section 707(a), and subject to 
paragraph (2), if an individual debtor in a voluntary case 
under chapter 7 or 13 fails to file all of the information 
required under subsection (a)(1) within 45 days after the 
filing of the petition commencing the case, the case shall be 
automatically dismissed effective on the 46th day after the 
filing of the petition.
    (2) With respect to a case described in paragraph (1), any 
party in interest may request the court to enter an order 
dismissing the case. If requested, the court shall enter an 
order of dismissal not later than 5 days after such request.
    (3) Upon request of the debtor made within 45 days after 
the filing of the petition commencing a case described in 
paragraph (1), the court may allow the debtor an additional 
period of not to exceed 45 days to file the information 
required under subsection (a)(1) if the court finds 
justification for extending the period for the filing.

Sec. 522. Exemptions

    (a) In this section--

           *       *       *       *       *       *       *

    [(b)] (b1) Notwithstanding section 541 of this title, an 
individual debtor may exempt from property of the estate the 
property listed in either [paragraph (1)] paragraph (2) or, in 
the alternative, [paragraph (2)] paragraph 3 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)] paragraph (2) and the other debtor elect to exempt 
property listed in [paragraph (2)] paragraph 3 of this 
subsection. If the parties cannot agree on the alternative to 
be elected, they shall be deemed to elect [paragraph (1)] 
paragraph (2), where such election is permitted under the law 
of the jurisdiction where the case is filed. [Such property 
is--]
          [(1) property that is specified under subsection (d) 
        of this section, unless the State law that is 
        applicable to the debtor under paragraph (2)(A) of this 
        subsection specifically does not so authorize; or, in 
        the alternative,]
          (2) Property listed in this paragraph is property 
        that is specified under subsection (d), unless the 
        State law that is applicable to the debtor under 
        paragraph (3)(A) specifically does not so authorize.'';
          [(2)(A) any property] (3) Property listed in this 
        paragraph is--
                  (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] 730 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 that those funds 
        are in a fund or account that is exempt from taxation 
        under section 401, 403, 408, 408A, 414, 457, or 501(a) 
        of the Internal Revenue Code of 1986.
    (4) For purposes of paragraph (3)(C) and subsection 
(d)(12), the following shall apply:
          (A) If the retirement funds are in a retirement fund 
        that has received a favorable determination pursuant to 
        section 7805 of the Internal Revenue Code of 1986, and 
        that determination is in effect as of the date of the 
        commencement of the case under section 301, 302, or 303 
        of this title, those funds shall be presumed to be 
        exempt from the estate.
          (B) If the retirement funds are in a retirement fund 
        that has not received a favorable determination 
        pursuant to such section 7805 those funds are exempt 
        from the estate if the debtor demonstrates that--
                 (i) no prior determination to the contrary has 
                been made by a court or the Internal Revenue 
                Service; and
                  (ii)(I) the retirement fund is in substantial 
                compliance with the applicable requirements of 
                the Internal Revenue Code of 1986; or
                  (II) the retirement fund fails to be in 
                substantial compliance with the applicable 
                requirements of the Internal Revenue Code of 
                1986 and the debtor is not materially 
                responsible for that failure.
          (C) A direct transfer of retirement funds from 1 fund 
        or account that is exempt from taxation under section 
        401, 403, 408, 408A, 414, 457, or 501(a) of the 
        Internal Revenue Code of 1986, pursuant to section 
        401(a)(31) of the Internal Revenue Code of 1986, or 
        otherwise, shall not cease to qualify for exemption 
        under paragraph (3)(C) or subsection (d)(12) by reason 
        of that direct transfer.
          (D)(i) Any distribution that qualifies as an eligible 
        rollover distribution within the meaning of section 
        402(c) of the Internal Revenue Code of 1986 or that is 
        described in clause (ii) shall not cease to qualify for 
        exemption under paragraph (3)(C) or subsection (d)(12) 
        by reason of that distribution.
          (ii) A distribution described in this clause is an 
        amount that--
                  (I) has been distributed from a fund or 
                account that is exempt from taxation under 
                section 401, 403, 408, 408A, 414, 457, or 
                501(a) of the Internal Revenue Code of 1986; 
                and
                  (II) to the extent allowed by law, is 
                deposited in such a fund or account not later 
                than 60 days after the distribution of that 
                amount.
    (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) of this title;]
          (1) a debt of a kind specific in paragraph (1) or (5) 
        of section 523(a) (in which case, notwithstanding any 
        provision of applicable nonbankruptcy law to the 
        contrary, such property shall be liable for a debt or a 
        kind specified in section 523(a)(5));

           *       *       *       *       *       *       *

    (d) The following property may be exempted under 
[subsection (b)(1)] subsection (b)(2) of this section:
          (1) The debtor's aggregate interest, not to exceed 
        $16,150 in value, in real property or personal property 
        that the debtor or a dependent of the debtor uses as a 
        residence, in a cooperative that owns property that the 
        debtor or a dependent of the debtor uses as a 
        residence, or in a burial plot for the debtor or a 
        dependent of the debtor.

           *       *       *       *       *       *       *

         (12) Retirement funds to the extent that those funds 
        are in a fund or account that is exempt from taxation 
        under section 401, 403, 408, 408A, 414, 457, or 501(a) 
        of the Internal Revenue Code of 1986.

           *       *       *       *       *       *       *

    (f)(1) Notwithstanding any waiver of exemptions but subject 
to paragraph (3), the debtor may avoid the fixing of a lien on 
an interest of the debtor in property to the extent that such 
lien impairs an exemption to which the debtor would have been 
entitled under subsection (b) of this section, if such lien 
is--
          (A) a judicial lien, other than a judicial lien that 
        secures a debt[--] of a kind that is specified in 
        section 523(a)(5); or
                  [(i) 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; and
                  [(ii) to the extent that such debt--
                          [(I) is not assigned to another 
                        entity, voluntarily, by operation of 
                        law, or otherwise; and
                          [(II) includes a liability designated 
                        as alimony, maintenance, or support, 
                        unless such liability is actually in 
                        the nature of alimony, maintenance or 
                        support,; or]

           *       *       *       *       *       *       *

    (4)(A) Subject to subparagraph (B), for purposes of 
paragraph (1)(B), the term ``Household goods'' means--
          (i) clothing;
          (ii) furniture;
          (iii) appliances;
          (iv) 1 radio;
          (v) 1 television;
          (vi) 1 VCR;
          (vii) linens;
          (viii) china;
          (ix) crockery;
          (x) kitchenware;
          (xi) educational materials and educational equipment 
        primarily for the use of minor dependent children of 
        the debtor, but only 1 personal computer only if used 
        primarily for the education or entertainment of such 
        minor children;
          (xii) medical equipment and supplies;
          (xiii) furniture exclusively for the use of minor 
        children, or elderly or disabled dependents of the 
        debtor; and
          (xiv) personal effects (including wedding rings and 
        the toys and hobby equipment of minor dependent 
        children) of the debtor and the dependents of the 
        debtor.
    (B) The term ``household goods'' does not include--
          (i) works of art (unless by or of the debtor or the 
        dependent of the debtor);
          (ii) electronic entertainment equipment (except 1 
        television, 1 radio, and 1 VCR);
          (iii) items acquired as antiques;
          (iv) jewerly (except wedding rings); and
          (v) a computer (except as otherwise provided for in 
        this section), motor vehicle (including a tractor or 
        lawn tractor), boat, or a motorized recreational 
        device, conveyance, vehicle, watercraft, or aircraft.

           *       *       *       *       *       *       *

    (m) Subject to the limitation in subsection (b), this 
section shall apply separately with respect to each debtor in a 
joint case.
    (n) For purposes of subsection (b)(3)(A), and 
notwithstanding subsection (a), the value of an interest in--
          (1) real or personal property that the debtor or a 
        dependent of the debtor uses as a residence;
          (2) a cooperative that owns property that the debtor 
        or a dependent of the debtor uses as a residence; or
          (3) a burial plot for the debtor or a dependent of 
        the debtor; shall be reduced to the extent such value 
        is attributable to any portion of any property that the 
        debtor disposed of in the 730-day period ending on the 
        date of the filing of the petition, with the intent to 
        hinder, delay, or defraud a creditor and that the 
        debtor could not exempt, or that portion that the 
        debtor could not exempt, under subsection (b) if on 
        such date the debtor had held the property so disposed 
        of.

Sec. 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) of the kind and for the periods specified 
                in section 507(a)(2) of 507(a)(8) of this 
                title, whether or not a claim for such tax was 
                filed or allowed;
                  (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]
                  (C) with respect to which the debtor made a 
                fraudulent return or willfully attempted in any 
                manner to evade or defeat such tax;
        For purposes of this subsection, the term ``return'' 
        means a return that satisfies the requirements of 
        applicable non-bankruptcy law (including applicable 
        filing requirements). Such term includes a return 
        prepared pursuant to section 6020(a) of the Internal 
        Revenue Code of 1986, or similar State or local law, or 
        a written stipulation to a judgment entered by a 
        nonbankruptcy tribunal, but does not include a return 
        made pursuant to section 6020(b) of the Internal 
        Revenue Code of 1986, or a similar State or local law.
          (2) for money, property, services, or an extension, 
        renewal, or refinancing of credit, to the extent 
        obtained by--

           *       *       *       *       *       *       *

                  [(C)] for purposes of subparagraph (A) of 
                this paragraph, consumer debts owed to a single 
                creditor and aggregating more than $1,075 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 $1,075 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)(i) for purposes of subparagraph (A)--
                          (I) consumer debts owed to a single 
                        creditor and aggregating more than $250 
                        for luxury goods or services incurred 
                        by an individual debtor on or within 90 
                        days before the order for relief under 
                        this title are presumed to be 
                        nondischargeable; and
                          (II) cash advances aggregating more 
                        than $750 that are extensions of 
                        consumer credit under an open end 
                        credit plan obtained by an individual 
                        debtor on or within 70 days before the 
                        order for relief under this title, are 
                        presumed to be nondischargeable; and
                  (ii) for purposes of this subparagraph--
                          (I) the term ``extension of credit 
                        under an open end credit plan'' means 
                        an extension of credit under an open 
                        end credit plan, within the meaning of 
                        the Consumer Credit Protection Act (15 
                        U.S.C 1601 et seq.);
                          (II) the term ``open end credit 
                        plan'' has the meaning given that term 
                        under section 103 of Consumer Credit 
                        Protection Act (15 U.S.C. 1602); and
                          (III) the term ``luxury goods or 
                        services'' does not include goods or 
                        services reasonably necessary for the 
                        support or maintenance of the debtor or 
                        a dependent of the debtor.
          [(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 extend 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) for a domestic support obligation;

           *       *       *       *       *       *       *

          (9) for death or personal injury caused by the 
        debtor's operation of a motor vehicle , vessel, or 
        aircraft if such operation was unlawful because the 
        debtor was intoxicated from using alcohol, a drug, or 
        another substance;

           *       *       *       *       *       *       *

          (14) incurred to pay a tax to the United States that 
        would be nondischargeable pursuant to paragraph (1);
          (14A)(A) incurred to pay a debt that is non-
        dischargeable by reason of section 727, 1141, 1228(a), 
        1228(b), or 1328(b), or any other provision of this 
        subsection, if the debtor incurred the debt to pay such 
        a nondischargeable debt with the intent to discharge in 
        bankruptcy the newly created debt; except that
          (B) all debts incurred to pay non-dischargeable debts 
        shall be presumed to be nondischargeable debts if 
        incurred within 70 days before the filing of the 
        petition (except that, in any case in which there is an 
        allowed claim under section 502 for child support or 
        spousal support entitled to priority under section 
        507(a)(1) and that was filed in a timely manner, debts 
        that would otherwise be presumed to be nondischargeable 
        debts by reason of this subparagraph shall be treated 
        as dischargeable debts);
          (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, or 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.
        but nothing in this paragraph] 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, 
        and until such time as the debtor or trustee has 
        surrendered any legal, equitable or possessory 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) owned under State law to a State or municipality 
        that is--
                  (A) in the nature of support, and
                  (B) enforceable under part D of title IV of 
                the Social Security Act (42 U.S.C. 601 et 
                seq.)[.]; or
          (19) owed to a pension, profit-sharing, stock bonus, 
        or other plan established under section 401, 403, 408, 
        408A, 414, 457, or 501(c) of the Internal Revenue Code 
        of 1986, pursuant to--
                  (A) a loan permitted under section 408(b)(1) 
                of the Employee Retirement Income Security Act 
                of 1974, or subject to section 72(p) of the 
                Internal Revenue Code of 1986; or
                  (B) a loan from the thrift savings plan 
                described in subchapter III of title 5, that 
                satisfies the requirements of section 8433 of 
                such title.
          Nothing in paragraph (19) may be construed to provide 
        that any loan made under a governmental plan under 
        section 414(d), or a contract or account under section 
        403(b), of the Internal Revenue Code of 1986 
        constitutes a claim or a debt under this title.

           *       *       *       *       *       *       *

    (e)(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)], or (6) as 
the case may be, of subsection (a) of this section.

           *       *       *       *       *       *       *

    (e) Any institution-affiliated party of [a insured] an 
insured depository institution shall be considered to be acting 
in a fiduciary capacity with respect to the purposes of 
subsection (a)(4) or (11).
    (f) Nothing in this section or in any other provision of 
this title shall preempt any State law relating to unfair trade 
practices that imposes restrictions on creditor conduct that 
would give rise to liability--
          (1) under this section; or
          (2) under section 524, for failure to comply with 
        applicable requirements for seeking a reaffirmation of 
        debt.
    (g) Actions by States.--The attorney general of a State, or 
an official or agency designated by a State--
          (1) may bring an action on behalf of its residents to 
        recover damages on their behalf under subsection (d) or 
        section 524(c); and
          (2) may bring an action in a State court to enforce a 
        State criminal law that is similar to section 152 or 
        157 of title 18.

Sec. 524. Effect of discharge

    (a) A discharge in a case under this title--

           *       *       *       *       *       *       *

          (3) operates as an injunction against the 
        commencement or continuation of an action, the 
        employment of process, or an act, to collect or recover 
        from, or offset against, property of the debtor of the 
        kind specified in section 541(a)(2) of this title that 
        is acquired after the commencement of the case, on 
        account of any allowable community claim, except a 
        community claim that is excepted from discharge under 
        [section 523, 1228(a)(1) of this title, or that] 
        section 523, 1228(a)(1) or 1328(a)(1), or that would be 
        so excepted, determined in accordance with the 
        provisions of sections 523(c) and 523(d) of this title, 
        in a case concerning the debtor's spouse commenced on 
        the date of the filing of the petition in the case 
        concerning the debtor, whether or not discharge of the 
        debt based on such community claim is waived.

           *       *       *       *       *       *       *

    (c) An agreement between a holder of a claim and the 
debtor, the consideration for which, in whole or in part, is 
based on a debt that is dischargeable in a case under this 
title is enforceable only to any extent enforceable under 
applicable nonbankruptcy law, whether or not discharge of such 
debt is waived, only if--

           *       *       *       *       *       *       *

      (2)(A) such agreement contains a clear and conspicuous 
statement which advises the debtor that the agreement may be 
rescinded at any time prior to discharge or within sixty days 
after such agreement is filed with the court, whichever, occurs 
later, by giving notice of rescission to the holder of such 
claim; [and]
          (B) such agreement contains a clear and conspicuous 
        statement which advises the debtor that such agreement 
        is not required under this title, under nonbankruptcy 
        law, or under any agreement not in accordance with the 
        provisions of this subsection; and
          (C) (i) the consideration for such agreement is based 
        on a wholly unsecured consumer debt; and
          (ii) such agreement contains a clear and conspicuous 
        statement that advises the debtor that--
                  (I) the debtor is entitled to a hearing 
                before the court at which--
                          (aa) the debtor shall appear in 
                        person; and
                          (bb) the court shall decide whether 
                        the agreement constitutes an undue 
                        hardship, is not in the debtor's best 
                        interest, or is not the result of a 
                        threat by the creditor to take an 
                        action that, at the time of the threat, 
                        the creditor may not legally take or 
                        does not intend to take; and
                  (II) if the debtor is represented by counsel, 
                the debtor may waive the debtor's right to a 
                hearing under subclause (I) by signing a 
                statement--
                          (aa) waiving the hearing;
                          (bb) stating that the debtor is 
                        represented by counsel; and
                          (cc) identifying the counsel;

           *       *       *       *       *       *       *

          (6)(A) in a case concerning an individual who was not 
        represented by an attorney during the course of 
        negotiating an agreement under this subsection, the 
        court approves such agreement as--
                  (i) not imposing an undue hardship on the 
                debtor or a dependent of the debtor; [and]
                  (ii) in the best interest of the debtor[.]; 
                and
                  (iii) not an agreement that the debtor 
                entered into as a result of a threat by the 
                creditor to take an action that, at the time of 
                the threat, the creditor could not legally take 
                or did not intend to take; except that
          (B) [Subparagraph] subparagraph (A) shall not apply 
        to the extent that such debt is a consumer debt secured 
        by real property.
    (d) In a case concerning an individual, when the court has 
determined whether to grant or not to grant a discharge under 
section 727, 1141, 1228, or 1328 of this title, the court may 
hold a hearing at which the debtor shall appear in person. At 
any such hearing, the court shall inform the debtor that a 
discharge has been granted or the reason why a discharge has 
not been granted. If a discharge has been granted and if the 
debtor desires to make an agreement of the kind specified in 
subsection (c) of this section and was not represented by an 
attorney [during the course of negotiating such agreement] (or 
if the consideration by such agreement is based on a wholly 
secured consumer debt, and the debtor has not waived the right 
to a hearing under subsection (c)(2)(C)), then the court shall 
hold a hearing at which the debtor shall appear in person and 
at such hearing the court shall--

           *       *       *       *       *       *       *

    (h) Application to existing injunctions.--For purposes of 
subsection (g)--
          (1) subject * * *

           *       *       *       *       *       *       *

          (2) for purposes of paragraph (1), if a trust 
        described in subsection (g)(2)(B)(i) is subject to a 
        court order on the date of the enactment of this Act 
        staying such trust from settling or paying further 
        claims--
                  (A) the requirements * * *

           *       *       *       *       *       *       *

                  (B) if such trust meets such requirements on 
                the date such stay if lifted or dissolved, such 
                trust shall be considered to have met such 
                requirements continuously from the date of the 
                enactment of this Act.
    (i) The willful failure of a creditor to credit payments 
received under a plan confirmed under this title (including a 
plan of reorganization confirmed under chapter 11 of this 
title) in the manner required by the plan (including crediting 
the amounts required under the plan) shall constitute a 
violation of an injunction under subsection (a)(2).

Sec. 525. Protection against discriminatory treatment

    (a) * * *

           *       *       *       *       *       *       *

    (c)(1) A governmental unit that operates a student grant or 
loan program and a person engaged in a business that includes 
the making of loans guaranteed or insured under a student loan 
program may not deny a student grant, loan, loan guarantee, or 
loan insurance to a person that is or has been a debtor under 
this title or a bankrupt or debtor under the Bankruptcy Act, or 
another person with whom the debtor or bankrupt has been 
associated, because the debtor or bankrupt is or has been a 
debtor under this title or a bankrupt or debtor under the 
Bankruptcy Act, has been insolvent before the commencement of a 
case under this title or during the pendency of the case but 
before the debtor is granted or denied a discharge, or has not 
paid a debt that is dischargeable in the case under this title 
or that was discharged under the Bankruptcy Act.
    (2) In this section, ``student loan program'' means [the 
program operated under part B, D, or E of] any program operated 
under title IV of the Higher Education Act of 1965 or a similar 
program operated under State or local law.

           *       *       *       *       *       *       *


                       Subchapter III--The Estate

541. Property of the estate.
     * * * * * * *
[555. Contractual right to liquidate a securities contract.]
Sec. 555. Contractual right to liquidate, terminate, or accelerate a 
          securities contract
[556. Contractual right to liquidate a commodity contract or forward 
          contract.]
Sec. 556. Contractual right to liquidate, terminate, or accelerate a 
          commodities contract or forward contract
     * * * * * * *
[Sec. 559. Contractual right to liquidate a repurchase agreement]
Sec. 559. Contractual right to liquidate, terminate, or accelerate a 
          repurchase agreement
[Sec. 560. Contractual right to terminate, a swap agreement]
Sec. 560. Contractual right to liquidate, terminate, or accelerate a 
          swap agreement
Sec. 561. Contractual right to terminate, liquidate, accelerate, or 
          offset under a master netting agreement and across contracts
Sec. 562. Damage measure in connection with swap agreements, securities 
          contracts, forward contracts, commodity contracts, repurchase 
          agreements, or master netting agreements.

Sec. 541. Property of the estate

    (a) The commencement of a case under section 301, 302, or 
303 of this title creates an estate. Such estate is comprised 
of all the following property, wherever located and by whomever 
held:
          (1) Except * * * 

           *       *       *       *       *       *       *

          (6) Proceeds, product, offspring, rents, or profits 
        of or from property of the estate, except such as are 
        earnings from services performed by an individual 
        debtor (other than an individual debtor who, in 
        accordance with section 301, files a petition to 
        commence a voluntary case under chapter 11) after the 
        commencement of the case.

           *       *       *       *       *       *       *

    (b) Property of the estate does not include--
          (1) any power that the debtor may exercise solely for 
        the benefit of an entity other than the debtor;

           *       *       *       *       *       *       *

          (4) any interest of the debtor in liquid or gaseous 
        hydrocarbons to the extent that--
                  (A)(i) the debtor has transferred or has 
                agreed to transfer such interest pursuant to a 
                farmout agreement or any written agreement 
                directly related to a farmout agreement; and

           *       *       *       *       *       *       *

                  (B)(i) the debtor has transferred such 
                interest pursuant to a written conveyance of a 
                production payment to an entity that does not 
                participate in the operation of the property 
                from which such production payment is 
                transferred; and
                  (ii) but for the operation of this paragraph, 
                the estate could include the interest referred 
                to in clause (i) only by virtue of section 365 
                or 542 of this title; [or]
          (5) any eligible asset (or proceeds thereof), to the 
        extent that such eligible asset was transferred by the 
        debtor, before the date of commencement of the case, to 
        an eligible entity in connection with an asset-backed 
        securitization, except to the extent that such asset 
        (or proceeds or value thereof) may be recovered by the 
        trustee under section 550 by virtue of avoidance under 
        section 548(a); or
          [(5)] (6) any interest in cash or cash equivalents 
        that constitute proceeds of a sale by the debtor of a 
        money order that is made--
                  (A) on or after the date that is 14 days 
                prior to the date on which the petition is 
                filed; and

           *       *       *       *       *       *       *

    (d) Property in which * * *
    (e) For purposes of this section, the following definitions 
shall apply:
          (1) The term ``asset-backed securitization'' means a 
        transaction in which eligible assets transferred to an 
        eligible entity are used as the source of payment on 
        securities, the most senior of which are rated 
        investment grade by 1 or more nationally recognized 
        securities rating organizations, issued by an issuer.
          (2) The term ``eligible asset'' means--
                  (A) financial assets (including interests 
                therein and proceeds thereof), either fixed or 
                revolving, including residential and commercial 
                mortgage loans, consumer receivables, trade 
                receivables, and lease receivables, that, by 
                their terms, convert into cash within a finite 
                time period, plus any rights or other assets 
                designed to assure the servicing or timely 
                distribution of proceeds to security holders.
                  (B) cash; and
                  (C) securities.
          (3) The term ``eligible entity'' means--
                  (A) an issuer; or
                  (B) a trust, corporation, partnership, or 
                other entity engaged exclusively in the 
                business of acquiring and transferring eligible 
                assets directly or indirectly to an issuer and 
                taking actions ancillary thereto.
          (4) The term ``issuer'' means a trust, corporation, 
        partnership, or other entity engaged exclusively in the 
        business of acquiring and holding eligible assets, 
        issuing securities backed by eligible assets, and 
        taking actions ancillary thereto.
          (5) The term ``transferred'' means the debtor, under 
        a written agreement, represented and warranted that 
        eligible assets were sold, contributed, or otherwise 
        conveyed with the intention of removing them from the 
        estate of the debtor pursuant to sub-section (b)(5), 
        irrespective, without limitation of--
                  (A) whether the debtor directly or indirectly 
                obtained or held an interest in the issuer or 
                in any securities issued by the issuer;
                  (B) whether the debtor had an obligation to 
                repurchase or to service or supervise the 
                servicing of all or any portion of such 
                eligible assets; or
                  (C) the characterization of such sale, 
                contribution, or other conveyance for tax, 
                accounting, regulatory reporting, or other 
                purposes.
    (f) Notwithstanding any other provision of this title, 
property that is held by a debtor that is a corporation 
described in section 501(c)(3) of the Internal Revenue Code of 
1986 and exempt from tax under section 501(a) of such Code may 
be transferred to an entity that is not such a corporation, but 
only under the same conditions as would apply if the debtor had 
not filed a case under this title.

           *       *       *       *       *       *       *


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 in any case in which a 
        purchaser is a purchaser described in section 6323 of 
        the Internal Revenue Code of 1986 or in any other 
        similar provision of State or local law;

           *       *       *       *       *       *       *


Sec. 546. Limitations on avoiding powers

    (a) An action or proceeding under section 544, 545, 547, 
548, or 553 of this title may not be commenced after the 
earlier of--

           *       *       *       *       *       *       *

    (c) Except as provided in subsection (d) of this section, 
the rights and powers of a trustee under sections 544(a), 545, 
547, and 549 of this title are subject to any statutory or 
common-law right of a seller of goods that has sold goods to 
the debtor, in the ordinary course of such seller's business, 
to reclaim such goods if the debtor has received such goods 
while insolvent, but--
          (1) such a seller may not reclaim any such goods 
        unless such seller demands in writing reclamation of 
        such goods--
                  (A) before 10 days after receipt of such 
                goods by the debtor; or
                  (B) if such 10-day period expires after the 
                commencement of the case, before [20] 45 days 
                after receipt of such goods by the debtor; and

           *       *       *       *       *       *       *

    (e) Notwithstanding sections 544, 545, 547, 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, 
financial participant, or securities clearing agency, that is 
made before the commencement of the case, except under section 
548(a)(1)(A) of this title.

           *       *       *       *       *       *       *

    (g) Notwithstanding sections 544, 545, 547, 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] under or in connection with 
any swap agreement and that is made before the commencement of 
the case, except under section 548(a)(1)(A) of this title.
    (h) Notwithstanding sections 544, 545, 547, 548(a)(2)(B), 
and 548(b), the trustee may not avoid a transfer made by or to 
a master netting agreement participant under or in connection 
with any master netting agreement or any individual contract 
covered thereby that is made before the commencement of the 
case, and except to the extent that the trustee could otherwise 
avoid such a transfer made under an individual contract covered 
by such master netting agreement (except under section 
548(a)(1)(A)).
    [(g)] (i) 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 good 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.
    (j)(1) Notwithstanding section 545 (2) and (3), the trustee 
may not avoid a warehouseman's lien for storage, transportation 
or other costs incidental to the storage and handling of goods.
    (2) The prohibition under paragraph (1) shall be applied in 
a manner consistent with any applicable State statute that is 
similar to section 7-209 of the Uniform Commercial Code.

Sec. 547. Preferences

    (a) In this section--

           *       *       *       *       *       *       *

    (b) Except as provided in [subsection (c)] subsections (c) 
and (i) of this section, the trustee may avoid any transfer of 
an interest of the debtor in property--

           *       *       *       *       *       *       *

    (c) The trustee may not avoid under this section a 
transfer--

           *       *       *       *       *       *       *

          [(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;
          (3) that creates a security interest in property 
        acquired by the debtor--

           *       *       *       *       *       *       *

                  (B) that is perfected on or before [20] 30 
                days after the debtor receives possessioN of 
                such property;

           *       *       *       *       *       *       *

          [(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--]
          (7) to the extent such transfer was a bona fide 
        payment of a debt for a domestic support obligation; or

           *       *       *       *       *       *       *

                  (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 $5,000.

           *       *       *       *       *       *       *

    (e)(1) For the purposes of this section--

           *       *       *       *       *       *       *

    (2) For the purposes of this section, except as provided in 
paragraph (3) of this subsection, a transfer is made--
          (A) at the time such transfer takes effect between 
        the transferor and the transferee, if such transfer is 
        perfected at, or within [10] 30 days after, such time, 
        except as provided in subsection (c)(3)(B);
          (B) at the time such transfer is perfected, if such 
        transfer is perfected after such [10] 30 days; or
          (C) immediately before the date of the filing of the 
        petition, if such transfer is not perfected at the 
        later of--
                  (i) the commencement of the case; or
                  (ii) [10] 30 days after such transfer takes 
                effect between the transferor and the 
                transferee.

           *       *       *       *       *       *       *

    (g) For the purposes of this section, the trustee has the 
burden of proving the avoidability of a transfer under 
subsection (b) of this section, and the creditor or party in 
interest against whom recovery or avoidance is sought has the 
burden of proving the nonavoidability of a transfer under 
subsection (c) of this section.
    (h) The trustee may not avoid a transfer if such transfer 
was made as a part of an alternative repayment plan between the 
debtor and any creditor of the debtor created by an approved 
credit counseling agency.
    (i) If the trustee avoids under subsection (b) a security 
interest given between 90 days and 1 year before the date of 
the filing of the petition, by the debtor to an entity that is 
not an insider for the benefit of a creditor that is an 
insider, such security interest shall be considered to be 
avoided under this section only with respect to the creditor 
that is an insider.

Sec. 548. Fraudulent transfers and obligations

    (a) * * *

           *       *       *       *       *       *       *

    (d)(1) * * *
    (2) In this section----
          (A) * * *
          (B) a commodity broker, forward contract merchant, 
        stockbroker, financial institution, financial 
        participant, or securities clearing agency that 
        receives 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, takes for 
        value to the extent of such payment.
          (C) a repo participant that receives a margin 
        payment, as defined in section 741 or 761 of this 
        title, or settlement payment, as defined in section 741 
        of this title, in connection with a repurchase 
        agreement, takes for value to the extent of such 
        payment; [and]
          (D) a swap participant that receives a transfer in 
        connection with a swap agreement takes for value to the 
        extent of such transfer[.]; and
          (E) a master netting agreement participant that 
        receives a transfer in connection with a master netting 
        agreement or any individual contract covered thereby 
        takes for value to the extent of such transfer, except, 
        with respect to a transfer under any individual 
        contract covered thereby, to the extent that such 
        master netting agreement participant otherwise did not 
        take (or is otherwise not deemed to have taken) such 
        transfer for value.

Sec. 549. Postpetition transactions

    (a) * * *

           *       *       *       *       *       *       *

    (c) The trustee may not avoid under subsection (a) of this 
section a transfer of an interest in  real property to go good 
faith purchaser without knowledge of the commencement of the 
case and for present fair equivalent value unless a copy or 
notice of the petition was filed, where a transfer of such real 
property may be recorded to perfect such transfer, before such 
transfer is so perfected that a bona fide purchaser of such 
real property, against whom applicable law permits such 
transfer to be perfected, could not acquire an interest that is 
superior to [the interest] such interest of such good faith 
purchaser. A good faith purchaser without knowledge of the 
commencement of the case and for less than present fair 
equivalent value has a lien on the property transferred to the 
extent of any present value given, unless a copy or notice of 
the petition was so filed before such transfer was so 
perfected.

           *       *       *       *       *       *       *


Sec. 552. Postpetition effect of security interest

           *       *       *       *       *       *       *


    (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], offspring, or profits of such property, then such 
security interest extends to such proceeds, [product], 
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.

           *       *       *       *       *       *       *


Sec. 553. Setoff

    (a) Except as otherwise provided in this section and in 
sections 362 and 363 of this title, this title does not affect 
any right of a creditor to offset a mutual debt owing by such 
creditor to the debtor that arose before the commencement of 
the case under this title against a claim of such creditor 
against the debtor that arose before the commencement of the 
case, except to the extent that--
          (1) the claim of such creditor against the debtor is 
        disallowed;

           *       *       *       *       *       *       *

          (3) the debt owed to the debtor by such creditor was 
        incurred by such creditor--
                  (A) after 90 days before the date of the 
                filing of the petition;
                  (B) while the debtor was insolvent; and
                  (C) for the purpose of obtaining a right of 
                setoff against the debtor (except for a setoff 
                of a kind described in section 362(b)(6), 
                362(b)(7), 362(b)(17), 362(b)(28), 555, 556, 
                559, or 560).
    (b)(1) Except with respect to a setoff of a kind described 
in section 362(b)(6), 362(b)(7), [362(b)(14)] 362(b)(7), 
362(b)(28), 555, 556, 559, 560, 365(h)(2), or 365(i)(2) of this 
title, if a creditor offsets a mutual debt owing to the debtor 
against a claim against the debtor on or within 90 days before 
the date of the filing of the petition, then the trustee may 
recover from such creditor the amount so offset to the extent 
that any insufficiency on the date of such setoff is less than 
the insufficiency on the later of--

           *       *       *       *       *       *       *


[Sec. 555. Contractual right to liquidate a securities contract]

Sec. 555. Contractual right to liquidate, terminate, or accelerate a 
                    securities contract

    The exercise of a contractual right of a stockbroker, 
financial institution, financial participation, or securities 
clearing agency to cause the [liquidation] liquidation, 
termination, or acceleration of a securities contract, as 
defined in section 741(7), because of a condition of the kind 
specified in section 365(e)(1) of this title shall not be 
stayed, avoided, or otherwise limited by operation of any 
provision of this title or by order of a court or 
administrative agency in any proceeding under this title unless 
such order is authorized under the provisions of the Securities 
Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.) or 
any statute administered by the Securities and Exchange 
Commission. As used in this section, the term ``contractual 
right'' includes a right set forth in a rule or bylaw of a 
national securities exchange, a national securities 
association, or a securities clearing agency, a right set forth 
in a bylaw of a clearing organization or contract market or in 
a resolution of the governing board thereof, and a right, 
whether or not in writing, arising under common law, under law 
merchant, or by reason of normal business practice.

[Sec. 556. Contractual right to liquidate a commodities contract or 
                    forward contract]

Sec. 556. Contractual right to liquidate, terminate, or accelerate a 
                    commodities contract or forward contract

    The contractual right of a commodity broker, financial 
participant, or forward contract merchant to cause the 
liquidation, termination, or acceleration of a commodity 
contract, as defined in section 761 of this title, or forward 
contract because of a condition of the kind specified in 
section 365(e)(1) of this title, and the right to a variation 
or maintenance margin payment received from a trustee with 
respect to open commodity contracts or forward contracts, shall 
not be stayed, avoided, or otherwise limited by operation of 
any provision of this title or by the order of a court in any 
proceeding under this title. As used in this section, the term 
``contractual right'' includes a right set forth in a rule or 
bylaw of a clearing organization or contract market or in a 
resolution of the governing board thereof and a right, whether 
or not evidenced in writing, arising under common law, under 
law merchant or by reason of normal business practice.

           *       *       *       *       *       *       *


[Sec. 559. Contractual right to liquidate a repurchase agreement]

Sec. 559. Contractual right to liquidate, terminate, or accelerate a 
                    repurchase agreement

    The exercise of a contractual right of a repo participant 
to cause the liquidation, termination, or acceleration of a 
repurchase agreement because of a condition of the kind 
specified in section 365(e)(1) of this title shall not be 
stayed, avoided, or otherwise limited by operation of any 
provision of this title or by order of a court or 
administrative agency in any proceeding under this title, 
unless, where the debtor is a stockbroker or securities 
clearing agency, such order is authorized under the provisions 
of the Securities Investor Protection Act of 1970 or any 
statute administered by the Securities and Exchange Commission. 
In the event that a repo participant liquidates one or more 
repurchase agreements with a debtor and under the terms of one 
or more such agreements has agreed to deliver assets subject to 
repurchase agreements to the debtor, any excess of the market 
prices received on liquidation of such assets (or if any such 
assets are not disposed of on the date of liquidation of such 
repurchase agreements, at the prices available at the time of 
liquidation of such repurchase agreements from a generally 
recognized source or the most recent closing bid quotation from 
such a source) over the sum of the stated repurchase prices and 
all expenses in connection with the liquidation of such 
repurchase agreements shall be deemed property of the estate, 
subject to the available rights of setoff. As used in this 
section, the term ``contractual right'' includes a right set 
forth in a rule or bylaw, applicable to each party to the 
repurchase agreement, of a national securities exchange, a 
national securities association, or a securities clearing 
agency, and a right whether or not evidenced in writing, 
arising under common law, under law merchant or by reason of 
normal business practice.

[Sec. 560. Contractual right to terminate a swap agreement]

Sec. 560. Contractual right to liquidate, terminate, or accelerate a 
                    swap agreement

    The exercise of any contractual right of any swap 
participant to cause the [termination of a swap agreement] 
liquidation, termination, or acceleration of a swap agreement 
because of a condition of the kind specified in section 
365(e)(1) of this title or to offset or net out any termination 
values or payment amounts arising under or [in connection with 
any swap agreement] in connection with the termination, 
liquidation, or acceleration of a swap agreement shall not be 
stayed, avoided, or otherwise limited by operation of any 
provision of this title or by order of a court or 
administrative agency in any proceeding under this title. As 
used in this section, the term ``contractual right'' includes a 
right, whether or not evidenced in writing, arising under 
common law, under law merchant, or by reason of normal business 
practice.

Sec. 561. Contractual right to terminate, liquidate, accelerate, or 
                    offset under a master netting agreement and across 
                    contracts

    (a) Subject to subsection (b), the exercise of any 
contractual right, because of a condition of the kind specified 
in section 365(e)(1), to cause the termination, liquidation, or 
acceleration of or to offset or net termination values, payment 
amounts or other transfer obligations arising under or in 
connection with 1 or more (or the termination, liquidation, or 
acceleration of 1 or more)--
          (1) securities contracts, as defined in section 
        741(7);
          (2) commodity contracts, as defined in section 
        761(4);
          (3) forward contracts;
          (4) repurchase agreements;
          (5) swap agreements; or
          (6) master netting agreements,
shall not be stayed, avoided, or otherwise limited by operation 
of any provisions of this title or by any order of a court or 
administrative agency in any proceeding under this title.
    (b)(1) A party may exercise a contractual right described 
in subsection (a) to terminate, liquidate, or accelerate only 
to the extent that such party could exercise such a right under 
section 555, 556, 559, or 560 for each individual contract 
covered by the master netting agreement in issue.
    (2) If a debtor is a commodity broker subject to sub-
chapter IV of chapter 7--
          (A) a party may not net or offset an obligation to 
        the debtor arising under, or in connection with, a 
        commodity contract against any claim arising under, or 
        in connection with, other instruments, contracts, or 
        agreements listed in subsection (a), except to the 
        extent that the party has positive net equity in the 
        commodity accounts at the debtor, as calculated under 
        such subchapter IV; and
          (B) another commodity broker may not net or offset an 
        obligation to the debtor arising under, or in 
        connection with, a commodity contract entered into or 
        held on behalf of a customer of the debtor against any 
        claim arising under, or in connection with, other 
        instruments, contracts, or agreements referred to in 
        subsection (a).
    (c) As used in this section, the term ``contractual right'' 
includes a right set forth in a rule or bylaw of a national 
securities exchange, a national securities association, or a 
securities clearing agency, a right set forth in a bylaw of a 
clearing organization or contract market or in a resolution of 
the governing board thereof, and a right, whether or not 
evidenced in writing, arising under common law, under law 
merchant, or by reason of normal business practice.

Sec. 562. Damage measure in connection with swap agreements, securities 
                    contracts, forward contracts, commodity contracts, 
                    repurchase agreements, or master netting agreements

    If the trustee rejects a swap agreement, securities 
contract (as defined in section 741), forward contract, 
commodity contract (as defined in section 761) repurchase 
agreement, or master netting agreement under section 365(a), or 
if a forward contract merchant, stockbroker, financial 
institution, securities clearing agency, repo participant, 
financial participant, master netting agreement participant, or 
swap participant liquidates, terminates, or accelerates such 
contract or agreement, damages shall be measured as of the 
earlier of--
          (1) the date of such rejection; or
          (2) the date of such liquidation, termination, or 
        acceleration.

                         CHAPTER 7--LIQUIDATION


               Subchapter I--Officers and Administration

Sec.
701. Interim trustee.
           *       *       *       *       *       *       *
[707. Dismissal.]
707. Dismissal of a case or conversion to a case under chapter 13.
           *       *       *       *       *       *       *

Sec. 704. Duties of trustee

    (a) The trustee shall--
    (b)(1) With respect to an individual debtor under this 
chapter--
          (A) the United States trustee or bankruptcy 
        administrator shall review all materials filed by the 
        debtor and, not later than 10 days before the first 
        meeting of creditors, file with the court a statement 
        as to whether the debtor's case would be presumed to be 
        an abuse under section 707(b); and
          (B) not later than 5 days after receiving a statement 
        under subparagraph (A), the court shall provide a copy 
        of the statement to all creditors.
    (2) The United States trustee or bankruptcy administrator 
shall not later than 30 days after receiving a statement filed 
under paragraph (1) file a motion to dismiss or convert under 
section 707(b), or file a statement setting forth the reasons 
the United States trustee or bankruptcy administrator does not 
believe that such a motion would be appropriate, if based on 
the filing of such statement with the court, the United States 
trustee or bankruptcy administrator determines that the 
debtor's case should be presumed to be an abuse under section 
707(b) and the product of the debtor's current monthly income, 
multiplied by 12 is not less than--
          (A) the highest national or applicable State median 
        family income reported for a family of equal or lesser 
        size, whichever is greater; or
          (B) in the case of a household of 1 person, the 
        national or applicable State median household income 
        for 1 earner, whichever is greater.
    (3)(A) The court shall order the counsel for the debtor to 
reimburse the panel trustee for all reasonable costs in 
prosecuting a motion brought under section 707(b), including 
reasonable attorneys' fee, if--
          (i) a panel trustee appointed under section 586(a)(1) 
        of title 28 brings a motion for dismissal or conversion 
        under this subsection; and
          (ii) the court--
                  (I) grants that motion; and
                  (II) finds that the action of the counsel for 
                the debtor in filing under this chapter was not 
                substantially justified.
    (B) If the court finds that the attorney for the debtor 
violated Rule 9011, at a minimum, the court shall order--
          (i) the assessment of an appropriate civil penalty 
        against the counsel for the debtor; and
          (ii) the payment of the civil penalty to the panel 
        trustee or the United States trustee.
    (C) In the case of a petition referred to in subparagraph 
(B), the signature of an attorney shall constitute a 
certificate that the attorney has--
          (i) performed a reasonable investigation into the 
        circumstances that gave rise to the petition; and
          (ii) determined that the petition--
                  (I) is well grounded in fact; and
                  (II) is warranted by existing law or a good 
                faith argument for the extension, modification, 
                or reversal of existing law and does not 
                constitute an abuse under paragraph (1).
    (4)(A) Except as provided in subparagraph (B) and subject 
to paragraph (5), the court may award a debtor all reasonable 
costs in contesting a motion brought by a party in interest 
(other than a panel trustee or United States trustee) under 
this subsection (including reasonable attorneys' fees) if--
          (i) the court does not grant the motion; and
          (ii) the court finds that--
                  (I) the position of the party that brought 
                the motion was not substantially justified; or
                  (II) the party brought the motion solely for 
                the purpose of coercing a debtor into waiving a 
                right guaranteed to the debtor under this 
                title.
    (B) A party in interest that has a claim of an aggregate 
amount less than $1,000 shall not be subject to subparagraph 
(A).
    (5) Only the judge, United States trustee, bankruptcy 
administrator, or panel trustee may bring a motion under this 
section if the debtor and the debtor's spouse combined, as of 
the date of the order for relief, have a total current monthly 
income equal to or less than the national or applicable State 
median family monthly income calculated on a monthly basis for 
a family of equal size.

           *       *       *       *       *       *       *

    (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) if, with respect to an individual debtor, there is a 
claim for support of a child of the debtor or a custodial 
parent or legal guardian of such child entitled to receive 
priority under section 507(a)(1), provide the applicable 
notification specified in subsection (c).
    (c)(1) In any case described in subsection (a)(10), the 
trustee shall--
          (A)(i) notify in writing the holder of the claim of 
        the right of that holder to use the services of a State 
        child support enforcement agency established under 
        sections 464 and 466 of the Social Security Act (42 
        U.S.C. 664 and 666, respectively) for the State in 
        which the holder resides for assistance in collecting 
        child support during and after the bankruptcy 
        procedures;
          (ii) include in the notice under this paragraph the 
        address and telephone number of the child support 
        enforcement agency; and
          (iii) include in the notice an explanation of the 
        rights of the holder of the claim to payment of the 
        claim under this chapter; and
          (B)(i) notify in writing the State child support 
        agency of the State in which the holder of the claim 
        resides of the claim;
          (ii) include in the notice under this paragraph the 
        name, address, and telephone number of the holder of 
        the claim; and
          (iii) at such time as the debtor is granted a 
        discharge under section 727, notify the holder of that 
        claim and the State child support agency of the State 
        in which that holder resides of--
                  (I) the granting of the discharge;
                  (II) the last recent known address of the 
                debtor; and
                  (III) with respect to the debtor's case, the 
                name of each creditor that holds a claim that--
                          (aa) is not discharged under 
                        paragraph (2), (4), or (14A) of section 
                        523(a); or
                          (bb) was reaffirmed by the debtor 
                        under section 524(c).
    (2)(A) If, after receiving a notice under paragraph 
(1)(B)(iii), a holder of a claim or a State child support 
agency is unable to locate the debtor that is the subject of 
the notice, that party may request from a creditor described in 
paragraph (1)(B)(iii)(III) (aa) or (bb) the last known address 
of the debtor.
    (B) Notwithstanding any other provision of law, a creditor 
that makes a disclosure of a last known address of a debtor in 
connection with a request made under subparagraph (A) shall not 
be liable to the debtor or any other person by reason of making 
that disclosure.

           *       *       *       *       *       *       *


Sec. 706. Conversion

    (a) the debtor * * *

           *       *       *       *       *       *       *

    (c) The court may not convert a case under this chapter to 
a case under chapter 12 or 13 of this title unless the debtor 
requests or consents to such conversion.

           *       *       *       *       *       *       *


[Sec. 707. Dismissal]

Sec. 707. Dismissal of a case or conversion to a case under chapter 13

    (a) The court may dismiss a case under this chapter only 
after notice and a hearing and only for cause, including--

           *       *       *       *       *       *       *

    (b)(1) 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] panel trustee or of any party in 
interest, may dismiss a case filed by an individual debtor 
under this chapter whose debts are primarily consumer debts, 
or, with the debtor's consent, convert such a case to a case 
under chapter 13 of this title, if it finds that the granting 
of relief would be a [substantial abuse] abuse of the 
provisions of this chapter. [There shall be a presumption in 
favor of granting the relief requested by the debtor.]
    (2)(A)(i) In considering under paragraph (1) whether the 
granting of relief would be an abuse of the provisions of this 
chapter, the court shall presume abuse exists if the debtor's 
current monthly income reduced by the amounts determined under 
clauses (ii), (iii), and (iv), and multiplied by 60 is not less 
than the lesser of--
          (I) 25 percent of the debtor's nonpriority unsecured 
        claims in the case; or
          (II) $15,000.
    (ii) The debtor's monthly expenses shall be the applicable 
monthly (excluding payments for debts) expenses under standards 
issued by the Internal Revenue Service for the area in which 
the debtor resides, as in effect on the date of the entry of 
the order for relief, for the debtor, the dependents of the 
debtor, and the spouse of the debtor in a joint case, if the 
spouse is not otherwise a dependent.
    (iii) The debtor's average monthly payments on account of 
secured debts shall be calculated as--
          (I) the total of all amounts scheduled as 
        contractually due to secured creditors in each month of 
        the 60 months following the date of the petition; 
        divided by
          (II) 60.
    (iv) The debtor's expenses for payment of all priority 
claims (including priority child support and alimony claims) 
shall be calculated as--
          (I) the total amount of debts entitled to priority; 
        divided by
          (II) 60.
    (B)(i) In any proceeding brought under this subsection, the 
presumption of abuse may be rebutted by demonstrating special 
circumstances that justify additional expenses or adjustments 
of current monthly total income. In order to establish special 
circumstances, the debtor shall be required to--
          (I) itemize each additional expense or adjustment of 
        income; and
          (II) provide--
                  (aa) documentation for such expenses; and
                  (bb) a detailed explanation of the special 
                circumstances that make such expenses necessary 
                and reasonable.
    (ii) The debtor, and the attorney for the debtor if the 
debtor has an attorney, shall attest under oath to theaccuracy 
of any information provided to demonstrate that additional expenses or 
adjustments to income are required.
    (iii) The presumption of abuse may be rebutted if the 
additional expenses or adjustments to income referred to in 
clause (i) cause the product of the debtor's current monthly 
income reduced by the amounts determined under clauses (ii), 
(iii), and (iv) of subparagraph (A) multiplied by 60 to be less 
than the lesser of--
          (I) 25 percent of the debtor's nonpriority unsecured 
        claims; or
          (II) $15,000.
    (C)(i) As part of the schedule of current income and 
expenditures required under section 521, the debtor shall 
include a statement of the debtor's current monthly income, and 
the calculations that determine whether a presumption arises 
under subparagraph (A)(i), that shows how each such amount is 
calculated.
    (ii) The Supreme Court shall promulgate rules under section 
2075 of title 28, that prescribe a form for a statement under 
clause (i) and may provide general rules on the content of the 
statement.
    (3) In considering under paragraph (I) whether the granting 
of relief would be an abuse of the provisions of this chapter 
in a case in which the presumption in subparagraph (A)(i) of 
such paragraph does not apply or has been rebutted, the court 
shall consider--
          (A) whether the debtor filed the petition in bad 
        faith; or
          (B) the totality of the circumstances (including 
        whether the debtor seeks to reject a personal services 
        contract and the financial need for such rejection as 
        sought by the debtor) of the debtor's financial 
        situation demonstrations abuse.
    In making a determination whether to dismiss a case under 
this section, the court may not take into consideration whether 
a debtor has made, or continues to make, charitable 
contributions (that meet the definition of ``charitable 
contribution'' under section 548(d)(3)) to any qualified 
religious or charitable entity or organization (as that term is 
defined in section 548(d)(4)).

           *       *       *       *       *       *       *


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) The trustee may avoid a lien that secures a claim of a 
kind specified in section 726(a)(4) of this title.
    (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) first, to any holder of an allowed claim secured 
        by a lien on such property that is not avoidable under 
        this title and that is senior to such tax lien;
          (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), or 507(a)(6) 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), 
        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 
under this section and subject to the requirements of 
subsection (e), the following may be paid from property of the 
estate which secures a tax lien, or the proceeds of such 
property:
          (1) Claims for wages, salaries, and commissions that 
        are entitled to priority under section 507(a)(3).
          (2) Claims for contributions to an employee benefit 
        plan entitled to priority under section 507(a)(4).

           *       *       *       *       *       *       *


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--
                  (A) the date that is 10 days after the 
                mailing to creditors of the summary of the 
                trustee's final report; or
                  (B) the date on which the trustee commences 
                final distribution under this section;

           *       *       *       *       *       *       *

    (b) Payment on claims of a kind specified in paragraph (1), 
(2), (3), (4), (5), (6), (7), or (8) of section 507(a) of this 
title, or in paragraph (2), (3), (4), or (5) of subsection (a) 
of this section, shall be made pro rata among claims of the 
kind specified in each such particular paragraph, except that 
in a case that has been converted to this chapter under section 
[1009] 1112, 1208, or 1307 of this title, a claim allowed under 
section 503(b) of this title incurred under this chapter after 
such conversion has priority over a claim allowed under section 
503(b) of this title incurred under any other chapter of this 
title or under this chapter before such conversion and over any 
expenses of a custodian superseded under section 543 of this 
title.

           *       *       *       *       *       *       *


Sec. 727. Discharge

    (a) The court shall grant the debtor a discharge, unless--
         (1) the debtor is not an individual;

           *       *       *       *       *       *       *

         (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] 8 years before the date of 
        the filing of the petition;
         (9) the debtor has been granted a discharge under 
        section 1228 or 1328 of this title, or under section 
        660 or 661 of the Bankruptcy Act, in a case commenced 
        within six years before the date of the filing of the 
        petition, unless payments under the plan in such case 
        totaled at least--
                 (A) 100 percent of the allowed unsecured 
                claims in such case; or
                 (B)(i) 70 percent of such claims; and
                 (ii) the plan was proposed by the debtor in 
                good faith, and was the debtor's best effort; 
                [or]
         (10) the court approves a written waiver of discharge 
        executed by the debtor after the order for relief under 
        this chapter[.] ; or
         (11) after the filing of the petition, the debtor 
        failed to complete an instructional course concerning 
        personal financial management described in section 111.

           *       *       *       *       *       *       *

    (d) On request of the trustee, a creditor, or the United 
States trustee, and after notice and a hearing, the court shall 
revoke a discharge granted under subsection (a) of this section 
if--

           *       *       *       *       *       *       *

         (2) the debtor acquired property that is property of 
        the estate, or became entitled to acquire property that 
        would be property of the estate, and knowingly and 
        fraudulently failed to report the acquisition of or 
        entitlement to such property, or to deliver or 
        surrender such property to the trustee;[or]
         (3) the debtor committed an act specified in 
        subsection (a)(6) of this section[.] ; or
         (4) the debtor has failed to explain satisfactorily--
                 (A) a material misstatement in an audit 
                performed under section 586(f) of title 28; or
                 (B) a failure to make available for inspection 
                all necessary accounts, papers, documents, 
                financial records, files, and any other papers, 
                things, or property belonging to the debtor 
                that are requested for an audit conducted under 
                section 586(f).

           *       *       *       *       *       *       *


Subchapter III--Stockbroker Liquidation

           *       *       *       *       *       *       *


741. Definitions for this subchapter.
           *       *       *       *       *       *       *
Sec. 753. Stockbroker liquidation and forward contract merchants, 
          commodity brokers, stockbrokers, financial institutions, 
          securities clearing agencies, swap participants, repo 
          participants, and master netting agreement participants

Sec. 741. Definitions for this subchapter

    In this subchapter--
         (1) ``Commission'' means Securities and Exchange 
        Commission;

           *       *       *       *       *       *       *

         [(7) ``securities contract'' means contract for the 
        purchase, sale, or loan of a security, including an 
        option for the purchase or sale of a security, 
        certificate of deposit, or group or index of securities 
        (including any interest therein or based on the value 
        thereof), or any option entered into on a national 
        securities exchange relating to foreign currencies, or 
        the guarantee of any settlement of cash or securities 
        by or to a securities clearing agency;]
         (7) ``securities contract''--
                 (A) means--
                          (i) a contract for the purchase, 
                        sale, or loan of a security, a mortgage 
                        loan or an interest in a mortgage loan, 
                        a group or index of securities, or 
                        mortgage loans or interests therein 
                        (including an interest therein or based 
                        on the value thereof), or option on any 
                        of the foregoing, including an option 
                        to purchase or sell any of the 
                        foregoing;
                          (ii) an option entered into on a 
                        national securities exchange relating 
                        to foreign currencies;
                          (iii) the guarantee by or to a 
                        securities clearing agency of a 
                        settlement of cash, securities, 
                        mortgage loans or interests therein, 
                        group or index of securities, or 
                        mortgage loans or interests therein 
                        (including any interest therein or 
                        based on the value thereof), or option 
                        on any of take forgoing, including an 
                        option to purchase or sell any of the 
                        foregoing;
                          (iv) a margin loan;
                          (v) any other agreement or 
                        transaction that is similar to an 
                        agreement or transaction referred to in 
                        this subparagraph;
                          (vi) a combination of the agreements 
                        or transactions referred to in this 
                        subparagraph;
                          (vii) an option to enter into an 
                        agreement or transaction referred to in 
                        this subparagraph;
                          (viii) a master netting agreement 
                        that provides for an agreement or 
                        transaction referred to in clause (i), 
                        (ii), (iii), (iv), (v), (vi), or (vii), 
                        together with all supplements to such 
                        master netting agreement, without 
                        regard to whether such master netting 
                        agreement provides for an agreement or 
                        transaction that is not a securities 
                        contract under this subparagraph, 
                        except that such master netting 
                        agreement shall be considered to be a 
                        securities contract under this 
                        subparagraph only with respect to each 
                        agreement or transaction under such 
                        master netting agreement that is 
                        referred to in clause (i), (ii), (iii), 
                        (iv), (v), (vi), or (vii); or
                          (ix) a security agreement or 
                        arrangement, or other credit 
                        enhancement, directly pertaining to a 
                        contract referred to in this 
                        subparagraph, but not to exceed the 
                        actual value of such contract on the 
                        date of the filing of the petition; and
                  (B) does not include a purchase, sale, or 
                repurchase obligation under a participation in 
                a commercial mortgage loan;

           *       *       *       *       *       *       *


Sec. 752. Customer property

    (a) The trustee shall distribute customer property ratably 
to customers on the basis and to the extent of such customers' 
allowed net equity claims and in priority to all other claims, 
except claims of the kind specified in section 507(a)(1) of 
this title that are attributable to the administration of such 
customer property.

           *       *       *       *       *       *       *


Sec. 753. Stockbroker liquidation and forward contract merchants, 
                    commodity brokers, stock-brokers, financial 
                    institutions, securities clearing agencies, swap 
                    participants, repo participants, and master netting 
                    agreement participants

    Notwithstanding any other provision of this title, the 
exercise of rights by a forward contract merchant, commodity 
broker, stockbroker, financial institution, securities clearing 
agency, swap participant, repo participant, financial 
participant, or master netting agreement participant under this 
title shall not affect the priority of any unsecured claim it 
may have after the exercise of such rights.

              Subchapter IV--Commodity Broker Liquidation

761. Definitions for this subchapter.
     * * * * * * *
Sec. 767. Commodity broker liquidation and forward contract merchants, 
          commodity brokers, stockbrokers, financial institutions, 
          securities clearing agencies, swap participants, repo 
          participants, and master netting agreement participants

Sec. 761. Definitions for this subchapter

    In this subchapter--
          (1) * * *

           *       *       *       *       *       *       *

          (4) ``commodity contract'' means--
                  A  *  *  *

           *       *       *       *       *       *       *

                  (D) with respect to a clearing organization, 
                contract for the purchase or sale of a 
                commodity for future delivery on, or subject to 
                the rules of, a contract market or board of 
                trade that is cleared by such clearing 
                organization, or commodity option traded on, or 
                subject to the rules of, a contract market or 
                board of trade that is cleared by such clearing 
                organization; [or]

           *       *       *       *       *       *       *

                  (F) any other agreement or transaction that 
                is similar to an agreement or transaction 
                referred to in this paragraph;
                  (G) a combination of the agreements or 
                transactions referred to in this paragraph;
                  (H) an option to enter into an agreement or 
                transaction referred to in this paragraph;
                  (I) a master netting agreement that provides 
                for an agreement or transaction referred to in 
                subparagraph (A), (B), (C), (D), (E), (F), (G), 
                or (H), together with all supplements to such 
                master netting agreement, without regard to 
                whether such master netting agreement provides 
                for an agreement or transaction that is not a 
                commodity contract under this paragraph, except 
                that such master netting agreement shall be 
                considered to be a commodity contract under 
                this paragraph only with respect to each 
                agreement or transaction under such master 
                netting agreement that is referred to in 
                subparagraph (A), (B), (C), (D), (E), (F), (G), 
                or (H); or
                  (J) a security agreement or arrangement, or 
                other credit enhancement, directly pertaining 
                to a contract referred to in this paragraph, 
                but not to exceed the actual value of such 
                contract on the date of the filing of the 
                petition.

           *       *       *       *       *       *       *


Sec. 767. Commodity broker liquidation and forward contract merchants, 
                    commodity brokers, stockbrokers, financial 
                    institutions, securities clearing agencies, swap 
                    participants, repo participants, and master netting 
                    agreement participants

    Notwithstanding any other provision of this title, the 
exercise of rights by a forward contract merchant, commodity 
broker, stockbroker, financial institution, securities clearing 
agency, swap participant, repo participant, or master netting 
agreement participant under this title shall not affect the 
priority of any unsecured claim it may have after the exercise 
of such rights.

            CHAPTER 9--ADJUSTMENT OF DEBTS OF A MUNICIPALITY


Subchapter I--General Provisions

           *       *       *       *       *       *       *



        Sec. 901. Applicability of other sections of this title

    (a) Sections 301, 344, 347(b), 349, 350(b), 361, 362, 
364(c), 364(d), 364(e), 364(f), 365, 366, 501, 502, 503, 504, 
506, 507(a)(1), 509, 510, 524(a)(1), 524(a)(2), 544, 545, 546, 
547, 548, 549(a), 549(c), 549(d), 550, 551, 552, 553, 555, 556, 
557, 559, 560, 1102, 1103, 1109, 1111(b), 1122, 1123(a)(1), 
1123(a)(2), 1123(a)(3), 1123(a)(4), 1123(a)(5), 1123(b), 
1123(d) 1124, 1125, 1126(a), 1126(b), 1126(c), 1126(e), 
1126(f), 1126(g), 1127(d), 1128, 1129(a)(2), 1129(a)(3), 
1129(a)(6), 1129(a)(8), 1129(a)(10), 1129(b)(1), 1129(b)(2)(A), 
1129(b)(2)(B), 1142(b), 1143, 1144, and 1145 of this title 
apply in a case under this chapter.

           *       *       *       *       *       *       *


Subchapter II--Administration

           *       *       *       *       *       *       *



Sec. 921. Petition and proceedings relating to petition *  *  *

    (a) Notwithstanding * * *

           *       *       *       *       *       *       *

    (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.
     * * * * * * *
[1110. Aircraft equipment and vessels.]
Sec. 1110. Aircraft equipment and vessels
           *       *       *       *       *       *       *

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

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

    (a)(1) Except * * *
    (2) On its own motion or on request of a party in interest, 
and after notice and hearing, the court may order a change in 
the membership of a committee appointed under this subsection, 
if the court determines that the change is necessary to ensure 
adequate representation of creditors or equity security 
holders. On request of a party in interest, the court may order 
the appointment of additional committees of creditors or of 
equity security holders if necessary to assure adequate 
representation of creditors or of equity security holders. The 
United States trustee shall appoint any such committee.
    (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.

           *       *       *       *       *       *       *


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, but the court determines that the 
        appointment of a trustee is in the best interests of 
        creditors and the estate.
    (b)(1) Except as provided in section 1163 of this title, on 
the request of a party in interest made not later than 30 days 
after the court orders the appointment of a trustee under 
subsection (a), the United States trustee shall convene a 
meeting of creditors for the purpose of electing one 
disinterested person to serve as trustee in the case. The 
election of a trustee shall be conducted in the manner provided 
in subsections (a), (b), and (c) of section 702 of this title.
    (2)(A) If an eligible, disinterested trustee is elected at 
a meeting of creditors under paragraph (1), the United States 
trustee shall file a report certifying that election.
    (B) Upon the filing of a report under subparagraph (A)--
          (i) the trustee elected under paragraph (1) shall be 
        considered to have been selected and appointed for 
        purposes of this section; and
          (ii) the service of any trustee appointed under 
        subsection (d) shall terminate.
    (C) In the case of any dispute arising out of an election 
described in subparagraph (A), the court shall resolve the 
dispute.

           *       *       *       *       *       *       *


Sec. 1106. Duties of trustee and examiner

    (a) A trustee shall--
    (b) An examiner appointed under section 1104(d) of this 
title shall perform the duties specified in paragraphs (3) and 
(4) of subsection (a) of this section, and, except to the 
extent that the court orders otherwise, any other duties of the 
trustee that the court orders the debtor in possession not to 
perform.

           *       *       *       *       *       *       *

           (7) if, with respect to an individual debtor, there 
        is a claim for support of a child of the debtor or a 
        custodial parent or legal guardian of such child 
        entitled to receive priority under section 507(a)(1), 
        provide the applicable notification specified in 
        subsection (c).

           *       *       *       *       *       *       *

    (c)(1) In any case described in subsection (b)(7), the 
trustee shall--
          (A)(i) notify in writing the holder of the claim of 
        the right of that holder to use the services of a State 
        child support enforcement agency established under 
        sections 464 and 466 of the Social Security Act (42 
        U.S.C. 664 and 666) for the State in which the holder 
        resides; and
          (ii) include in the notice under this paragraph the 
        address and telephone number of the child support 
        enforcement agency; and
          (B)(i) notify, in writing, the State child support 
        agency (of the State in which the holder of the claim 
        resides) of the claim;
          (ii) include in the notice under this paragraph the 
        name, address, and telephone number of the holder of 
        the claim; and
          (iii) at such time as the debtor is granted a 
        discharge under section 1141, notify the holder of the 
        claim and the State child support agency of the State 
        in which that holder resides of--
                  (I) the granting of the discharge;
                  (II) the last recent known address of the 
                debtor; and
                  (III) with respect to the debtor's case, the 
                name of each creditor that holds a claim that--
                          (aa) is not discharged under 
                        paragraph (2), (4), or (14A) of section 
                        523(a); or
                          (bb) was reaffirmed by the debtor 
                        under section 524(c).
    (2)(A) If, after receiving a notice under paragraph 
(1)(B)(iii), a holder of a claim or a State child support 
agency is unable to locate the debtor that is the subject of 
the notice, that party may request from a creditor described in 
paragraph (1)(B)(iii)(III) (aa) or (bb) the last known address 
of the debtor.
    (B) Notwithstanding any other provision of law, a creditor 
that makes a disclosure of a last known address of a debtor in 
connection with a request made under subparagraph (A) shall not 
be liable to the debtor or any other person by reason of making 
that disclosure.

           *       *       *       *       *       *       *


[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 
                is cured before the later of--
                          [(I) the date that is 30 days after 
                        the date of the default; or
                          [(II) the expiration of such 60-day 
                        period.
      [(2) Equipment is described in this paragraph if it is--
          [(A) an aircraft, aircraft engine, propeller, 
        appliance, or spare part (as defined in section 40102 
        of title 49) that is subject to a security interest 
        granted by, leased to, or conditionally sold to a 
        debtor that is a citizen of the United States (as 
        defined in section 40102 of title 49) holding an air 
        carrier operating certificate issued by the Secretary 
        of Transportation pursuant to chapter 447 of title 49 
        for aircraft capable of carrying 10 or more individuals 
        or 6,000 pounds or more of cargo; or
          [(B) a documented vessel (as defined in section 
        30101(1) of title 46) that is subject to a security 
        interest granted by, leased to, or conditionally sold 
        to a debtor that is a water carrier that holds a 
        certificate of public convenience and necessity or 
        permit issued by the Interstate Commerce Commission.
    [(3) Paragraph (1) applies to a secured party, lessor, or 
conditional vendor acting in its own behalf or acting as 
trustee or otherwise in behalf of another party.
    [(b) The trustee and the secured party, lessor, or 
conditional vendor whose right to take possession is protected 
under subsection (a) may agree, subject to the court's 
approval, to extend the 60-day period specified in subsection 
(a)(1).
    [(c) With respect to equipment first placed in service on 
or prior to the date of enactment of this subsection, for 
purposes of this section--
        [(1) the term ``lease'' includes any written agreement 
        with respect to which the lessor and the debtor, as 
        lessee, have expressed in the agreement or in a 
        substantially contemporaneous writing that the 
        agreement is to be treated as a lease for Federal 
        income tax purposes; and
        [(2) the term ``security interest'' means a purchase-
        money equipment security interest.]

Sec. 1110. Aircraft equipment and vessels

    (a)(1) Except as provided in paragraph (2) and subject to 
subsection (b), the right of a secured party with a security 
interest in equipment described in paragraph (3), or of a 
lessor or conditional vendor of such equipment, to take 
possession of such equipment in compliance with a security 
agreement, lease, or conditional sale contract, and to enforce 
any of its other rights or remedies, under suchsecurity 
agreement, lease, or conditional sale contract, to sell, lease, or 
otherwise retain or dipose of such equipment, is not limited or 
otherwise affected by any other provision of this title or by any power 
of the court.
    (2) The right to take possession and to enforce the other 
rights and remedies described in paragraph (1) shall be subject 
to section 362 if--
          (A) before the date that is 60 days after the date of 
        the order for relief under this chapter, the trustee, 
        subject to the approval of the court, agrees to perform 
        all obligations of the debtor under such security 
        agreement, lease, or conditional sale contract; and
          (B) any default, other than a default of a kind 
        specified in section 365(b)(2) under such security 
        agreement, lease, or conditional sale contract that 
        occurs--
                  (i) before the date of the order is cured 
                before the expiration of such 60-day period;
                  (ii) after the date of the order and before 
                the expiration of such 60-day period is cured 
                before the later of--
                          (I) the date that is 30 days after 
                        the date of the default; or
                          (II) the expiration of such 60-day 
                        period; and
                  (iii) on or after the expiration of such 60-
                day period is cured in compliance with the 
                terms of such security agreement, lease, or 
                conditional sale contract, if a cure is 
                permitted under that agreement, lease, or 
                contract.
    (3) The equipment described in this paragraph--
          (A) is--
                  (i) an aircraft, aircraft engine, propeller, 
                appliance, or spare part (as defined in section 
                40102 of title 49) that is subject to a 
                security interest granted by, leased to, or 
                conditionally sold to a debtor that, at the 
                time such transaction is entered into, holds an 
                air carrier operating certificate issued under 
                chapter 447 of title 49 for aircraft capable of 
                carrying 10 or more individuals or 6,000 pounds 
                or more of cargo; or
                  (ii) a documented vessel (as defined in 
                section 30101(1) of title 46) that is subject 
                to a security interest granted by, leased to, 
                or conditionally sold to a debtor that is a 
                water carrier that, at the time such 
                transaction is entered into, holds a 
                certificate of public convenience and necessity 
                or permit issued by the Department of 
                Transportation; and
          (B) includes all records and documents relating to 
        such equipment that are required, under the terms of 
        the security agreement, lease, or conditional sale 
        contract, to be surrendered or returned by the debtor 
        in connection with the surrender or return of such 
        equipment.
    (4) Paragraph (1) applies to a secured party, lessor, or 
conditional vendor acting in its own behalf or acting as 
trustee or otherwise in behalf of another party.
    (b) The trustee and the secured party, lessor, or 
conditional vendor whose right to take possession is protected 
under subsection (a) may agree, subject to the approval of the 
court, to extend the 60-day period specified in subsection 
(a)(1).
    (c)(1) In any case under this chapter, the trustee shall 
immediately surrender and return to a secured party, lessor, or 
conditional vendor, described in subsection (a)(1), equipment 
described in subsection (a)(3), if at any time after the date 
of the order for relief under this chapter such secured party, 
lessor, or conditional vendor is entitled under subsection 
(a)(1) to take possession of such equipment and makes a written 
demand for such possession to the trustee.
    (2) At such time as the trustee is required under paragraph 
(1) to surrender and return equipment described in subsection 
(a)(3), any lease of such equipment, and any security agreement 
or conditional sale contract relating to such equipment, if 
such security agreement or conditional sale contract is an 
executory contract, shall be deemed rejected.
    (d) With respect to equipment first placed in service on or 
before October 22, 1994, for purposes of this section--
          (1) the term ``lease'' includes any written agreement 
        with respect to which the lessor and the debtor, as 
        lessee, have expressed in the agreement or in a 
        substantially contemporaneous writing that the 
        agreement is to be treated as a lease for Federal 
        income tax purposes; and
          (2) the term ``security interest'' means a purchase-
        money equipment security interest.

           *       *       *       *       *       *       *


Sec. 112. Conversion or dismissal

    (a) The debtor may convert a case under this chapter to a 
case under chapter 7 of this title unless--
         (1) the debtor is not a debtor is possession;
         (2) the case originally was commenced as an 
        involuntary case under this chapter; or
         (3) the case was converted to a case under this 
        chapter other than on the debtor's request.
    [(b) Except as provided in subsection (c) of this section, 
on request of a party in interest or the United States trustee, 
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
         [(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 section 1104(a)(3), 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 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 interestobjects and 
establishes by a preponderance of the evidence that--
          (A) it is more likely than not that a plan will be 
        confirmed within--
                  (i) a period of time fixed under this title 
                or by order of the court entered under section 
                1121(e)(3); or
                  (ii) a reasonable period of time if no period 
                of 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)(I) the act or omission will be cured 
                within a reasonable period of time fixed by the 
                court, but 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
                  (II) compelling circumstances beyond the 
                control of the debtor justify an extension.
    (3) 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.
    (4) 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) or an examination ordered 
        under Rule 2004 of the Federal Rules of Bankruptcy 
        Procedures;
          (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;
          (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.
    (5) The court shall commence the hearing on any motion 
under this subsection not later than 30 days after filing of 
the motion, and shall decide the motion within 15 days after 
commencement of the hearing, unless the movant expressly 
consents to a continuance for a specific period of time or 
compelling circumstances prevent the court from meeting the 
time limits established by this paragraph

           *       *       *       *       *       *       *


Sec. 1114. Payment of insurance benefits to retired employees

    (a) For purposes of this section, the term ``retiree 
benefits'' means payments to any entity or person for the 
purpose of providing or reimbursing payments for retired 
employees and their spouses and dependents, for medical, 
surgical, or hospital care benefits, or benefits in the event 
of sickness, accident, disability, or death under any plan, 
fund, or program (through the purchase of insurance or 
otherwise) maintained or established in whole or in part by the 
debtor prior to filing a petition commencing a case under this 
title.

           *       *       *       *       *       *       *


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 unless the court 
        waives that requirement after notice and hearing, upon 
        a finding of extraordinary and compelling 
        circumstances;
          (3) timely file all schedules and statements of 
        financial affairs, unless the court, after notice and a 
        hearing, grants an extension, which shall not extend 
        such time period to a date later than 30 days after the 
        date of the order for relief, absent extraordinary and 
        compelling circumstances;
          (4) file all postpetition financial and other reports 
        required by the Federal Rules of Bankruptcy Procedure 
        or by local rule of the district court;
          (5) subject to section 363(c)(2), maintain insurance 
        customary and appropriate to the industry;
          (6)(A) timely file tax returns;
          (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, unless the court waives that 
        requirement after notice and hearing, upon a finding of 
        extraordinary and compelling circumstances; and
          (7) allow the United States trustee, or a designated 
        representative of the United States trustee, to inspect 
        the debtor's business premises, books, and records at 
        reasonable times, after reasonable prior written 
        notice, unless notice is waived by the debtor.

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) The 120-day period specified in paragraph (1) may 
not be extended beyond a date that is 18 months after the date 
of the order for relief under this chapter.
    ``(B) The 180-day period specified in paragraph (1) may not 
be extended beyond a date that is 120 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 
        that period is--
                  (A) shortened on request of a party in 
                interest made during the 90-day period;
                  (B) extended as provided by this subsection, 
                after notice and hearing; or
                  (C) 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 timer periods specified in paragraphs (1) and 
        (2), and the time fixed in section 1129(e), within 
        which the plan shall be confirmed, may be extended only 
        if--
                  (A) the debtor, after providing notice to 
                parties in interest (including the United 
                States trustee), demonstrates by a 
                preponderance of the evidence that it is more 
                likely than not that the court will confirm a 
                plan within a reasonable period of time;
                  (B) a new deadline is imposed at the time the 
                extension is granted; and
                  (C) the order extending time is signed before 
                the existing deadline has expired.

           *       *       *       *       *       *       *


Sec. 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

           *       *       *       *       *       *       *

    [(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 under 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 later 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 particular 
        claim has agreed to a different treatment of such 
        claim, the plan provides that--
                 (A) with respect to a claim of a kind 
                specified in section 507(a)(1) or 507(a)(2) of 
                this title, on the effective date of the plan, 
                the holder of such claim will received on 
                account of such claim cash equal to the allowed 
                amount of such claim;

           *       *       *       *       *       *       *

                         (i) if such class has accepted the 
                        plan, deferred cash payments of a 
                        value, as of the effective date of the 
                        plan, equal to the allowed amount of 
                        such claim; or
                         (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 received on 
                account of such claim [deferred cash payments, 
                over a period not exceeding six years after the 
                date of assessment of such claim, of a value, 
                as of the effective date of the plan, equal to 
                the allowed amount of such claim.]regular 
                installment payments--
                         (i) of a total value, as of the 
                        effective date of the claim, equal to 
                        the allowed amount of such claim in 
                        cash, but in no case with a balloon 
                        payment; and
                         (ii) beginning not later than the 
                        effective date of the plan and ending 
                        on the earlier of--
                                 (I) the date that is 5 years 
                                after the date of the filing of 
                                the petition; or
                                 (II) the last date payments 
                                are to be made under the plan 
                                to unsecured creditors; and
                         (D) with respect to a secured claim 
                        which would otherwise meet the 
                        description on an unsecured claim of a 
                        governmental unit under section 
                        507(a)(8), but for the secured status 
                        of that claim, the holder of that claim 
                        will receive on account of that claim, 
                        cash payments, in the same manner and 
                        over the same period, as prescribed in 
                        subparagraph (C).
          (10) If a class of claims is impaired under the plan, 
        at least one class of claims that is impaired under the 
        plan has accepted the plan, determined without 
        including any acceptance of the plan by any insider.

           *       *       *       *       *       *       *

          (13) * * *

           *       *       *       *       *       *       *

          (15) All transfers of property of the plan shall be 
        made in accordance with any applicable provisions of 
        nonbankruptcy law that govern the transfer of property 
        by a corporation or trust that is not a moneyed, 
        business, or commercial corporation or trust.

           *       *       *       *       *       *       *

    (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).

Subchapter III--Postconfirmation Matters

           *       *       *       *       *       *       *



Sec. 1141. Effect of confirmation

    (a) * * *

           *       *       *       *       *       *       *

    (d)(1) * * *

           *       *       *       *       *       *       *

    (5) Notwithstanding paragraph (1), the confirmation of a 
plan does not discharge a debtor that is a corporation from any 
debt for a tax or customs duty with respect to which the 
debtor--
          (A) made a fraudulent return; or
          (B) willfully attempted in any manner to evade or 
        defeat that tax or duty.

           *       *       *       *       *       *       *


                 Subchapter IV--Railroad Reorganization

Sec.
1161. Inapplicability of other sections.
     * * * * * * *
[1168. Rolling stock equipment.]
Sec. 1168. Rolling stock equipment

[Sec. 1168. Rolling stock equipment

    [(a)(1) The right of a secured party with a security 
interest in or of a lessor or conditional vendor of equipment 
described in paragraph (2) to take possession of such equipment 
in compliance with an equipment security agreement, lease, or 
conditional sale contract 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 commencement of a case 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 commencementof the case under 
such security agreement, lease, or conditional sale contract; and
          [(B) any default, other than a default of a kind 
        described in section 365(b)(2), under such security 
        agreement, lease, or conditional sale contract--
                  [(i) that occurs before the date of 
                commencement of the case and is an event of 
                default therewith is cured before the 
                expiration of such 60-day period; and
                  [(ii) that occurs or becomes an event of 
                default after the date of commencement of the 
                case is cured before the later of--
                          [(I) the date that is 30 days after 
                        the date of the default or event of 
                        default; or
                          [(II) the expiration of such 60-day 
                        period.
    [(2) Equipment is described in this paragraph if it is 
rolling stock equipment or accessories used on such equipment, 
including superstructures and racks, that is subject to a 
security interest granted by, leased to, or conditionally sold 
to the debtor.
    [(3) Paragraph (1) applies to a secured party, lessor, or 
conditional vendor acting in its own behalf or acting as 
trustee or otherwise in behalf of another party.
    [(b) The trustee and the secured party, lessor, or 
conditional vendor whose right to take possession is protected 
under subsection (a) may agree, subject to the court's 
approval, to extend the 60-day period specified in subsection 
(a)(1).
    [(c) With respect to equipment first placed in service on 
or prior to the date of enactment of this subsection, for 
purposes of this section--
          [(1) the term ``lease'' includes any written 
        agreement with respect to which the lessor and the 
        debtor, as lessee, have expressed in the agreement or 
        in a substantially contemporaneous writing that the 
        agreement is to be treated as a lease for Federal 
        income tax purposes; and
          [(2) the term ``security interest'' means a purchase-
        money equipment security interest.
    [(d) With respect to equipment first placed in service 
after the date of enactment of this subsection, for purposes of 
this section, the term ``rolling stock equipment'' includes 
rolling stock equipment that is substantially rebuilt and 
accessories used on such equipment.]

Sec. 1168. Rolling stock equipment

    (a)(1) The right of a secured party with a security 
interest in or of a lessor or conditional vendor of equipment 
described in paragraph (2) to take possession of such equipment 
in compliance with an equipment security agreement, lease, or 
conditional sale contract, and to enforce any of its other 
rights or remedies under such security agreement, lease, or 
conditional sale contract, to sell, lease, or otherwise retain 
or dispose of such equipment, is not limited or otherwise 
affected by any other provision of this title or by any power 
of the court, except that the right to take possession and 
enforce those other rights and remedies shall be subject to 
section 362, if--
          (A) before the date that is 60 days after the date of 
        commencement of a case under this chapter, the trustee, 
        subject to the court's approval, agrees to perform all 
        obligations of the debtor under such security 
        agreement, lease, or conditional sale contract; and
          (B) any default, other than a default of a kind 
        described in section 365(b)(2) under such security 
        agreement, lease, or conditional sale contract that--
                  (i) occurs before the date of commencement of 
                the case and is an event of default therewith 
                is cured before the expiration of such 60-day 
                period;
                  (ii) occurs or becomes an event of default 
                after the date of commencement of the case and 
                before the expiration of such 60-day period is 
                cured before the later of--
                          (I) the date that is 30 days after 
                        the date of the default or event of the 
                        default; or
                          (II) the expiration of such 60-day 
                        period; and
                  (iii) occurs on or after the expiration of 
                such 60-day period is cured in accordance with 
                the terms of such security agreement, lease, or 
                conditional sale contract, if cure is permitted 
                under that agreement, lease, or conditional 
                sale contract.
    (2) The equipment described in this paragraph--
          (A) is rolling stock equipment or accessories used on 
        rolling stock equipment, including superstructures or 
        racks, that is subject to a security interest granted 
        by, leased to, or conditionally sold to a debtor; and
          (B) includes all records and documents relating to 
        such equipment that are required, under the terms of 
        the security agreement, lease, or conditional sale 
        contract, to be surrendered or returned by the debtor 
        in connection with the surrender or return of such 
        equipment.
    (3) Paragraph (1) applies to a secured party, lessor, or 
conditional vendor acting in its own behalf or acting as 
trustee or otherwise in behalf of another party.
    (b) The trustee and the secured party, lessor, or 
conditional vendor whose right to take possession is protected 
under subsection (a) may agree, subject to the court's 
approval, to extend the 60-day period specified in subsection 
(a)(1).
    (c)(1) In any case under this chapter, the trustee shall 
immediately surrender and return to a secured party, lessor, or 
conditional vendor, described in subsection (a)(1), equipment 
described in subsection (a)(2), if at any time after the date 
of commencement of the case under this chapter such secured 
party, lessor, or conditional vendor is entitled pursuant to 
subsection (a)(1) to take possession of such equipment and 
makes a written demand for such possession of the trustee.
    (2) At such time as the trustee is required under paragraph 
(1) to surrender and return equipment described in subsection 
(a)(2), any lease of such equipment, and any security agreement 
or conditional sale contract relating to such equipment, if 
such security agreement or conditional sale contract is an 
executory contract, shall be deemed rejected.
    (d) With respect to equipment first placed in service on or 
before October 22, 1994, for purposes of this section--
          (1) the term ``lease'' includes any written agreement 
        with respect to which the lessor and the debtor, as 
        lessee, have expressed in the agreement or in a 
        substantially contemporaneous writing that the 
        agreement is to be treated as a lease for Federal 
        income tax purposes; and
          (2) the term ``security interest'' means a purchase-
        money equipment security interest.
    (e) With respect to equipment first placed in service after 
October 22, 1994, for purposes of this section, the term 
``rolling stock equipment'' includes rolling stock equipment 
that is substantially rebuilt and accessories used on such 
equipment.

           *       *       *       *       *       *       *


Sec. 1170. Abandonment of railroad line

    (a) * * *

           *       *       *       *       *       *       *

    (e)(1) In authorizing any abandonment of a railroad line 
under this section, the court shall require the rail carrier to 
provide a fair arrangement at least as protective of the 
interests of employees as that established under section 
[11347] 11326(a) of title 49.

           *       *       *       *       *       *       *


Sec. 1172. Contents of plan

    (a) * * *

           *       *       *       *       *       *       *

    (c)(1) In approving an application under subsection (b) of 
this section, the Board shall require the rail carrier to 
provide a fair arrangement at least as protective of the 
interests of employees as that established under section 
[11347] 11326(a) of title 49.

           *       *       *       *       *       *       *


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


Subchapter I--Officers, Administration, and the Estate

           *       *       *       *       *       *       *



Sec. 1202. Trustee

    (a) If the * * *
    (b) The trustee shall--
          (1) perform the duties specified in sections 704(2), 
        704(3), 704(5), 704(6), 704(7), and 704(9) of this 
        title;

           *       *       *       *       *       *       *

          (4) ensure that the debtor commences making timely 
        payments required by a confirmed plan; [and]
          (5) if the debtor ceases to be a debtor in 
        possession, perform the duties specified in sections 
        704(8), 1106(a)(1), 1106(a)(2), 1106(a)(6), 1106(a)(7), 
        and 1203[.]; and
          (6) if, with respect to an individual debtor, there 
        is a claim for support of a child of the debtor or a 
        custodial parent or legal guardian of such child 
        entitled to receive priority under section 507(a)(1), 
        provide the applicable notification specified in 
        subsection (c).
    (c)(1) In any case described in subsection (b)(6), the 
trustee shall--
          (A)(i) notify in writing the holder of claim of the 
        right of that holder to use the services of a State 
        child support enforcement agency established under 
        sections 464 and 466 of the Social Security Act (42 
        U.S.C. 664 and 666) for the State in which the holder 
        resides; and
          (ii) include in the notice under this paragraph the 
        address and telephone number of the child support 
        enforcement agency; and
          (B)(i) notify, in writing, the State child support 
        agency (of the State in which the holder of the claim 
        resides) of the claim;
          (ii) include in the notice under this paragraph the 
        name, address, and telephone number of the holder of 
        the claim; and
          (iii) at such time as the debtor is granted a 
        discharge under section 1228, notify the holder of the 
        claim and the State child support agency of the State 
        in which that holder resides of--
                  (I) the granting of the discharge;
                  (II) the last recent known address of the 
                debtor; and
                  (III) with respect to the debtor's case, the 
                name of each creditor that holds a claim that--
          (aa) is not discharged under paragraph (2), (4), or 
        (14A) of section 523(a); or
          (bb) was reaffirmed by the debtor under section 
        524(c)
                  (2)(A) If, after receiving a notice under 
                paragraph (1)(B)(iii), a holder of a claim or a 
                State child support agency is unable to locate 
                the debtor that is the subject of the notice, 
                that party may request from a creditor 
                described in paragraph (1)(B)(iii)(III) (aa) or 
                (bb) the last known address of the debtor.
                  (B) Notwithstanding any other provision of 
                law, a creditor that makes a disclosure of a 
                last know address of a debtor in connection 
                with a request made under subparagraph (A) 
                shall not be liable to the debtor or any other 
                person by reason of making that disclosure.

           *       *       *       *       *       *       *


Subhapter II--The Plan

           *       *       *       *       *       *       *



Sec. 1222. Contents of plan

    (a) The plan shall--
          (1) provide * * *
          [(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]
          (2) provide for the full payment, in deferred cash 
        payments, of all claims entitled to priority under 
        section 507, unless--
                  (A) the claim is a claim owed to a 
                governmental unit that arises as a result of 
                the sale, transfer, exchange, or other 
                disposition of any farm asset used in the 
                debtor's farming operation, in which case the 
                claim shall be treated as an unsecured claim 
                that is not entitled to priority under section 
                507, but the debt shall be treated in such 
                manner only if the debtor receives a discharge; 
                or
                  (B) the holder of a particular claim agrees, 
                to a different treatment of that claim; and

           *       *       *       *       *       *       *


Sec. 1225. Confirmation of plan

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

                  (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) if the debtor is required by a judicial or 
        administrative order or statute to pay a domestic 
        support obligation, the plan provides for the full 
        payment of all amounts payable under such order or 
        statute for such obligation that initially become 
        payable after the date on which the petition is filed.
    (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) the * * *

           *       *       *       *       *       *       *

          (2) For purposes of this subsection, ``disposable 
        income'' means income which is received by the debtor 
        and which is not reasonably necessary to be expended
                  (A) for the maintenance or support of the 
                debtor or a dependent of the debtor for a child 
                support, foster care, or disability payment for 
                a dependent child made in accordance with 
                applicable nonbankruptcy law; or

           *       *       *       *       *       *       *


Sec. 1228. Discharge

    [(a) As soon as practicable] (a)(1) Subject to paragraph 
(2), 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)] 1222(b)(9) of this title, 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--
          [(10 provided] for under section 1222(b)(5) or 
        1222(b)(10) of this title; or (A) providecd
          [(2) of the kind] (B) of the kind specified in 
        section 523(a) of this title.
    (2) With respect to a debtor who is required by a judicial 
or administrative order or statute to pay a domestic support 
obligation, the court may not grant the debtor a discharge 
under paragraph (1) until after the debtor certifies that--
          (A) all amounts payable under that order or statute 
        that initially became payable after the date on which 
        the petition was filed (through the date of the 
        certification) have been paid; and
          (B) all amounts payable under that order that, as of 
        the date of the certification, are owed directly to a 
        spouse, former spouse, or child of the debtor, orthe 
parent or legal guardian of such child, have been paid, unless the 
holder of such claim agrees to a different treatment of such claim.

           *       *       *       *       *       *       *

    (c) A discharge granted under subsection (b) of this 
section discharges the debtor from all unsecured debts provided 
for by the plan or disallowed under section 502 of this title, 
except any debt--
          (1) provided for under section 1222(b)(5) or 
        [1222(b)(10)] 1226(b)(9) of this title, or

           *       *       *       *       *       *       *


Sec. 1231. Special tax provisions

    (a) For * * *

           *       *       *       *       *       *       *

    (d) The court may authorize the proponent of a plan to 
request a determination, limited to questions of law, by [a 
State or local governmental unit] any governmental unit charged 
with responsibility for collection or determination of a tax on 
or measured by income, of the tax effects, under section 346 of 
this title and under the law imposing such tax, of the plan. In 
the event of an actual controversy, the court may declare such 
effects after the earlier of--

  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.
           *       *       *       *       *       *       *
1309. Filing of prepetition tax returns.
           *       *       *       *       *       *       *

Sec. 1302. Trustee

    (a) If the * * *
    (b) The trustee shall--
          (1) perform the duties specified in sections 704(2), 
        704(3), 704(4), 704(5), 704(6), 704(7), and 704(9) of 
        this title;

           *       *       *       *       *       *       *

          (4) advise, other than on legal matters, and assist 
        the debtor in performance under the plan; and [and]
          (5) ensure that the debtor commences making timely 
        payments under section 1326 of this title []; and
          (6) if, with respect to an individual debtor, there 
        is a claim for support of a child of the debtor or a 
        custodial parent or legal guardian of such child 
        entitled to receive priority under section 507(a)(1), 
        provide the applicable notification specified in 
        subsection (d).
    (c) If the debtor is engaged in business, then in addition 
to the duties specified in subsection (b) of this section, the 
trustee shall perform the duties specified in sections 
1106(a)(3) and 1106(a)(4) of this title.
    (d)(1) In any case described in subsection (b)(6), the 
trustee shall--
          (A)(i) notify in writing the holder of the claim of 
        the right of that holder to use the services of a State 
        child support enforcement agency established under 
        sections 464 and 466 of the Social Security Act (42 
        U.S.C. 664 and 666, respectively) for the State in 
        which the holder resides; and
          (ii) include in the notice under this paragraph the 
        address and telephone number of the child support 
        enforcement agency; and
          (B)(i) notify in writing the State child support 
        agency of the State in which the holder of the claim 
        resides of the claims;
          (ii) include in the notice under this paragraph the 
        name, address, and telephone number of the holder of 
        the claim; and
          (iii) at such time as the debtor is granted a 
        discharge under section 1328, notify the holder of the 
        claim and the State child support agency of the State 
        in which that holder resides of--
                  (I) the granting of the discharge;
                  (II) the last recent known address of the 
                debtor; and
                  (III) with respect to the debtor's case, the 
                name of each creditor that holds a claim that--
                          (aa) is not discharged under 
                        paragraph (2), (4), or (14A) of section 
                        523(a); or
                          (bb) was reaffirmed by the debtor 
                        under section 524(c).
    (2)(A) If, after receiving a notice under paragraph 
(1)B)(iii), a holder of a claim or a State child support agency 
is unable to locate the debtor that is the subject of the 
notice, that party may request from a creditor described in 
paragraph (1)(B)(iii)(III) (aa) or (bb) the last known address 
of the debtor.
    (B) Notwithstanding any other provision of law, a creditor 
that makes a disclosure of a last known address of a debtor in 
connection with a request made under subparagraph (A) shall not 
be liable to the debtor or any other person by reason of making 
that disclosure.

           *       *       *       *       *       *       *


Sec. 1307. Conversion or dismissal

    (a) The debtor * * *

           *       *       *       *       *       *       *

    (e) Upon the failure of the debtor to file a tax return 
under section 1309, on request of a party in interest or the 
United States trustee and after notice and a hearing, the court 
shall dismiss the case.
    [(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. 1309. Filing of prepetition tax returns

    (a) Not later than the day before the day on which the 
first meeting of the creditors is convened under section 
341(a), the debtor shall file with appropriate tax authorities 
all tax returns for all taxable periods ending during the 3-
year period ending on the date of the filing of the petition.
    (b)(1) Subject to paragraph (2), if the tax returns 
required by subsection (a) have not been filed by the date on 
which the first meeting of creditors is convened under section 
341(a), the trustee may continue that meeting for a reasonable 
period of time to allow the debtor an additional period of time 
to file any unfiled returns, but such additional period of time 
shall not extend beyond--
          (A) for any return that is past due as of the date of 
        the filing of the petition, the date that is 120 days 
        after the date of that first meeting; or
          (B) for any return that is not past due as of the 
        date of the filing of the petition, the later of--
                  (i) the date that is 120 days after the date 
                of that first meeting; or
                  (ii) the date on which the return is due 
                under the last automatic extension of time for 
                filing that return to which the debtor is 
                entitled, and for which request has been timely 
                made, according to applicable nonbankruptcy 
                law.
    (2) Upon notice and hearing, and order entered before the 
tolling of any applicable filing period determined under this 
subsection, if the debtor demonstrates by clear and convincing 
evidence that the failure to file a return as required under 
this subsection is attributable to circumstances beyond the 
control of the debtor, the court may extend the filing period 
established by the trustee under this subsection for--
          (A) a period of not more than 30 days for returns 
        described in paragraph (1); and
          (B) a period not to extend after the applicable 
        extended due date for a return described in paragraph 
        (2).
    (c) For purposes of this section, the term ``return'' 
includes a return prepared pursuant to section 6020 (a) or (b) 
of the Internal Revenue Code of 1986, or a similar State or 
local law, or written stipulation to a judgment entered by a 
nonbankruptcy tribunal.

                        Subchapter II--The Plan

[1321. Filing of plan.]

Sec. 1321. Filing of plan

           *       *       *       *       *       *       *


[Sec. 1321. Filing of plan

    [The debtor shall file a plan.]

Sec. 1321. Filing of plan

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

Sec. 1322. Contents of plan

    (a) The plan shall--
          (1) provide * * * 
          (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) if the debtor is required by judicial or 
        administrative order or statute to pay a domestic 
        support obligation, unless the holder of such claim 
        agrees to a different treatment of such claim, provide 
        for the full payment of--
                  (A) all amounts payable under such order or 
                statute for such obligation that first become 
                payable after the date of which the petition is 
                filed; and
                  (B) all amounts payable under such order 
                before the date on which such petition was 
                filed, if such amounts are owed directly to a 
                spouse, former spouse, child of the debtor, or 
                a parent or legal guardian of such child.

           *       *       *       *       *       *       *

    [(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)(1) Except as provided in paragraph (2), the plan may 
not provide for payments over a period that is longer than 3 
years.
    (2) The plan may provide for payments over a period that is 
longer than 3 years if--
          (A) the plan is for a case that was converted to a 
        case under this chapter from a case under chapter 7, or 
        the plan is for a debtor who has been dismissed from 
        chapter 7 by reason of section 707(b), in which case 
        the plan shall provide for payments over a period of 5 
        years; or
          (B) the plan is for a case that is not described in 
        subparagraph (A), and the court, for cause, approves a 
        period longer than 3 years, but not to exceed 5 years.

           *       *       *       *       *       *       *

    (f) A plan may not materially alter the terms of a loan 
described in section 362(b)(20).

           *       *       *       *       *       *       *


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 
later than 45 after the meeting of creditors under section 
341(a).

Sec. 1325. Confirmation of plan

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

                  (B)[(i) the plan provides that the holder of 
                such claim retain the lien securing such claim; 
                and] (i) the plan provides that--
                          (I) the holder of such claim retain 
                        the lien securing such claim until the 
                        earlier of--
                                  (aa) the payment of the 
                                underlying debt determined 
                                under nonbankruptcy law; or
                                  (bb) discharge under section 
                                1328; and
                          (II) if the case under this chapter 
                        is dismissed or converted without 
                        completion of the plan, such lien shall 
                        also be retained by such holder to the 
                        extent recognized by applicable 
                        nonbankruptcy law; and
                  (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] and
                  (iii) if--
                          (I) property to be distributed 
                        pursuant to this subsection is in the 
                        form of periodic payments, such 
                        payments shall be in equal monthly 
                        amounts; and
                          (II) the holder of the claim is 
                        secured by personal property the amount 
                        of such payments shall not be less than 
                        an amount sufficient to provide to the 
                        holder of such claim adequate 
                        protection during the period of the 
                        plan; or
                  (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) if the debtor is required by a judicial or 
        administrative order or statute to pay a domestic 
        support obligation, the plan provides for full payment 
        of all amounts payable under such order for such 
        obligation that become payable after the date on which 
        the petition is filed; and
          (8) if the debtor has filed all applicable Federal, 
        State, and local tax returns as required by section 
        1309.
For purposes of paragraph (5), section 506 shall not apply to a 
claim described in that paragraph if the debt that is the 
subject of the claim was incurred within the 5-year period 
preceding the filing of the petition and the collateral for 
that debt consists of a motor vehicle (as defined in section 
30102 of title 49) acquired for the personal use of the debtor, 
or if collateral for that debt consists of any other thing of 
value, if the debt was incurred during the 6-month period 
preceding that filing.
    (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--

           *       *       *       *       *       *       *

    (2) For purposes of this subsection, ``disposable income'' 
means income which is received by the debtor and which is not 
reasonably necessary to be expended
          (A) for the maintenance or support of the debtor or a 
        dependent of the debtor or for a child support, foster 
        care, or disability payment for a dependent child made 
        in accordance with applicable nonbankruptcy law; and

           *       *       *       *       *       *       *


Sec. 1326. Payments

    [(a)(1) Unless the court orders otherwise, the debtor shall 
commence making the payments proposed by a plan within 30 days 
after the plan is filed.]
    (a)(1) Unless the court orders otherwise, the debtor 
shall--
          (A) commence making the payments proposed by a plan 
        within 30 days after the plan is filed; or
          (B) if no plan is filed then as specified in the 
        proof of claim, within 30 days after the order for 
        relief or within 15 days after the plan is filed, 
        whichever is earlier.
    (2) A payment made under this section shall be retained by 
the trustee until confirmation, denial of con-firmation, or 
paid by the trustee as adequate protection payments in accordance with 
paragraph (3). If a plan is confirmed, the trustee shall distribute any 
such payment in accordance with the plan as soon as is practicable. If 
a plan is not confirmed, the trustee shall return any such payments not 
previously paid to creditors pursuant to paragraph (3) to the debtor, 
after deducting any unpaid claim allowed under section 503(b).
    (3)(A) As soon as is practicable, and not later than 40 
days after the filing of the case, the trustee shall--
          (i) pay from payments made under this section the 
        adequate protection payments proposed in the plan; or
          (ii) if no plan is filed then, according to the terms 
        of the proof of claim.
    (B) The court may, upon notice and a hearing, modify, 
increase, or reduce the payments required under this paragraph 
pending confirmation of a plan.

           *       *       *       *       *       *       *


Sec. 1328. Discharge

    [(a) As soon as practicable] (a)(1) Subject to paragraph 
(2), as soon as practicable after completion by the debtor of 
all payments under the plan and with respect to a debtor who is 
required by a judicial or administrative order to pay a 
domestic support obligation, and with respect to whom the court 
certifies that all amounts payable under such order or statute 
that initially became payable after the date on which the 
petition was filed through the date of the certification have 
been paid, after all amounts payable under that order that, as 
of the date of certification, are owned directly to a spouse, 
former spouse, or child of the debtor, or the parent or legal 
guardian of such child have been paid (unless the holder of 
such claim agrees to a different treatment of such claim), 
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) provided] (A) provided for under section 
        1322(b)(5) of this title;
          [(2) of the kind] (B) of the kind specified in 
        paragraph (1), (5), (8), or (9) of section 523(a) of 
        this title;
    (2) With respect to a debtor who is required by a judicial 
or administrative order or statute to pay a domestic support 
obligation, the court may not grant the debtor a discharge 
under paragraph (1) until after the debtor certifies that--
          (A) all amounts payable under that order or statute 
        that initially became payable after the date on which 
        the petition was filed (through the date of the 
        certification) have been paid; and
          (B) all amounts payable under that order that, as of 
        the date of the certification, are owed directly to a 
        spouse, former spouse, or child of the debtor, or the 
        parent or legal guardian of such child, have been paid, 
        unless the holder of such claim agrees to a different 
        treatment of such claim,
    (3) for restitution, or a criminal fine, included in a 
sentence on the debtor's conviction of a crime; or
    (4) for restitution, or damages, awarded in a civil action 
against the debtor as a result of willful or malicious injury 
by the debtor that caused personal injury to an individual or 
the death of an individual.

           *       *       *       *       *       *       *

    (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 if the debtor has received 
a discharge in any case filed under this title within 5 years 
before the order for relief under this chapter.
    (g) The court shall not grant a discharge under this 
section to a debtor, unless after filing a petition the debtor 
has completed an instructional course concerning personal 
financial management described in section 111.
    (h) Subsection (g) shall not apply with respect to a debtor 
who resides in a district for which the United States trustee 
or bankruptcy administrator of the bankruptcy court of that 
district determines that the approved instructional courses are 
not adequate to service the additional individuals who would be 
required to complete the instructional course by reason of the 
requirements of this section.
    (i) Each United States trustee or bankruptcy administrator 
that makes a determination described in subsection (h) shall 
review that determination not later than 1 year after the date 
of that determination, and not less frequently than every year 
thereafter.

           *       *       *       *       *       *       *


                    PART IV--JURISDICTION AND VENUE

               CHAPTER 85--DISTRICT COURTS; JURISDICTION


Sec. 1334. Bankruptcy cases and proceedings

    (a) Except as provided in subsection (b) of this section, 
the district courts shall have original and exclusive 
jurisdiction of all cases under title 11.

           *       *       *       *       *       *       *

    (d) Any decision to abstain or not to abstain [made under 
this subsection] made under subsection (c) (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 of this title or 
by the Supreme Court of the United States under section 1254 or 
this title. [This subsection] Subsection (c) and 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 15--ANCILLARY AND OTHER CROSS-BORDER CASES

Sec.
1501. Purpose and scope of application

                    SUBCHAPTER I--GENERAL PROVISIONS

1502. Definitions.
1503. International obligations of the United States.
1504. Commencement of ancillary case.
1505. Authorization to act in a foreign country.
1506. Public policy exception.
1507. Additional assistance.
1508. Interpretation.

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

1509. Right of direct access.
1510. Limited jurisdiction.
1511. Commencement of case under section 301 or 303.
1512. Participation of a foreign representative in a case under this 
          title.
1513. Access of foreign creditors to a case under this title.
1514. Notification to foreign creditors concerning a case under this 
          title.

     SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF

1515. Application for recognition of a foreign proceeding.
1516. Presumptions concerning recognition.
1517. Order recognizing a foreign proceeding.
1518. Subsequent information.
1519. Relief that may be granted upon petition for recognition of a 
          foreign proceeding.
1520. Effects of recognition of a foreign main proceeding.
1521. Relief that may be granted upon recognition of a foreign 
          proceeding.
1522. Protection of creditors and other interested persons.
1523. Actions to avoid acts detrimental to creditors.
1524. Intervention by a foreign representative.

       SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN 
                             REPRESENTATIVES

1525. Cooperation and direct communication between the court and foreign 
          courts or foreign representatives.
1526. Cooperation and direct communication between the trustee and 
          foreign courts or foreign representatives.
1527. forms of cooperation.

                  SUBCHAPTER V--CONCURRENT PROCEEDINGS

1528. Commencement of a case under this title after recognition of a 
          foreign main proceeding.
1529. Coordination of a case under this title and a foreign proceeding.
1530. Coordination of more than 1 foreign proceeding.
1531. Presumption of insolvency based on recognition of a foreign main 
          proceeding.
1532. Rule of payment in concurrent proceedings.

           CHAPTER 15--ANCILLARY AND OTHER CROSS-BORDER CASES

Sec. 1501. Purpose and scope of application

    (a) The purpose of this chapter is to incorporate the Model 
Law on Cross-Border Insolvency so as to provide effective 
mechanisms for dealing with cases of cross-border insolvency 
with the objectives of----
          (1) cooperation between----
                  (A) United States courts, United States 
                Trustees, trustees, examiners, debtors, and 
                debtors in possession; and
                  (B) the courts and other competent 
                authorities of foreign countries involved in 
                cross-border insolvency cases;
          (2) greater legal certainty for trade and investment;
          (3) fair and efficient administration of cross-border 
        insolvencies that protects the interests of all 
        creditors, and other interested entities, including the 
        debtor;
          (4) protection and maximization of the value of the 
        debtor's assets; and
          (5) facilitation of the rescue of financially 
        troubled businesses, thereby protecting investment and 
        preserving employment.
    (b) This chapter applies if--
          (1) assistance is sought in the United States by 
        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, case or 
        proceeding under this title.
    (c) This chapter does not apply to--
          (1) a proceeding concerning an entity identified by 
        exclusion in subsection 109(b);
          (2) an individual, or to an individual and such 
        individual's spouse, who have debts within the limits 
        specified in section 109(e) and who are citizens of the 
        United States or aliens lawfully admitted for permanent 
        residence in the United States; or
          (3) an entity subject to a proceeding under the 
        Securities Investor Protection Act of 1970 (84 Stat. 
        1636 et seq.), a stockbroker subject to subchapter III 
        of chapter 7 of this title, or a commodity broker 
        subject to subchapter IV of chapter 7 of this title.

                    Subchapter I--General Provisions

Sec. 1502. Definitions

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

Sec. 1503. International obligations of the United States

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

Sec. 1504. Commencement of ancillary case

    A case under this chapter is commenced by the filing of a 
petition for recognition of a foreign proceeding under section 
1515.

Sec. 1505. Authorization to act in a foreign country

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

Sec. 1506. Public policy exception

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

Sec. 1507. Additional assistance

    (a) Subject to the specific limitations under other 
provisions of this chapter, the court, upon recognition of a 
foreign proceeding, may provide additional assistance to a 
foreign representative under this title or under other laws of 
the United States.
    (b) In determining whether to provide additional assistance 
under this title or under other laws of the United States, the 
court shall consider whether such additional assistance, 
consistent with the principles of comity, will reasonably 
assure--
          (1) just treatment of all holders of claims against 
        or interests in the debtor's property;
          (2) protection of claim holders in the United States 
        against prejudice and inconvenience in the processing 
        of claims in such foreign proceeding;
          (3) prevention of preferential or fraudulent 
        dispositions of property of the debtor;
          (4) distribution of proceeds of the debtor's property 
        substantially in accordance with the order prescribed 
        by this title; and
          (5) if appropriate, the provision of an opportunity 
        for a fresh start for the individual that such foreign 
        proceeding concerns.

Sec. 1508. Interpretation

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

 Subchapter II--Access of Foreign Representatives and Creditors to the 
                                 Court

Sec. 1509. Right of direct access

    (a) A foreign representative is entitled to commence a case 
under section 1504 by filing a petition for recognition under 
section 1515, and upon recognition, to applydirectly to other 
Federal and State courts for appropriate relief in those courts.
    (b) Upon recognition, and subject to section 1510, a 
foreign representative shall have the capacity to sue and be 
sued, and shall be subject to the laws of the United States of 
general applicability.
    (c) Subject to section 1510, a foreign representative is 
subject to laws of general application.
    (d) Recognition under this chapter is prerequisite to the 
granting of comity or cooperation to a foreign representative 
in any Federal or State court in the United States. Any request 
for comity or cooperation by a foreign representative in any 
court shall be accompanied by a sworn statement setting forth 
whether recognition under section 1515 has been sought and the 
status of any such petition.
    (e) 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. 1510. Limited jurisdiction

    The sole fact that a foreign representative files a 
petition under section 1515 does not subject the foreign 
representative to the jurisdiction of any court in the United 
States for any other purpose.

Sec. 1511. Commencement of case under section 301 or 303

    (a) Upon recognition, a foreign representative may 
commerce--
          (1) an involuntary case under section 303; or
          (2) a voluntary case under section 301 or 302, if the 
        foreign proceeding is a foreign main proceeding.
    (b) The petition commencing a case under subsection (a) 
must be accompanied by a 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) prior to such commencement.

Sec. 1512. Participation of a foreign representative in a case under 
                    this title

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

Sec. 1513. Access of foreign creditors to a case under this title

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

Sec. 1514. Notification to foreign creditors concerning a case under 
                    this title

    (a) Whenever in a case under this title notice is to be 
given to creditors generally or to any class or category of 
creditors, such notice shall also be given to the known 
creditors generally, or to creditors in the notified class or 
category, that do no 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. 1515. Application for recognition of a foreign proceeding

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

Sec. 1516. Presumptions concerning recognition

    (a) If the decision or certificate referred to in section 
1515(b) indicates that the foreign proceeding is a foreign 
proceeding as defined in section 101 and that the person or 
body is a foreign representative as defined in section 101, the 
court is entitled to so presume.
    (b) the court is entitled to presume that documents 
submitted in support of the petition for recognition are 
authentic, whether or not they have been legalized.
    (c) In the absence of evidence to the contrary, the 
debtor's registered office, or habitual residence in the case 
of an individual, is presumed to be the center of the debtor's 
main interests.

Sec. 1517. Order recognizing a foreign proceeding

    (a) Subject a section 1506, after notice and a hearing an 
order recognizing a foreign proceeding shall be entered if--
          (1) the foreign proceeding is a foreign main 
        proceeding or foreign nonmain proceeding within the 
        meaning of section 1502;
          (2) the foreign representative applying for 
        recognition is a person or body as defined in section 
        101; and
          (3) the petition meets the requirements of section 
        1515.
    (b) the foreign proceeding shall be recognized--
          (1) as a foreign main proceeding if it is taking 
        place in the country where the debtor has the center of 
        its main interests, or
          (2) as a foreign nonmain proceeding if the debtor has 
        an establishment within the meaning of section 1502 in 
        the foreign country where the proceeding is pending.
    (c) A petition for recognition of a foreign proceeding 
shall be decided upon at the earliest possible time. Entry of 
an order recognizing a foreign proceeding 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. 1518. Subsequent information

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

Sec. 1519. Relief that may be granted upon petition for recognition of 
                    a foreign proceeding

    (a) Beginning on the date on which a petition for 
recognition is filed and ending on the date on which 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 1521(a).
    (b) Unless extended under section 1521(a)(6), the relief 
granted under this section terminates when the petition for 
recognition is decided upon.
    (c) It is a ground for denial of relief under this section 
that such relief would interfere with the administration of a 
foreign main proceeding.
    (d) The court may not enjoin a police or regulatory act of 
a governmental unit, including a criminal action or proceeding, 
under this section.
    (e) The standards, procedures, and limitations applicable 
to an injunction shall apply to relief under this section.

Sec. 1520. Effects of recognition of a foreign main proceeding

    (a) Upon recognition of a foreign proceeding that is a 
foreign main proceeding--
          (1) section 362 applies with respect to the debtor 
        and that property of the debtor that is within the 
        territorial jurisdiction of the United States;
          (2) a transfer, an 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; and
          (3) 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) 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) 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) does not affect the right of a foreign 
representative or an entity to file a petition commencing a 
case under this title or the right of any party to file claims 
or take other proper actions in such a case.

Sec. 1521. Relief that may be granted upon recognition of a foreign 
                    proceeding

    (a) Upon recognition of a foreign proceeding, whether main 
or nonmain, where necessary to effectuate the purpose of this 
chapter and to protect the assets of the debtor or the 
interests of the creditors, the court may, at the request of 
the foreign representative, grant any appropriate relief, 
including--
          (1) staying the commencement or continuation of 
        individual actions or individual proceedings concerning 
        the debtor's assets, rights, obligations or liabilities 
        to the extent the actions or proceedings have not been 
        stayed under section 1520(a);
          (2) staying execution against the debtor's assets to 
        the extent the execution has not been stayed under 
        section 1520(a);
          (3) suspending the right to transfer, encumber or 
        otherwise dispose of any assets of the debtor to the 
        extent that right has not been suspended under section 
        1520(a);
          (4) providing for the examination of witnesses, the 
        taking of evidence or the delivery of information 
        concerning the debtor's assets, affairs, rights, 
        obligations or liabilities;
          (5) entrusting the administration or realization of 
        all or part of the debtor's assets within the 
        territorial jurisdiction of the United States to the 
        foreign representative or another person, including an 
        examiner, authorized by the court;
          (6) extending relief granted under section 1519(a); 
        and
          (7) granting any additional relief that may be 
        available to a trustee, except for relief available 
        under sections 522, 544, 545, 547, 548, 550, and 
        724(a).
    (b) Upon recognition of a foreign proceeding, whether main 
or nonmain, the court may, at the request of the foreign 
representative entrust the distribution of all or part of the 
debtor's assets located in the United States to the foreign 
representative or another person, including an examiner, 
authorized by the court, if the court is satisfied that the 
interests of creditors in the United States are sufficiently 
protected.
    (c) In granting relief under this section to a 
representative of a foreign nonmain proceeding, the court must 
be satisfied that the relief relates to assets that, under the 
law of the United States, should be administered in the foreign 
nonmain proceeding or concerns information required in that 
proceeding.
    (d) The court may not enjoin a police or regulatory act of 
a governmental unit, including a criminal action or proceeding, 
under this section.
    (e) The standards, procedures, and limitations applicable 
to an injunction shall apply to relief under paragraphs (1), 
(2), (3), and (6) of subsection (a).

Sec. 1522. Protection of creditors and other interested persons

    (a) The court may grant relief under section 1519 or 1521, 
or may modify or terminate relief under subsection (c), only if 
the interests of the creditors and other interested entities, 
including the debtor, are sufficiently protected.
    (b) The court may subject relief granted under section 1519 
or 1521, or the operation of the debtor's business under 
section 1520(a)(2), to conditions that the court considers to 
be appropriate, including the giving of security or the filing 
of a bond.
    (c) The court may, at the request of the foreign 
representative or an entity affected by relief granted under 
section 1519 or 1521, or at its own motion, modify or terminate 
the relief referred to in subsection (b).
    (d) Section 1104(d) shall apply to the appointment of an 
examiner under this chapter. Any examiner shallcomply with the 
qualification requirements imposed on a trustee by section 322.

Sec. 1523. Actions to avoid acts detrimental to creditors

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

Sec. 1524. Intervention by a foreign representative

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

      Subchapter IV--Cooperation With Foreign Courts and Foreign 
                            Representatives

Sec. 1525. Cooperation and direct communication between the court and 
                    foreign courts or foreign representatives

    (a) Consistent with section 1501, the court shall cooperate 
to the maximum extent possible with foreign courts or foreign 
representatives, either directly or through the trustee.
    (b) The court is entitled to communicate directly with, or 
to request information or assistance directly from, foreign 
courts or foreign representatives, subject to the rights of 
parties in interest to notice and participation.

Sec. 1526. Cooperation and direct communication between the trustee and 
                    foreign courts or foreign representatives

    (a) Consistent with section 1501, the trustee or other 
person, including an examiner, authorized by the court, shall, 
subject to the supervision of the court, cooperate to the 
maximum extent possible with foreign courts or foreign 
representatives.
    (b) The trustee or other person, including an examiner, 
authorized by the court is entitled, subject to the supervision 
of the court, to communicate directly with foreign courts or 
foreign representatives.

Sec. 1527. Forms of cooperation

    Cooperation referred to in sections 1525 and 1526 may be 
implemented by any appropriate means, including--
          (1) appointment of a person or body, including an 
        examiner, to act at the direction of the court;
          (2) communication of information by any means 
        considered appropriate by the court;
          (3) coordination of the administration and 
        supervision of the debtor's assets and affairs;
          (4) approval or implementation of agreements 
        concerning the coordination of proceedings; and
          (5) coordination of concurrent proceedings regarding 
        the same debtor.

                  Subchapter V--Concurrent Proceedings

Sec. 1528. Commencement of a case under this title after recognition of 
                    a foreign main proceeding

    After recognition of a foreign main proceeding, a case 
under another chapter of this title may be commenced only if 
the debtor has assets in the United States. The effects of such 
case shall be restricted to the assets of the debtor that are 
within the territorial jurisdiction of theUnited States and, to 
the extent necessary to implement cooperation and coordination under 
sections 1525, 1526, and 1527, to other assets of the debtor that are 
within the jurisdiction of the court under sections 541(a), and 1334(e) 
of title 28, to the extent that such other assets are not subject to 
the jurisdiction and control of a foreign proceeding that has been 
recognized under this chapter.

Sec. 1529. Coordination of a case under this title and a foreign 
                    proceeding

    In any case in which a foreign proceeding and a case under 
another chapter of this title are taking place concurrently 
regarding the same debtor, the court shall seek cooperation and 
coordination under sections 1525, 1526, and 1527, and the 
following shall apply:
          (1) If the case in the United States is taking place 
        at the time the petition for recognition of the foreign 
        proceeding is filed--
                  (A) any relief granted under sections 1519 or 
                1521 must be consistent with the relief granted 
                in the case in the United States; and
                  (B) even if the foreign proceeding is 
                recognized as a foreign main proceeding, 
                section 1520 does not apply.
          (2) If a case in the United States under this title 
        commences after recognition, or after the filing of the 
        petition for recognition, of the foreign proceeding--
                  (A) any relief in effect under sections 1519 
                or 1521 shall be reviewed by the court and 
                shall be modified or terminated if inconsistent 
                with the case in the United States; and
                    (B) if the foreign proceeding is a foreign 
                main proceeding, the stay and suspension 
                referred to in section 1520(a) shall be 
                modified or terminated if inconsistent with the 
                relief granted in the case in the United 
                States.
          (3) In granting, extending, or modifying relief 
        granted to a representative of a foreign nonmain 
        proceeding, the court must be satisfied that the relief 
        relates to assets that, under the law of the United 
        States, should be administered in the foreign nonmain 
        proceeding or concerns information required in that 
        proceeding.
          (4) In achieving cooperation and coordination under 
        sections 1528 and 1529, the court may grant any of the 
        relief authorized under section 305.

Sec. 1530. Coordination of more than 1 foreign proceeding

    In matters referred to in section 1501, with respect to 
more than 1 foreign proceeding regarding the debtor the court 
shall seek cooperation and coordination under sections 1525, 1526, and 
1527, and the following shall apply:
          (1) Any relief granted under section 1519 or 1521 to 
        a representative of a foreign nonmain proceeding after 
        recognition of a foreign main proceeding must be 
        consistent with the foreign main proceeding.
          (2) If a foreign main proceeding is recognized after 
        recognition, or after the filing of a petition for 
        recognition, of a foreign nonmain proceeding, any 
        relief in effect under section 1519 or 1521 shall be 
        reviewed by the court and shall be modified or 
        terminated if inconsistent with the foreign main 
        proceeding.
          (3) If, after recognition of a foreign nonmain 
        proceeding, another foreign nonmain proceeding is 
        recognized, the court shall grant, modify, or terminate 
        relief for the purpose of facilitating coordination of 
        the proceedings.

Sec. 1531. Presumption of insolvency based on recognition of a foreign 
                    main proceeding

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

Sec. 1532. Rule of payment in concurrent proceedings

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

TITLE 18--CRIMES AND CRIMINAL PROCEDURE

           *       *       *       *       *       *       *


PART I.--CRIMES

           *       *       *       *       *       *       *


                         CHAPTER 9--BANKRUPTCY

Sec.
151. Definitions.
           *       *       *       *       *       *       *
158. Designation of United States attorneys and agents of the Federal 
          Bureau of Investigation to address abusive reaffirmations of 
          debts.

           *       *       *       *       *       *       *


Sec. 156. Knowing disregard of bankruptcy law or rule

    (a) Definitions.--In this section--
          (1) the term ``bankruptcy petition preparer'' means a 
        person, other than the debtor's attorney or an employee 
        of such an attorney, who prepares for compensation a 
        document for filing; and
          (2) the term ``document for filing'' means a petition 
        or any other document prepared for filing by a debtor 
        in a United States bankruptcy court or a United States 
        district court in connection with a case under title 
        11.
    (b) Offense.--If a bankruptcy case or related proceeding is 
dismissed because of a knowing attempt by a bankruptcy petition 
preparer in any manner to disregard the requirements of title 
11, United States Code, or the Federal Rules of Bankruptcy 
Procedure, the bankruptcy petition preparer shall be fined 
under this title, imprisoned not more than 1 year, or both.

           *       *       *       *       *       *       *


Sec. 158. Designation of United States attorneys and agents of the 
                    Federal Bureau of Investigation to address abusive 
                    reaffirmations of debt

    (a) In General.--The Attorney General of the United States 
shall designate the individuals described in subsection (b) to 
have primary responsibility in carrying out enforcement 
activities in addressing violations of section 152 or 157 
relating to abusive reaffirmations of debt.
    (b) United States District Attorneys and Agents of the 
Federal Bureau of Investigation.--The individuals referred to 
in subsection (a) are--
          (1) a United States attorney for each judicial 
        district of the United States; and
          (2) an agent of the Federal Bureau of Investigation 
        (within the meaning of section 3107) for each field 
        office of the Federal Bureau of Investigation.
    (c) Bankruptcy Investigations.--Each United States attorney 
designated under this section shall have primary responsibility 
for carrying out the duties of a United States attorney under 
section 3057.

TITLE 28--JUDICIARY AND JUDICIAL PROCEDURE

           *       *       *       *       *       *       *


PART I--ORGANIZATION OF COURTS

           *       *       *       *       *       *       *


                      CHAPTER 6--BANKRUPTCY JUDGES

Sec.
151. Designation of bankruptcy courts.
           *       *       *       *       *       *       *
159. Bankruptcy statistics.

           *       *       *       *       *       *       *


Sec. 152. Appointment of bankruptcy judges

    (a)(1) [The United States court of appeals for the circuit 
shall appoint bankruptcy judges for the judicial districts 
established in paragraph (2) in such numbers as are established 
in such paragraph.] Each bankruptcy judge to be appointed for a 
judicial district as provided in paragraph (2) shall be 
appointed by the United States court of appeals of for the 
circuit in which such district is located. Such appointments 
shall be made after considering the recommendations of the 
Judicial Conference submitted pursuant to subsection (b). Each 
bankruptcy judge shall be appointed for a term of fourteen 
years, subject to the provisions of subsection (e). However, 
upon the expiration of the term, a bankruptcy judge may, with 
the approval of the judicial council of the circuit, continue 
to perform the duties of the office until the earlier of the 
date which is 180 days after the expiration of the term or the 
date of the appointment of a successor. Bankruptcy judges shall 
serve as judicial officers of the United States district court 
established under Article III of the Constitution.

           *       *       *       *       *       *       *


Sec. 156. Staff; expenses

    (a) * * *

           *       *       *       *       *       *       *

    (g)(1) In this subsection, the term ``travel expenses''--
          (A) means the expenses incurred by a bankruptcy judge 
        for travel that is not directly related to any case 
        assigned to such bankruptcy judge; and
          (B) shall not include the travel expenses of a 
        bankruptcy judge if--
                  (i) the payment for the travel expenses is 
                paid by such bankruptcy judge from the personal 
                funds of such bankruptcy judge; and
                  (ii) such bankruptcy judge does not receive 
                funds (including reimbursement) from the United 
                States or any other person or entity for the 
                payment of such travel expenses.
    (2) Each bankruptcy judge shall annually submit the 
information required under paragraph (3) to the chief 
bankruptcy judge for the district in which the bankruptcy judge 
is assigned.
    (3)(A) Each chief bankruptcy judge shall submit an annual 
report to the Director of the Administrative Office of the 
United States Courts on the travel expenses of each bankruptcy 
judge assigned to the applicable district (including the travel 
expenses of the chief bankruptcy judge of such district).
    (B) The annual report under this paragraph shall include--
          (i) the travel expenses of each bankruptcy judge, 
        with the name of the bankruptcy judge to whom the 
        travel expenses apply;
          (ii) a description of the subject matter and purpose 
        of the travel relating to each travel expense 
        identified under clause (i), with the name of the 
        bankruptcy judge to whom the travel applies; and
          (iii) the number of days of each travel described 
        under clause (ii), with the name of the bankruptcy 
        judge to whom the travel applies.
    (4)(A) The Director of the Administrative Office of the 
United States Courts shall--
          (i) consolidate the reports submitted under paragraph 
        (3) into a single report; and
          (ii) annually submit such consolidated report to 
        Congress.
    (B) The consolidated report submitted under this paragraph 
shall include the specific information required under paragraph 
(3)(B), including the name of each bankruptcy judge with 
respect to clauses (i), (ii), and (iii) of paragraph (3)(B).

Sec. 157. Procedures

    (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 15 of title 11.

           *       *       *       *       *       *       *


Sec. 159. Bankruptcy statistics

    (a) The clerk of each district court shall compile 
statistics regarding individual debtors with primarily consumer 
debts seeking relief under chapters 7, 11, and 13 of title 11. 
Those statistics shall be in a form prescribed by the Director 
of the Administrative Office of the United States Courts 
(referred to in this section as the ``Office'').
    (b) The Director shall--
          (1) compile the statistics referred to in subsection 
        (a);
          (2) make the statistics available to the public; and
          (3) not later than October 31, 1999, and annually 
        thereafter, prepare, and submit to Congress a report 
        concerning the information collected under subsection 
        (a) that contains an analysis of the information.
    (c) The compilation required under subsection (b) shall--
          (1) be itemized, by chapter, with respect to title 
        11;
          (2) be presented in the aggregate and for each 
        district; and
          (3) include information concerning--
                  (A) the total assets and total liabilities of 
                the debtors described in subsection (a), and in 
                each category of assets and liabilities, as 
                reported in the schedules prescribed under 
                section 2075 and filed by those debtors;
                  (B) the total current monthly income, 
                projected monthly net income, and average 
                income, and average expenses of those debtors 
                as reported on the schedules and statements 
                that each such debtor files under sections 111, 
                521, and 1322 of title 11;
                  (C) the aggregate amount of debt discharged 
                in the reporting period, determined as the 
                difference between the total amount of debt and 
                obligations of a debtor reported on the 
                schedules and the amount of such debt reported 
                in categories which are predominantly 
                nondischargeable;
                  (D) the average period for time between the 
                filing of the petition and the closing of the 
                case;
                  (E) for the reporting period--
                          (i) the number of cases in which a 
                        reaffirmation was filed; and
                          (ii)(I) the total number of 
                        reaffirmations filed;
                          (II) of those cases in which a 
                        reaffirmation was filed, the number in 
                        which the debtor was not represented by 
                        an attorney; and
                          (III) of the cases under each of 
                        subclauses (I) and (III), the number of 
                        cases in which the reaffirmation was 
                        approved by the court;
                  (F) with respect to cases filed under chapter 
                13 of title 11, for the reporting period--
                          (i)(I) the number of cases in which a 
                        final order was entered determining the 
                        value of property securing a claim in 
                        an amount less than the amount of the 
                        claim; and
                          (II) the number of final or debtors 
                        determining the value of property 
                        securing a claim issued;
                          (ii) the number of cases dismissed 
                        for failure to make payments under the 
                        plan; and
                          (iii) the number of cases in which 
                        the debtor filed another case during 
                        the 6-year period preceding the date of 
                        filing;
                  (G) the number of cases in which creditors 
                were fined for misconduct and any amount of 
                punitive damages awarded by the court for 
                creditor misconduct; and
                  (H) the number of cases in which sanctions 
                under Rule 9011 of the Federal Rules of 
                Bankruptcy Procedure were imposed against 
                debtor's counsel and damages awarded under such 
                rule.

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 7, 11, 12, [or 13] 13, 
        or 15, 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.]
          (6) make such reports as the Attorney General 
        directs, including the results of audits performed 
        under subsection (f); and
          (7) in each of such small business cases--
                  (A) conduct an initial debtor interview as 
                soon as practicable after the entry of order 
                for relief but before the first meeting 
                scheduled under section 341(a) of title 11, at 
                which time the United States trustee shall--
                          (i) begin to investigate the debtor's 
                        viability;
                          (ii) inquire about the debtor's 
                        business plan;
                          (iii) explain the debtor's 
                        obligations to file monthly operating 
                        reports and other required reports;
                          (iv) attempt to develop an agreed 
                        scheduling order; and
                          (v) inform the debtor of other 
                        obligations;
                  (B) if determined to be appropriate and 
                advisable, visit the appropriate business 
                premises of the debtor and ascertain the state 
                of the debtor's books and records and verify 
                that the debtor has filed its tax returns; and
                  (C) review and monitor diligently the 
                debtor's activities, to identify as promptly as 
                possible whether the debtor will be unable to 
                confirm a plan; and
          (8) in any case in which the United States trustee 
        finds material grounds for any relief under section 112 
        of title 11, the United States trustee shall apply 
        promptly after making that finding to the court for 
        relief.

           *       *       *       *       *       *       *

    (f)(1)(A) The Attorney General shall establish procedures 
to determine the accuracy, veracity, and completeness of 
petitions, schedules, and other information which the debtor is 
required to provide under sections 521 and 1322 of title 11, 
and, if applicable, section 111 of title 11, in individual 
cases filed under chapter 7 or 13 of such title.
    (B) Those procedures shall--
          (i) establish a method of selecting appropriate 
        qualified persons to contract to perform those audits;
          (ii) establish a method of randomly selecting cases 
        to be audited, except that not less than 1 out of every 
        250 cases in each Federal judicial district shall be 
        selected for audit;
          (iii) require audits for schedules of income and 
        expenses which reflect greater than average variances 
        from the statistical norm of the district in which the 
        schedules were filed if those variances occur by reason 
        of higher income or higher expenses than the 
        statistical norm of the district in which the schedules 
        were filed; and
          (iv) include procedures for providing, not less 
        frequently than annually, public information concerning 
        the aggregate results of the audits referred to in this 
        subparagraph, including the percentage of cases, by 
        district, in which a material misstatement of income or 
        expenditures is reported.
    (2) The United States trustee for each district may 
contract with auditors to perform audits in cases designated by 
the United States trustee according to the procedures 
established under paragraph (1).
    (3)(A) The report of each audit conducted under this 
subsection shall be filed with the court and transmitted to the 
United States trustee. Each report shall clearly and 
conspicuously specify any material misstatement of income or 
expenditures or of assets identified by the person performing 
the audit. In any case where a material misstatement of income 
or expenditures or of assets has been reported, the clerk of 
the bankruptcy court shall give notice of the misstatement to 
the creditors in the case.
    (B) If a material misstatement of income or expenditures or 
of asserts is reported, the United States trustee shall--
          (i) report the material misstaement, if appropriate, 
        to the United States Attorney under section 3057 of 
        title 18; and
          (ii) if advisable, take appropriate action, including 
        commencing an adversary proceeding to revoke the 
        debtor's discharge under section 727(d) of title 11.

HISTORICAL AND STATUTORY NOTES OF Sec. 581

           *       *       *       *       *       *       *



``SEC. 302. EFFECTIVE DATES; APPLICATION OF AMENDMENTS.

    ``(a) General effective date.

           *       *       *       *       *       *       *

    ``(d) Application of amendments to judicial districts.
    ``(1) Certain regions not currently served by United States 
trustees. * * *

           *       *       *       *       *       *       *

    ``(3) Judicial districts for the States of Alabama and 
North Carolina. (A) Notwithstanding * * *
          ``(i) become effective in or with respect to a 
        judicial district specified in subparagraph (E) until, 
        or
        ``(ii) apply to cases while pending in such district 
        before,
such district elects to be included in a bankruptcy region 
established in section 581(a) of Title 28, United States Code, 
as amended by section 111(a) of this Act [subsec. (a) of this 
section], [or October 1, 2002, whichever occurs first,] except 
that the amendment to section 105(a) of Title 11, United States 
Code [section 105(a) of Title 11], shall become effective as of 
the date of the enactment of the Federal Courts Study Committee 
Implementation Act of 1990 [Dec. 1, 1990].

           *       *       *       *       *       *       *

    ``(F)(i) Subject to clause (ii), with respect to cases 
under chapters 7, 11, 12, and 13 of title 11, United States 
Code [sections 701 et seq., 1101 et seq., 1201 et seq., and 
1301 et seq., respectively, of Title 11]--
          ``(I) commenced before the effective date of this 
        Act, and
          ``(II) pending in a judicial district in the State of 
        Alabama or the State of North Carolina before any 
        election made under subparagraph (A) by such district 
        becomes effective [or October 1, 2002, whichever occurs 
        first],
the amendments made by section 113 [amending section 586 of 
this title] and subtitle A of title II of this Act, and section 
1930(a)(6) of title 28 of the United States Code (as added by 
section 117(4) of this Act) [section 1930(a)(6) of this title], 
shall not apply until [October 1, 2003, or] the expiration of 
the 1-year period beginning on the date such election becomes 
effective, whichever occurs first.
    ``(ii) For purposes of clause (i), the amendments made by 
section 113 [amending section 586 of this title] and subtitle A 
of title II of this Act, and section 1930(a)(6) of title 28 of 
the United States Code (as added by section 117(4) of this Act) 
[section 1930(a)(6) of this title], shall not apply with 
respect to a case under chapter 7, 11, 12, or 13 of title 11, 
United States Code [sections 701 et seq., 1101 et seq., 1201 et 
seq., and 1301 et seq., respectively, of Title II], if--
          ``(I) the trustee in the case files the final report 
        and account of administration of the estate, required 
        under section 704 of such title [section 704 of Title 
        11], or
        ``(II) a plan is confirmed under section 1129, 1225, or 
        1325 of such title [section 1129, 1225, or 1325, 
        respectively of Title 11],
[before October 1, 2003, on] the expiration of the 1-year 
period beginning on the date such election becomes effective 
[whichever occurs first].

           *       *       *       *       *       *       *


Sec. 589b. Bankruptcy data

    (a) Within a reasonable period of time after the effective 
date of this section, the Attorney General of the United States 
shall 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) Each report referred to in subsection (a) shall be 
designed (and the requirements as to place and manner of filing 
shall be established) so as to facilitate compilation of data 
and maximum practicable access of the public, by--
          (1) physical inspection at 1 or more central filing 
        locations; and
          (2) electronic access through the Internet or other 
        appropriate media.
    (c)(1) The information required to be filed in the reports 
referred to in subsection (b) shall be information that is--
          (A) in the best interests of debtors and creditors, 
        and in the public interest; and
          (B) reasonable and adequate information to evaluate 
        the efficiency and practicality of the Federal 
        bankruptcy system.
    (2) In issuing rules proposing the forms referred to in 
subsection (a), the Attorney General shall strike the best 
achievable practical balance between--
          (A) the reasonable needs of the public for 
        information about the operational results of the 
        Federal bankruptcy system; and
          (B) economy, simplicity, and lack of undue burden on 
        persons with a duty to file reports.
    (d)(1) Final reports proposed for adoption by trustees 
under chapters 7, 12, and 13 of title 11 shall include with 
respect to a case under such title, by appropriate category--
          (A) information about the length of time the case was 
        pending;
          (B) assets abandoned;
          (C) assets exempted;
          (D) receipts and disbursements of the estate;
          (E) expenses of administration;
          (F) claims asserted;
          (G) claims allowed; and
          (H) distributions to claimants and claims discharged 
        without payment.
    (2) In cases under chapters 12 and 13 of title 11, final 
reports proposed for adoption by trustees shall include--
          (A) the date of confirmation of the plan;
          (B) each modification to the plan; and
          (C) defaults by the debtor in performance under the 
        plan.
    (3) The information described in paragraphs (1) and (2) 
shall be in addition to such other matters as are required by 
law for a final report or as the Attorney General, in the 
discretion of the Attorney General, may propose for a final 
report.
    (e)(1) Periodic reports proposed for adoption by trustees 
or debtors in possession under chapter 11 of title 11 shall 
include--
          (A) information about the standard industry 
        classification, published by the Department of 
        Commerce, for the businesses conducted by the debtor;
          (B) the length of time the case has been pending;
          (C) the number of full-time employees--
                  (i) as of the date of the order for relief; 
                and
                  (ii) at the end of each reporting period 
                since the case was filed;
          (D) cash receipts, cash disbursements, and 
        profitability of the debtor for the most recent period 
        and cumulatively since the date of the order for 
        relief;
          (E) 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;
          (F) all professional fees approved by the court in 
        the case for the most recent period and cumulatively 
        since the date of the order for relief (separately 
        reported, for the professional fees incurred by or on 
        behalf of the debtor, between those that would have 
        been incurred absent a bankruptcy case and those that 
        would not have been so incurred); and
          (G) 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.
    (2) The information described in paragraph (1) shall be in 
addition to such other matters as are required by law for a 
periodic report or as the Attorney General, in the discretion 
of the Attorney General, may propose for a periodic report.

           *       *       *       *       *       *       *


PART III--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) A tax under subsection (a) shall be paid when due in 
the conduct of business unless--
          (1) the tax is a property tax secured by a lien 
        against property that is abandoned within a reasonable 
        period of time after the lien attaches, by the trustee 
        of a bankruptcy estate, under 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 makes a 
        finding of probable insufficiency of funds of the 
        estate to pay in full the administrative expenses 
        allowed under section 503(b) of title 11 that have the 
        same priority in distribution under section 726(b) of 
        title 11 as the priority of that tax.

           *       *       *       *       *       *       *


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.

                    PART IV--JURISDICTION AND VENUE

               CHAPTER 85--DISTRICT COURTS; JURISDICTION


Sec. 1334. Bankruptcy cases and proceedings

    (c)(1) [Nothing in] Except with respect to a case under 
chapter 15 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 II or arising in or related to a case under title 11.

           *       *       *       *       *       *       *


                                
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