    [House Report 107-3]
    [From the U.S. Government Publishing Office]

    107th Congress                                              Rept. 107-3
                            HOUSE OF REPRESENTATIVES
     1st Session                                                     Part 1
    _______________________________________________________________________

        BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2001

                                   __________

                                  R E P O R T

                                     of the

                           COMMITTEE ON THE JUDICIARY

                            HOUSE OF REPRESENTATIVES

                                  to accompany

                                    H.R. 333

                                 together with

                                DISSENTING VIEWS

     February 26, 2001.--Committed to the Committee of the Whole House on
                the State of the Union and ordered to be printed
                                   __________

                        U.S. GOVERNMENT PRINTING OFFICE
    89-000                     WASHINGTON : 2001

    107th Congress                                              Rept. 107-3
                            HOUSE OF REPRESENTATIVES
     1st Session                                                     Part 1

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

        BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2001

                                    _______

     February 26, 2001.--Committed to the Committee of the Whole House on
                the State of the Union and ordered to be printed

                                    _______

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

                                  R E P O R T

                                 together with

                                DISSENTING VIEWS

                            [To accompany H.R. 333]

        The Committee on the Judiciary, to whom was referred the
    bill (H.R. 333) amending title 11, United States Code, and for
    other purposes, having considered the same, report favorably
    thereon with amendments and recommend that the bill as amended
    do pass.

                                    CONTENTS

                                                                       Page
    The Amendment....................................................     2
    Purpose and Summary..............................................     2
    Background and Need for the Legislation..........................     3
    Hearings.........................................................    15
    Committee Consideration..........................................    16
    Votes of the Committee...........................................    16
    Committee Oversight Findings.....................................    23
    Performance Goals and Objectives.................................    24
    New Budget Authority and Tax Expenditures........................    24
    Committee Cost Estimate..........................................    24
    Committee Jurisdiction Letters...................................    25
    Constitutional Authority Statement...............................    26
    Preemption of State Law..........................................    26
    Section-by-Section Analysis and Discussion.......................    27
    Changes in Existing Law Made by the Bill, as Reported............   118
    Markup Transcript................................................   300
    Dissenting Views.................................................   455
    Additional Dissenting Views......................................   488

        The amendments (stated in terms of the page and line
    numbers of the introduced bill) are as follows:

        Page 174, line 5, strike ``30.76'' and insert ``33.87''.

        Page 316, strike line 16 and insert the following:

                (1) by redesignating section 407 as 407A;

        Beginning on page 330, strike line 19 and all that follows
    through line 10 on page 331 (and make such technical and
    conforming changes as may be appropriate).

        Page 356, beginning on line 5, strike ``and amended by this
    Act, is reenacted.'' and insert ``is hereby reenacted, and as
    here reenacted is amended by this Act.''.

        Page 356, line 20, strike ``2001'' and insert ``2004''.

        Page 368, line 4, strike ``and (38)'' and insert ``, (38),
    and (54A)''.

        Page 380, strike lines 19 through 21, and insert the
    following:

        (e) Effective Dates.--(1) Except as provided in paragraph
    (2), this section and the amendments made by this section shall
    take effect on the date of the enactment of this Act.
        (2) With respect to the temporary bankruptcy judgeship
    authorized for the district of South Carolina under paragraph
    (8) of the Bankruptcy Judgeship Act of 1992 (28 U.S.C. 152
    note), subsection (c)(1) as it applies to the extension
    specified in subparagraph (D) of such subsection shall take
    effect immediately before December 31, 2000.

                                 The Amendment

        H.R. 333, the Bankruptcy Abuse Prevention and Consumer
    Protection Act of 2001, was ordered reported with an amendment.
    The amendment made conforming revisions to the bill.

                              Purpose and Summary

        H.R. 333, the Bankruptcy Abuse Prevention and Consumer
    Protection Act of 2001, is a comprehensive package of reform
    measures pertaining to both consumer and business bankruptcy
    cases. The purpose of the bill is to improve bankruptcy law and
    practice by restoring personal responsibility and integrity in
    the bankruptcy system and by ensuring that the system is fair
    for both debtors and creditors.
        The heart of H.R. 333's consumer bankruptcy reforms is the
    implementation of an income/expense screening mechanism
    (``needs-based bankruptcy relief'') to ensure that debtors
    repay creditors the maximum they can afford. In addition to
    implementing needs-based bankruptcy relief, H.R. 333 institutes
    a panoply of other consumer bankruptcy reforms. These include
    new eligibility standards for bankruptcy relief, additional
    financial disclosure requirements for consumer debtors, and
    enhanced responsibilities for those charged with administering
    consumer bankruptcy cases. H.R. 333, likewise, institutes
    significant consumer protection reforms, including mandatory
    credit counseling requirements, required disclosures in
    connection with certain credit transactions, and protections
    against abusive practices with respect to reaffirmation
    agreements.
        The bill also includes extensive reforms pertinent to
    business bankruptcies. Many of these provisions are intended to
    heighten administrative scrutiny and judicial oversight of
    small business bankruptcy cases. In addition, the bill includes
    provisions designed to reduce systemic risk in the financial
    marketplace and clarify the treatment of tax claims in
    bankruptcy cases. H.R. 333 also creates a new form of
    bankruptcy relief for transnational insolvencies and includes
    provisions regarding family farmer debtors and health care
    providers.

                    Background and Need for the Legislation

        Congressman George W. Gekas (for himself and 56 original
    cosponsors) introduced H.R. 333 on January 31, 2001. H.R. 333
    is the product of more than 3 years of Congressional
    consideration of bankruptcy reform legislation. As introduced,
    H.R. 333 is virtually identical to the conference report on
    H.R. 2415,\1\ the Gekas-Grassley Bankruptcy Reform Act of 2000,
    which passed the House by voice vote on October 12, 2000,\2\
    and passed the Senate on December 7, 2000 by a vote of 70 to
    28.\3\ On December 19, 2000, the conference report was pocket-
    vetoed by President Clinton.
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        \1\ H. Rep. No. 106-970 (2000). The only differences are H.R. 333's
    title and the deletion of section 1224 (pertaining to the Bankruptcy
    Administrator Program) from the conference report, as this provision
    was enacted into law. Federal Courts Improvement Act of 2000, Pub. L.
    No. 106-518, Sec. 501, 114 Stat. 2410, 2422 (2000).
        \2\ 146 Cong. Rec. H9840 (daily ed. Oct. 12, 2000)
        \3\ 146 Cong. Rec. S11730 (daily ed. Dec. 7, 2000). On October 19,
    2000, the Senate, by a vote of 89 to 0, agreed to a motion to proceed
    to consideration of the conference report on H.R. 2415. 146 Cong. Rec.
    S10770 (daily ed. Oct. 19, 2000). A further motion to proceed was
    agreed to in the Senate on October 27, 2000 by a vote of 87 to 1. 146
    Cong. Rec. S11205 (daily ed. Oct. 27, 2000). After a cloture motion
    failed by a vote of 53 to 30 on November 1, 2000, Senate Majority
    Leader Trent Lott moved to reconsider the vote. 146 Cong. Rec. S11450
    (daily ed. Nov. 1, 2000). On December 5, 2000, the Senate agreed to a
    cloture motion by a vote of 67 to 31 and passed the conference report 2
    days later. 146 Cong. Rec. S11553 (daily ed. Dec. 5, 2000).
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        Support for bankruptcy reform legislation in the last two
    Congresses has been overwhelming and bipartisan. In the 105th
    Congress, for example, the House passed both H.R. 3150, the
    Bankruptcy Reform Act of 1998, and the conference report on
    that bill by a veto-proof margins.\4\ In the last Congress, the
    House passed H.R. 833, the predecessor to H.R. 2415, by a veto-
    proof margin of 313 to 108.\5\ Bankruptcy reform legislation
    has also enjoyed broad bipartisan support in the Senate.\6\
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        \4\ 144 Cong. Rec. H4442 (daily ed. June 10, 1998) (vote on final
    passage of H.R. 3150 was 306 to 118); 144 Cong. Rec. H10239-40 (daily
    ed. Oct. 9, 1998) (vote on final passage of the conference report on
    H.R. 3150 was 300 to 125).
        \5\ 145 Cong. Rec. H2771 (daily ed. May 5, 1999).
        \6\ On February 2, 2000, H.R. 833 was laid before the Senate by
    unanimous consent. The Senate struck all of H.R. 833's language after
    its enacting clause and substituted the text of S. 625, as amended.
    H.R. 833, as amended, was then passed by the Senate in lieu of S. 625
    by a recorded vote of 83 to 14. 146 Cong. Rec. S255 (daily ed. Feb. 2,
    2000).
    ---------------------------------------------------------------------------
        The Judiciary Committee commenced its consideration of
    bankruptcy reform early in 105th Congress. On April 16, 1997,
    the Subcommittee on Commercial and Administrative Law conducted
    a hearing on the operation of the bankruptcy system that was
    combined with a status report from the National Bankruptcy
    Review Commission.\7\ This would be the first of 17 hearings on
    bankruptcy reform over the ensuing 4 years.\8\ Ten of these
    hearings were devoted solely to consideration of H.R. 333 and
    its predecessors, H.R. 3150 (the Bankruptcy Reform Act of 1998)
    and H.R. 833 (the Bankruptcy Reform Act of 1999). Over the
    course of these hearings, nearly 130 witnesses, representing
    nearly every major constituency in the bankruptcy community,
    testified. With regard to H.R. 833 alone, testimony was
    received from 69 witnesses, representing 23 organizations, with
    additional material submitted by other groups. In fact, the
    subcommittee's inaugural hearing on H.R. 833 was held jointly
    with the Senate Subcommittee on Administrative Oversight and
    the Courts on March 11, 1999.\9\ This marked the first time in
    more than 60 years that a bicameral hearing was held on the
    subject of bankruptcy reform.\10\
    ---------------------------------------------------------------------------
        \7\ Operation of the Bankruptcy System and Status Report from the
    National Bankruptcy Review Commission: Hearing Before the Subcomm. on
    Commercial and Administrative Law of the House Comm. on the Judiciary,
    105th Cong. (1997).
        \8\ The dates and subject matters of these hearings were as
    follows:

          April 16, 1997--Hearing on the operation of the bankruptcy
          system and status report from the National Bankruptcy
    ---------------------------------------------------------------------------
          Review Commission.

          April 30, 1997--Hearing on H.R. 764, ``Bankruptcy
          Amendments of 1997,'' and H.R. 120, ``Bankruptcy Law
          Technical Corrections Act of 1997.''

          October 9, 1997--Hearing on H.R. 2592, ``Private Trustee
          Reform Act of 1997'' and review of post-confirmation fees
          in chapter 11 cases.

          November 13, 1997--Hearing on the Report of the National
          Bankruptcy Review Commission.

          February 12, 1998--Hearing on H.R. 2604, ``Religious
          Liberty and Charitable Donation Protection Act of 1997.''

          March 10-11, 18-19, 1998--Hearings on H.R. 3150,
          ``Bankruptcy Reform Act of 1998,'' H.R. 3146, ``Consumer
          Lenders and Borrowers Bankruptcy Accountability Act of
          1998,'' and H.R. 2500, ``Responsible Borrower Protection
          Bankruptcy Act.''

          March 11-12, 18-19, 1999--Hearings on H.R. 833,
          ``Bankruptcy Reform Act of 1999.''

          November 2, 1999--Joint oversight hearing on additional
          bankruptcy judgeship needs.

          April 11, 2000--Oversight hearing on the limits on
          regulatory powers under the Bankruptcy Code.''

          February 7-8, 2001--Hearings on H.R. 333, the ``Bankruptcy
          Abuse Prevention and Consumer Protection Act of 2001.''
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        \9\ Representatives on behalf of the Commercial Law League of
    America, the Credit Union National Association, MBNA America Bank,
    N.A., National Retail Federation, and the National Consumer Law Center
    also testified. Some of the nation's leading jurists and academics
    presented testimony as well. Bankruptcy Reform: Joint Hearing Before
    the Subcomm. on Commercial and Administrative Law of the House Comm. on
    the Judiciary and the Subcomm. on Administrative Oversight and the
    Courts of the Senate Comm. on the Judiciary, 106th Cong. (1999).
        \10\ Senators testifying at the hearing included Charles Grassley
    (R-Iowa), Joseph Biden (D-Del.) and Christopher Dodd (D-Conn.). House
    Members included Jim Moran (D-Va.), Pete Sessions (R-Texas) and Nick
    Smith (R-Mich.). Id. The March 16, 1999 hearing provided an opportunity
    for the subcommittee to hear divergent historical perspectives of
    consumer bankruptcy reform. Specific topics included an analysis of the
    history and significance of the ``fresh start'' discharge under
    American bankruptcy law, the impact of the Bankruptcy Reform Act of
    1978, the historical underpinnings of needs-based bankruptcy relief,
    and how bankruptcy affects the rights of creditors. Another panel
    examined the need for consumer bankruptcy reform from various
    perspectives. Bankruptcy Reform Act of 1999 (Pt. I): Hearing before the
    Subcomm. on Commercial and Administrative Law of the House Comm. on the
    Judiciary, 106th Cong. (1999).
        At its third hearing, on March 17, 1999, the subcommittee heard
    from many of the major organizations in the bankruptcy community,
    including the American Bankruptcy Institute, the American Financial
    Services Association, the National Association of Consumer Bankruptcy
    Attorneys, the National Bankruptcy Conference, the National Consumer
    Bankruptcy Coalition, the National Governors' Association, and the
    National Retail Federation, on the topic of consumer bankruptcy reform.
    A separate panel was devoted to judicial and administrative aspects of
    consumer bankruptcy reform. The hearing concluded with a statistical
    analysis of the needs-based reforms in H.R. 833. Bankruptcy Reform Act
    of 1999 (Pt. II): Hearing before the Subcomm. on Commercial and
    Administrative Law of the House Comm. on the Judiciary, 106th Cong.
    (1999).
        The fourth and final hearing on H.R. 833 was held on March 18,
    1999. One panel focused on the treatment of domestic support
    obligations under the bill. Another panel offered various perspectives
    on business bankruptcy reform provisions in the bill from some of the
    major organizations in the bankruptcy community, including the AFL-CIO,
    American Bankers Association, American Bar Association/Business
    Bankruptcy Section, Commercial Law League of America, National
    Association of Credit Managers, and the Office of Chief Counsel for
    Advocacy at the Small Business Administration. The final panel examined
    a variety of other provisions in H.R. 833, including the treatment of
    tax claims in bankruptcy cases, international insolvencies, financial
    contracts, and chapter 12 (family farmer bankruptcy relief). Bankruptcy
    Reform Act of 1999 (Pt. III): Hearing before the Subcomm. on Commercial
    and Administrative Law of the House Comm. on the Judiciary, 106th Cong.
    (1999).
    ---------------------------------------------------------------------------
        It is also important to note that H.R. 333 is the product
    of extensive negotiation and compromise. Shortly after its
    predecessor, H.R. 833, was passed by the Senate last year,
    Members of the House and Senate, together with their staffs,
    spent nearly 7 months engaged in what was initially an informal
    conference to reconcile differences between the House and
    Senate passed versions of this bill. The product of these
    exhaustive efforts was the conference report on H.R. 2415,
    which is virtually identical to H.R. 333.
    Consumer Bankruptcy
        Overview. With respect to its consumer provisions, H.R. 333
    responds to several significant developments. One of these
    developments was the exponential increase in consumer
    bankruptcy filings and the losses associated with these
    filings. Based on data released by the Administrative Office of
    the United States Courts, bankruptcy filings increased by more
    than 72 percent between 1994 and 1998.\11\ For the first time
    in our nation's history, bankruptcy filings exceeded one
    million in 1996.\12\ In calendar year 1997 alone, bankruptcy
    filings increased by more than 19 percent over the prior year.
    By 1998, the number of bankruptcy filings, according to the
    Administrative Office, reached an ``all-time high'' of more
    than 1.4 million cases.\13\ Although the most recent reporting
    periods indicate that filings have somewhat decreased, the
    Administrative Office states that they ``remain well above the
    one million mark.'' \14\ Paradoxically, this dramatic increase
    in bankruptcy filing rates has occurred during a period when
    the economy was generally robust, with relatively low
    unemployment and high consumer confidence.\15\
    ---------------------------------------------------------------------------
        \11\ Administrative Office for United States Courts News Release,
    Bankruptcy Filings Decrease in Fiscal Year 2000, at 1 (Nov. 21, 2000).
        \12\ Administrative Office for United States Courts News Release,
    Increase in Bankruptcy Filings Slowed in Calendar Year 1998, at 1 (Mar.
    1, 1999).
        \13\ Id.
        \14\ Administrative Office for United States Courts News Release,
    Bankruptcy Filings Decrease in Fiscal Year 2000, at 1 (Nov. 21, 2000).
    For example, the number of bankruptcy cases filed in fiscal year 2000
    exceeded 1.3 million. Id.
        \15\ See, e.g., Congressional Budget Office, Personal Bankruptcy: A
    Literature Review (Sept. 2000); Bankruptcy Reform: Joint Hearing Before
    the Subcomm. on Commercial and Administrative Law of the House Comm. on
    the Judiciary and the Subcomm. on Administrative Oversight and the
    Courts of the Senate Comm. on the Judiciary, 106th Cong. 97 (1999);
    Bankruptcy Reform Act of 1998: Hearings on H.R. 3150 Before the
    Subcomm. on Commercial and Administrative Law of the House Comm. on the
    Judiciary, 105th Cong. 141 (1998).
    ---------------------------------------------------------------------------
        Coupled with this development was the release of a study
    estimating that financial losses attributable to bankruptcy
    filings in 1997 exceeded $44 billion.\16\ The committee
    received testimony in the last Congress stating that this
    figure, when amortized on a daily basis, amounts to a loss of
    ``at least $110 million every day.'' \17\ Various other
    studies, which thereafter became available, concluded that some
    bankruptcy debtors can, in fact, repay a significant portion of
    their debts.\18\
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        \16\ Bankruptcy Reform Act of 1998: Hearings on H.R. 3150 Before
    the Subcomm. on Commercial and Administrative Law of the House Comm. on
    the Judiciary, 105th Cong. 147 (1998).
        \17\ Bankruptcy Reform: Joint Hearing Before the Subcomm. on
    Commercial and Administrative Law of the House Comm. on the Judiciary
    and the Subcomm. on Administrative Oversight and the Courts of the
    Senate Comm. on the Judiciary, 106th Cong. 26 (1999). This estimated
    loss has been calculated to be $400 per household. Id.
        \18\ See, e.g., Bankruptcy Reform Act of 1999 (Part II): Hearing on
    H.R. 833 Before the Subcomm. on Commercial and Administrative Law of
    the House Comm. on the Judiciary, 106th Cong. 298 (1999) (statement of
    Thomas S. Neubig, Ernst & Young LLP--Policy Economics and Quantitative
    Analysis Group, concluding that ``large numbers of 1997 U.S. chapter 7
    filers had the ability to repay large portions of their debts''); Id.
    at 228-29 (statement of Michael E. Staten, Credit Research Center,
    concluding that ``about 25 percent of chapter 7 debtors could have
    repaid at least 30 percent of their non-housing debts over a 5-year
    repayment plan, after accounting for monthly expenses and housing
    payments'' and that ``[a]bout 5 percent of chapter 7 filers appeared
    capable of repaying all of their non-housing debt over a 5-year plan,''
    although these ``calculations assumed income would remain unchanged
    relative to expenses over the 5 years''); Marianne B. Culhane &
    Michaela M. White, Taking the New Consumer Bankruptcy Model for a Test
    Drive: Means-Testing Real Chapter 7 Debtors, 7 Am. Bankr. L. J. 27, 31
    (1999) (concluding that 3.6% of sampled debtors ``emerged as apparent
    can-pays'').
    ---------------------------------------------------------------------------
        The consumer bankruptcy provisions of H.R. 333 address the
    needs of creditors as well as debtors. With respect to the
    interests of creditors, this legislation responds to many of
    the factors contributing to the increase in consumer bankruptcy
    filings, such as lack of personal financial accountability,\19\
    the proliferation of serial filings, and the absence of
    effective oversight to eliminate abuse in the system. The
    bill's debtor protections consist of provisions allowing
    debtors to exempt certain education IRA plans, fortifying the
    Bankruptcy Code's exemptions for certain retirement pension
    funds, enhancing the professionalism standards for attorneys
    and others who assist consumer debtors with their bankruptcy
    cases, ensuring that debtors receive notice of alternatives to
    bankruptcy relief, requiring debtors to participate in debt
    repayment programs, and instituting a pilot program to study
    the effectiveness of consumer financial management programs.
    ---------------------------------------------------------------------------
        \19\ As one academic explained:

          [S]hoplifting is wrong; bankruptcy is also a moral act.
          Bankruptcy is a moral as well as an economic act. There is
          a conscious decision not to keep one's promises. It is a
          decision not to reciprocate a benefit received, a good deed
          done on the promise that you will reciprocate. Promise-
          keeping and reciprocity are the foundation of an economy
    ---------------------------------------------------------------------------
          and healthy civil society.

    Bankruptcy Reform: Joint Hearing Before the Subcomm. on Commercial and
    Administrative Law of the House Comm. on the Judiciary and the Subcomm.
    on Administrative Oversight and the Courts of the Senate Comm. on the
    Judiciary, 106th Cong. (1999) 98 (statement of Prof. Todd Zywicki).
        Consumer creditor protections: needs-based reforms. Chapter
    7 is a form of bankruptcy relief where an individual debtor
    receives an immediate unconditional discharge of personal
    liability for certain debts in exchange for turning over his or
    her nonexempt assets to a bankruptcy trustee for liquidation
    and distribution to creditors.\20\ This ``unconditional
    discharge'' in chapter 7 contrasts with the ``conditional
    discharge'' provisions of chapter 13, under which a debtor
    commits to repay some portion of his or her financial
    obligations in exchange for retaining nonexempt assets and
    receiving a broader discharge of debt than is available under
    chapter 7.
    ---------------------------------------------------------------------------
        \20\ Under the Bankruptcy Code, only an individual may obtain a
    chapter 7 discharge. Thus, a corporation is not eligible to receive a
    discharge under chapter 7. 11 U.S.C. Sec. 727(a)(1).
    ---------------------------------------------------------------------------
        Allowing consumer debtors in financial distress to choose
    voluntarily an ``unconditional discharge'' has been a part of
    American bankruptcy law since the enactment of the Bankruptcy
    Act of 1898.\21\ The rationale of an unconditional discharge
    was explained by Congress more than 100 years ago:
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        \21\ Bankruptcy Act of 1898, 30 Stat. 544 (1898) (repealed 1978).

            [W]hen an honest man is hopelessly down financially,
            nothing is gained for the public by keeping him down,
            but, on the contrary, the public good will be promoted
            by having his assets distributed ratably as far as they
            will go among his creditors and letting him start
            anew.\22\
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        \22\ H.R. Rep. No. 55-65, at 43 (1897).

        The heart of H.R. 333's consumer bankruptcy reforms is the
    implementation of a needs-based screening mechanism, which uses
    the debtor's income and expenses to assess repayment ability.
    The concept of needs-based bankruptcy relief has long been
    debated in the United States. In 1932, President Herbert
    Hoover, for instance, recommended to the Congress the
    ---------------------------------------------------------------------------
    following:

            The discretion of the courts in granting or refusing
            discharges should be broadened, and they should be
            authorized to postpone discharges for a time and
            require bankrupts, during the period of suspension, to
            make some satisfaction out of after-acquired property
            as a condition to the granting of a full discharge.\23\
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        \23\ President's Special Message to the Congress on Reform of
    Judicial Procedure, 69 Pub. Papers 83, 90 (Feb. 29, 1932).

        Congressional recognition of needs-based relief has been
    gradual. In 1938, chapter XIII (the predecessor to chapter 13
    of the Bankruptcy Code) was enacted as a purely voluntary form
    of bankruptcy relief that allowed a debtor to voluntarily
    propose a plan to repay creditors out of future earnings.\24\
    Over the ensuing years, there continued to be repeated
    expressions of support for and opposition to needs-based
    bankruptcy reform.\25\ The Bankruptcy Reform Act of 1978,\26\
    however, retained the principle that a debtor's decision to
    choose relief premised on repayment to creditors had to be
    ``completely voluntary.'' \27\
    ---------------------------------------------------------------------------
        \24\ Chandler Act of 1938, 52 Stat. 840 (1938); Bankruptcy Reform
    Act of 1999 (Part II): Hearing on H.R. 833 Before the Subcomm. on
    Commercial and Administrative Law of the House Comm. on the Judiciary,
    106th Cong. 100 (1999) (statement of Prof. Lawrence P. King).
        \25\ See, e.g., Report of the Commission on the Bankruptcy Laws of
    the United States--July 1973, H.R. Doc. No. 93 137, pt. I, at 158
    (1973) (observing that ``proposals have been made to Congress from time
    to time that a debtor able to obtain relief under chapter XIII
    [predecessor of chapter 13] should be denied relief in straight
    bankruptcy''); Hearings on H.R. 1057 and H.R. 5771 Before the Subcomm.
    No. 4 of the House Committee on the Judiciary, 90th Cong. (1967).
    Organizations that testified before Congress in 1967 in support of such
    reform included the American Bar Association, the American Bankers
    Association, the Chamber of Commerce of the United States, Credit Union
    National Association, Inc., the National Federation of Independent
    Businesses, and the American Industrial Bankers Association. Id. The
    Commission on the Bankruptcy Laws of the United States, while
    supporting the concept that repayment plans should be ``fostered,''
    nevertheless concluded in 1973 that ``forced participation by a debtor
    in a plan requiring contributions out of future income has so little
    prospect for success that it should not be adopted as a feature of the
    bankruptcy system.'' Id. at 159.
        \26\ Pub. L. No. 95-598, 92 Stat. 2549 (1978).
        \27\ H.R. Rep. No. 95-595, at 120 (1977) (observing that ``[t]he
    thirteenth amendment prohibits involuntary servitude'' and suggesting
    that ``a mandatory chapter 13, by forcing an individual to work for
    creditors, would violate this prohibition'').
    ---------------------------------------------------------------------------
        Although as originally enacted, the Bankruptcy Code
    provided that a chapter 7 case could only be dismissed for
    ``cause,'' the Code was in 1984 amended to permit the court to
    dismiss a chapter 7 case for ``substantial abuse.'' \28\ This
    provision, codified in section 707(b) of the Bankruptcy
    Code,\29\ was added ``as part of a package of consumer credit
    amendments designed to reduce perceived abuses in the use of
    chapter 7.'' \30\ It was intended to respond ``to concerns that
    some debtors who could easily pay their creditors might resort
    to chapter 7 to avoid their obligations.'' \31\ In 1986,
    section 707(b) was further amended to allow a United States
    trustee (a Department of Justice official) to move for
    dismissal.\32\
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        \28\ Bankruptcy Amendments and Federal Judgeship Act of 1984, Pub.
    L. No. 98-353, 98 Stat. 333.
        \29\ 11 U.S.C. Sec. 707(b).
        \30\ 6 Lawrence P. King et al., Collier on Bankruptcy para.
    707.LH[2], at 707-30 (15th ed. rev. 2000).
        \31\ Id. para. 707.04, at 707-15.
        \32\ Bankruptcy Judges, United States Trustees, and Family Farmer
    Bankruptcy Act of 1986, Pub. L. No. 99-554, 100 Stat. 3008.
    ---------------------------------------------------------------------------
        Under current practice, section 707(b) motions are
    infrequently made for several reasons. First, neither the court
    nor the United States trustee is required to make these
    motions, even in cases evidencing obvious abuse of the
    bankruptcy system. Second, other parties in interest, such as
    chapter 7 trustees and creditors, are prohibited from filing
    these motions. In fact, section 707(b) provides that a motion
    under that provision may not even be made ``at the request or
    suggestion of any party in interest.'' \33\ Third, the standard
    for dismissal--substantial abuse--is inherently vague, which
    has lead to its disparate interpretation and application by the
    bankruptcy bench.\34\ Some courts, for example, hold that a
    debtor's ability to repay a significant portion of his or her
    debts out of future income constitutes substantial abuse and
    therefore is cause for dismissal; \35\ others require some
    evidence of moral turpitude.\36\ A fourth reason militating
    against filing section 707(b) motions is that the Bankruptcy
    Code codifies a presumption that favors granting a debtor a
    discharge.\37\
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        \33\ 11 U.S.C. Sec. 707(b).
        \34\ See, e.g., David White, Disorder in the Court: Section 707(b)
    of the Bankruptcy Code, 1995-96 Ann. Survey of Bankr. L. 333, 355
    (1996) (noting that the courts ``have taken divergent views in an
    attempt to define the term'' and have resorted to ``a variety of
    methods'' in applying it to specific cases).
        \35\ See, e.g., In re Kelly , 841 F.2d 908, 913-14 (9th Cir. 1988)
    (observing that the ``principal factor to be considered in determining
    substantial abuse is the debtor's ability to repay debts for which a
    discharge is sought'').
        \36\ See, e.g., In re Braley, 103 B.R. 758 (Bankr. E.D. Va. 1989),
    aff'd, 110 B.R. 211 (E.D. Va. 1990). Notwithstanding the fact that the
    debtors in Braley had disposable monthly income of nearly $2,700, the
    bankruptcy court did not dismiss the case for substantial abuse. Id. at
    760. The court concluded, ``Based upon this legislative history, we are
    persuaded that no future income tests exists in 707(b) and if it did,
    as a finding of fact, the Braley family has insufficient future income
    to merit barring the door in light of the circumstances of this Navy
    family.'' Id. at 762.
        \37\ Section 707(b) of the Bankruptcy Code mandates that ``[t]here
    shall be a presumption in favor of granting the relief requested by the
    debtor.'' 11 U.S.C. Sec. 707(b).
    ---------------------------------------------------------------------------
        Over the course of its hearings in the last two Congresses,
    the committee received testimony explaining that if needs-based
    reforms and other measures were implemented, the rate of
    repayment to creditors would increase as more debtors are
    shifted into chapter 13 (a form of bankruptcy relief where the
    debtor commits to repay a portion or all of his debts in
    exchange for receiving a broad discharge of debt) as opposed to
    chapter 7 (a form of bankruptcy relief where the debtor
    receives an immediate discharge of personal liability on
    certain debts in exchange for turning over his or her nonexempt
    assets to the bankruptcy trustee for distribution to
    creditors).
        Section 102 implements the act's needs-based bankruptcy
    reforms. Subsection (a) amends section 707(b) of the Bankruptcy
    Code to permit a court, on its own motion, or on motion of the
    United States trustee, private trustee, bankruptcy
    administrator, or party in interest, to dismiss a chapter 7
    case for abuse if it was filed by an individual debtor whose
    debts are primarily consumer debts. Alternatively, section
    102(a) permits a chapter 7 case to be converted to a case under
    chapter 11 or chapter 13 on consent of the debtor.
        In addition, section 102(a) replaces the current law's
    presumption in favor of the debtor with a mandatory presumption
    of abuse that is triggered under certain conditions. Section
    102(a) requires a court to presume that abuse exists if the
    amount of the debtor's income remaining, after certain expenses
    and other specified amounts are deducted from the debtor's
    current monthly income (a defined term),\38\ when multiplied by
    60, exceeds the lower of the following: (1) 25 percent of the
    debtor's nonpriority unsecured claims, or $6000 (whichever is
    greater); or (2) $10,000. In addition to other specified
    expenses,\39\ the debtor's monthly expenses--exclusive of any
    payments for debts (unless otherwise permitted)--must be the
    applicable monthly amounts set forth in the Internal Revenue
    Service Financial Analysis Handbook as Necessary Expenses under
    the National and Local Standards categories and the debtor's
    actual monthly expenditures for items categorized as Other
    Necessary Expenses. For purposes of this provision, the
    expenses include those of the debtor, the debtor's dependents,
    and the debtor's spouse, if not otherwise a dependent. For
    purposes of determining whether the mandatory presumption of
    abuse applies under the needs-based test, section 102(a)
    permits the debtor to deduct certain other liabilities.
    ---------------------------------------------------------------------------
        \38\ Section 102(b) defines ``current monthly income'' as the
    average monthly income from all sources that the debtor receives (or,
    in a joint case, the debtor and the debtor's spouse receive), without
    regard to whether it is taxable income, in the 6-month period preceding
    the date of determination. It includes any amount paid on a regular
    basis by any entity (other than the debtor or, in a joint case, the
    debtor and the debtor's spouse) 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. It excludes Social Security Act benefits
    and payments to victims of war crimes or crimes against humanity on
    account of their status as victims of such crimes.
        \39\ Section 102(a) mandates that the debtor's monthly expenses
    also include reasonably necessary expenses incurred to maintain the
    safety of the debtor and the debtor's family from family violence as
    identified in section 309 of the Family Violence Prevention and
    Services Act or other applicable law. In addition, the debtor may
    deduct up to an additional 5 percent of the food and clothing expense
    allowances under the National Standards category, if demonstrated to be
    reasonable and necessary.
        Other liabilities that may be deducted include the debtor's average
    monthly payments on account of secured debts, calculated as the total
    of all amounts scheduled as contractually due over the 60-month period
    following the filing of the bankruptcy, divided by 60 months. This
    amount may include any additional payments to secured creditors that a
    chapter 13 debtor must make to retain possession of a primary
    residence, motor vehicle, or other property necessary for the support
    of the debtor and the debtor's dependents. With respect to claims and
    expenses entitled to priority under section 507 of the Bankruptcy Code,
    section 102(a) specifies that the debtor may deduct payments for these
    obligations, calculated as the total amount of all priority debts,
    divided by 60. If applicable, the debtor may deduct the following
    additional expenses:

          (1) the continuation of actual expenses paid by the debtor
          that are reasonable and necessary for the care and support
          of an elderly, chronically ill, or disabled household
          member or member of the debtor's immediate family who is
    ---------------------------------------------------------------------------
          unable to pay such expenses;

          (2) the actual administrative expenses (including
          reasonable attorneys' fees) of administering a chapter 13
          plan for the district in which the debtor resides, up to 10
          percent of projected plan payments, as determined under
          schedules issued by the Executive Office for United States
          Trustees; and

          (3) the actual expenses for each dependent child under the
          age of 18 years up to $1,500 per year per child to attend a
          private elementary or secondary school, if the debtor
          documents these expenses and provides a detailed
          explanation of why they are reasonable and necessary.
        The mandatory presumption of abuse may only be rebutted if:
    (1) the debtor demonstrates special circumstances that justify
    any additional expense or adjustment to the debtor's current
    monthly income for which there is no reasonable alternative;
    and (2) such additional expense or income adjustment causes the
    debtor's current monthly income (reduced by various amounts)
    when multiplied by 60 to be less than the lesser of either (i)
    25 percent of the debtor's nonpriority unsecured claims, or
    $6,000 (whichever is greater), or (ii) $10,000.\40\
    ---------------------------------------------------------------------------
        \40\ The debtor must itemize and provide documentation of each
    additional expense or income adjustment and an explanation of the
    special circumstances that make such expense or income adjustment
    reasonable and necessary. In addition, the debtor must attest under
    oath to the accuracy of any information provided to demonstrate that
    such additional expenses or adjustments to income are required.
    ---------------------------------------------------------------------------
        Where the mandatory presumption of abuse does not apply or
    has been rebutted, the court, in order to determine whether the
    granting of relief under chapter 7 would be an abuse of such
    chapter, must consider: (1) whether the debtor filed the
    chapter 7 case in bad faith; or (2) whether the totality of
    circumstances of the debtor's financial situation (including
    whether the debtor seeks to reject a personal services contract
    and the financial need for such rejection) demonstrates abuse.
        Should a court grant a section 707(b) motion made by a
    trustee and find that the action of debtor's counsel in filing
    the chapter 7 case violated Federal Rule of Bankruptcy
    Procedure 9011, section 102(a) mandates that the court order
    the attorney to reimburse the trustee for all reasonable costs
    in prosecuting the motion, including reasonable attorneys'
    fees. In addition, the court must assess an appropriate civil
    penalty, payable to the private trustee, bankruptcy
    administrator, or the United States trustee.\41\
    ---------------------------------------------------------------------------
        \41\ Section 102(a) specifies that the signature of an attorney on
    a bankruptcy petition, pleading, or written motion constitutes a
    certification that the attorney has (1) performed a reasonable
    investigation into the circumstances giving rise to such petition,
    pleading or motion; and (2) determined that the document is well
    grounded in fact or 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 section 707(b)(1) of the Bankruptcy Code.
    Pursuant to section 102(a), the signature of an attorney on a
    bankruptcy petition constitutes a certification that the attorney has
    no knowledge after an inquiry that the information in the schedules
    filed with such petition is incorrect.
    ---------------------------------------------------------------------------
        Two types of ``safe harbors'' are recognized under section
    102(a). One provides that only a judge, United States trustee,
    bankruptcy administrator, or private trustee may bring a motion
    under section 707(b) of the Bankruptcy Code if the chapter 7
    debtor's income (or in a joint case, the income of debtor and
    the debtor's spouse) does not exceed the State median family
    income for a family of equal or lesser size (adjusted for
    larger sized families), or the State median family income for
    one earner in the case of a one-person household. The second
    safe harbor provides that no motion under section 707(b)(2)
    (dismissal based on the debtor's ability to repay) may be filed
    by a judge, United States trustee, bankruptcy administrator,
    private trustee, or other party in interest if the debtor and
    the debtor's spouse combined have income that does not exceed
    the State median family income for a family of equal or lesser
    size (adjusted for larger sized families), or the State median
    family income for one earner in the case of a one-person
    household.
        Provisions of the bill that are directed to other forms of
    abuse include Section 102(f), which amends section 707 of the
    Bankruptcy Code to provide that a court may dismiss a chapter 7
    case filed by an individual debtor convicted of a crime of
    violence (as defined in 18 U.S.C. Sec. 16), or a drug
    trafficking crime (as defined in 18 U.S.C. Sec. 924(c)(2)) on
    motion of the victim, under certain circumstances. Section
    102(g) amends section 1325(a) of the Bankruptcy Code to require
    the court to find, as a condition of confirmation, that the
    debtor filed the chapter 13 case in good faith.
        Protections for creditors--in general. H.R. 333 contains a
    broad range of reforms to provide greater protections for
    creditors, while ensuring that the claims of those creditors
    entitled to priority treatment, such as spousal and child
    support claims, are not adversely impacted. The bill
    accomplishes this goal by: (1) ensuring that creditors receive
    proper and timely notice of important events and proceedings in
    a bankruptcy case; (2) prohibiting abusive serial filings and
    extending the period between successive discharges; (3)
    implementing various provisions designed to improve the
    accuracy of the information contained in debtors' schedules,
    statements of financial affairs, and other documents; and (4)
    limiting abusive use of homestead exemptions. It also clarifies
    that creditors holding consumer debts may participate without
    counsel at the section 341 meeting of creditors (which provides
    an opportunity for creditors to examine the debtor under oath).
        Protection of family support obligations. Domestic support
    claimants receive a broad spectrum of special protections under
    H.R. 333. According to one law enforcement official who
    testified before this committee earlier this year:

            It is my opinion, and the opinion of every professional
            support collector with whom I have discussed the issue,
            that the support amendments contained in Sections 211
            through 219 of H.R. 333 will enhance substantially the
            enforcement of support obligations against debtors in
            bankruptcy. These enhancements will also result in a
            more efficient and economical use of attorney and court
            resources.\42\
    ---------------------------------------------------------------------------
        \42\ Bankruptcy Abuse Prevention and Consumer Protection Act of
    2001: Hearing Before the Subcomm. on Commercial and Administrative Law
    of the House Comm. on the Judiciary, 107th Cong.____(2001) (statement
    of Philip L. Strauss on behalf of the California District Attorneys
    Association and the California Family Support Council).

        The bill creates a uniform and expanded definition of
    domestic support obligations to include debts that accrue both
    before or after a bankruptcy case is filed. H.R. 333 accords
    the highest payment priority for these debts and gives new
    priority treatment to certain claims assigned to governmental
    units by a spouse, former spouse, child of the debtor, or
    parent of a child. In addition, the bill mandates that a
    chapter 13 or chapter 11 debtor must be current on postpetition
    domestic support obligations to confirm a plan of
    reorganization. The same obligation is imposed as a
    prerequisite for a chapter 13 debtor to receive a discharge. To
    facilitate the domestic support collection efforts by
    governmental units, H.R. 333 creates various exceptions to
    automatic stay provisions of the Bankruptcy Code (which enjoin
    many forms of creditor collection activities). It also broadens
    the categories of nondischargeable family support obligations
    with the result that these debts will not be extinguished at
    the end of the bankruptcy process. H.R. 333, in addition,
    mandates that spousal and child support claimants as well as
    State child support agencies receive specified information and
    notices relevant to pending bankruptcy cases.
        Protections for secured creditors. H.R. 333 gives secured
    creditors a broad variety of enhanced protections. These
    include a prohibition against bifurcating a secured debt
    incurred within the 5-year period preceding the filing of a
    bankruptcy case if the debt is secured by a purchase money
    security interest in a motor vehicle acquired for the debtor's
    personal use. Where the collateral consists of any other type
    of property having value, H.R. 333 prohibits bifurcation of
    specified secured debts if incurred during the 1-year period
    preceding the filing of the bankruptcy case. The bill clarifies
    current law to specify that the value of a claim secured by
    personal property is the replacement value of such property
    without deduction for the secured creditor's costs of sale or
    marketing. In addition, the bill terminates the automatic stay
    with respect to personal property if the debtor does not timely
    reaffirm the underlying obligation or redeem the property. H.R.
    333 also specifies that a secured claimant retains its lien in
    a chapter 13 case until the underlying debt is paid or the
    debtor receives a discharge.
        Protections for unsecured creditors. H.R. 333 contains
    various reforms tailored to remedy certain types of fraud and
    abuse within the present bankruptcy system. For example, the
    bill substantially limits a debtor's ability to file successive
    bankruptcy cases. It also addresses abusive practices by
    consumer debtors who, for example, knowingly load up with
    credit card purchases or recklessly obtain cash advances and
    then file for bankruptcy relief. In addition, H.R. 333 prevents
    the discharge of debts based on fraud, embezzlement, and
    malicious injury in a chapter 13 case.
        Protections for lessors. With respect to the interests of
    lessors, H.R. 333 requires chapter 13 debtors to remain current
    on their personal property leases and provide proof of adequate
    insurance. The bill specifies that a lessor may condition
    assumption of a personal property lease on cure of any
    outstanding default and it provides that a lessor is not
    required to permit such assumption. The bill also addresses a
    problem faced by thousands of small landlords across the nation
    whose tenants file for bankruptcy relief solely for the purpose
    of staying pending eviction proceedings so that they can live
    ``rent free.''
        Consumer debtor protections. The bill's consumer
    protections include provisions strengthening the
    professionalism standards for attorneys and others who assist
    consumer debtors with their bankruptcy cases. H.R. 333 mandates
    that certain services and specified notices be provided to
    consumers by professionals and others who render bankruptcy
    assistance. To ensure compliance with these provisions, the
    bill institutes various enforcement mechanisms.
        In addition, H.R. 333 amends the Truth in Lending Act to
    require certain credit card solicitations, monthly billing
    statements, and related materials to include important
    disclosures and explanatory statements regarding introductory
    interest rates and minimum payments, among other matters. These
    additional disclosures are intended to give debtors important
    information to enable them to better manage their financial
    affairs.
        Reforms aimed to help debtors understand their rights and
    obligations with respect to reaffirmation agreements are also
    included in the legislation. To enforce these protections, for
    example, H.R. 333 requires the Attorney General to designate a
    U.S. Attorney for each judicial district and a FBI agent for
    each field office to have primary law enforcement
    responsibility regarding abusive reaffirmation practices.
        In addition, the legislation substantially expands a
    debtor's ability to exempt certain tax-qualified retirement
    accounts and pensions. It also creates a new provision that
    allows a consumer debtor to exempt certain education IRA and
    State tuition plans for his or her child's postsecondary
    education from the claims of creditors.
        Most importantly, H.R. 333 requires debtors to participate
    in credit counseling programs before filing for bankruptcy
    relief (unless special circumstances do not permit such
    participation). The legislation's credit counseling provisions
    are intended to give consumers in financial distress an
    opportunity to learn about the consequences of bankruptcy--such
    as the potentially devastating effect it can have on their
    credit rating--and guidance about how to manage their finances,
    so that they can avoid future financial difficulties.
        Other debtor protections include expanded notice
    requirements for consumers. Under the bill, individuals with
    primarily consumer debts must receive notice of alternatives to
    bankruptcy relief before they file for bankruptcy and it
    requires them to be informed of other matters pertaining to the
    integrity of the bankruptcy system. The legislation also
    permits certain filing fees and related charges to be waived,
    in appropriate cases, for individuals who lack the ability to
    pay these costs.
        Business Bankruptcy. H.R. 333 contains a comprehensive set
    of reforms pertinent to business bankruptcies. They include
    provisions addressing the special problems presented by small
    business bankruptcies and single asset real estate debtors as
    well as provisions dealing with business bankruptcy cases in
    general. H.R. 333 establishes a new form of bankruptcy relief
    for transnational insolvencies that is intended to promote
    international comity and greater certainty. It also includes
    provisions concerning the treatment of certain financial
    contracts under the banking laws as well as under the
    Bankruptcy Code. H.R. 333 responds to the special needs of
    family farmers by making chapter 12 of the Bankruptcy Code (a
    form of bankruptcy relief available only to eligible family
    farmers) permanent.
        Small business/single asset real estate debtors. Most
    chapter 11 cases are filed by small business debtors. Although
    the Bankruptcy Code envisions that creditors should play a
    major role in the oversight of chapter 11 cases, this often
    does not occur with respect to small business debtors. The main
    reason is that creditors in these smaller cases do not have
    claims large enough to warrant the time and money to
    participate actively in these cases. The resulting lack of
    creditor oversight creates a greater need for the United States
    trustee to monitor these cases closely. Nevertheless, the
    monitoring of these debtors by United States trustees varies
    throughout the nation.
        H.R. 333 addresses the special problems presented by small
    business cases by instituting a variety of time frames and
    enforcement mechanisms designed to weed out small business
    debtors who are not likely to reorganize. It also requires
    these cases to be more actively monitored by United States
    trustees and the bankruptcy courts. The small business and
    single asset real estate provisions of H.R. 333 are largely
    derived from consensus recommendations of the National
    Bankruptcy Review Commission.\43\ These provisions have also
    received broad support from many in the business community.\44\
    ---------------------------------------------------------------------------
        \43\ See generally Report of the National Bankruptcy Review
    Commission, at 303-706 (Oct. 20, 1997).
        \44\ See, e.g., Bankruptcy Abuse Prevention and Consumer Protection
    Act of 2001: Hearing Before the Subcomm. on Commercial and
    Administrative Law of the House Comm. on the Judiciary, 107th
    Cong.____(2001) (statement of R. Bruce Josten on behalf of the U.S.
    Chamber of Commerce).
    ---------------------------------------------------------------------------
        With regard to the Bankruptcy Code's treatment of single
    asset real estate debtors, H.R. 333 makes several amendments.
    First, it eliminates the monetary cap from the single asset
    real estate debtor definition. Second, it makes these debtors
    subject to the bill's small business reforms. Third, H.R. 333
    amends the automatic stay provisions by permitting a single
    asset real estate debtor to make requisite interest payments
    out of rents or other proceeds generated by the real property.
        Financial contracts. H.R. 333 contains a series of
    provisions pertaining to the treatment of certain financial
    transactions under the Bankruptcy Code and relevant banking
    laws. These provisions are intended to reduce ``systemic risk''
    in the banking system and financial marketplace. To minimize
    the risk of disruption when parties to these transactions
    become bankrupt or insolvent, the bill amends provisions of the
    banking and investment laws, as well as the Bankruptcy Code,
    applicable to certain types of financial transactions.\45\ In
    addition to the Bankruptcy Code, the bill amends the Federal
    Deposit Insurance Act; Financial Institutions Reform, Recovery
    and Enforcement Act of 1989; Federal Deposit Insurance
    Corporation Improvement Act of 1991; Federal Reserve Act; and
    Securities Investor Protection Act of 1971.
    ---------------------------------------------------------------------------
        \45\ The report on H.R. 4393, a bill substantially similar to title
    X of H.R. 833 that was introduced in the 106th Congress by Banking and
    Financial Services Committee Chair James Leach (R-Iowa), explained as
    follows:

          Systemic risk is the risk that the failure of a firm or
          disruption of a market or settlement system will cause
          widespread difficulties at other firms, in other market
          segments or in the financial system as a whole. If
          participants in certain financial activities are unable to
          enforce their rights to terminate financial contracts with
          an insolvent entity in a timely manner, or to offset or net
          their various contractual obligations, the resulting
          uncertainty and potential lack of liquidity could increase
    ---------------------------------------------------------------------------
          the risk of an inter-market disruption.

    H. Rep. No. 105-688, Part 1, at 2 (1998).
        Many of these provisions are derived from recommendations
    issued by a presidential interagency working group \46\ and
    revisions espoused by the financial industry. Other provisions
    would treat certain asset-backed securitizations as valid
    transfers and limit the authority of a court or administrative
    agency to enjoin certain actions.
    ---------------------------------------------------------------------------
        \46\ The Working Group's members included representatives from the
    Commodity Futures Trading Commission, the Federal Deposit Insurance
    Corporation, the Board of Governors of the Federal Reserve System, the
    Federal Reserve Bank of New York, the Securities and Exchange
    Commission, and the Department of the Treasury, including the Office of
    the Comptroller of the Currency. Id. at 1.
    ---------------------------------------------------------------------------
        Transnational insolvencies. In response to the increasing
    globalization of business dealings and operations, the bill
    establishes a separate chapter under the Bankruptcy Code
    devoted to transnational insolvencies. These provisions are
    intended to provide greater legal certainty for trade and
    investment as well as to provide for the fair and efficient
    administration of these cases.
        Health care providers. H.R. 333 adds a provision to the
    Bankruptcy Code specifying requirements for the disposal of
    patient records in a chapter 7, 9, or 11 case of a health care
    business where the trustee lacks sufficient funds to pay for
    the storage of such records in accordance with applicable
    Federal or State law. These requirements are intended to
    protect the privacy and confidentiality of a patient's medical
    records when they are in the custody of a health care business
    in bankruptcy.
        In addition, the bill includes a provision according
    administrative expense priority to the actual, necessary costs
    and expenses of closing a health care business (including the
    disposal of patient records or transferral of patients)
    incurred by a trustee, Federal agency, or a department or
    agency of a State. It also requires the court to order the
    appointment of an ombudsman within 30 days after the
    commencement of a chapter 7, 9 or 11 case by a health care
    provider, unless the court finds that such appointment is not
    necessary for the protection of patients under the specific
    facts of the case. The ombudsman is responsible for monitoring
    the quality of patient care and to represent the interests of
    the patients. Other provisions include the requirement that a
    bankruptcy trustee use all reasonable and best efforts to
    transfer patients from a health care business that is being
    closed to an appropriate alternative facility that meets
    certain specified criteria.
        Other Provisions Having General Impact. H.R. 333 contains
    several provisions having general impact with respect to
    bankruptcy law and practice. For example, it requires the
    Executive Office for United States Trustees to compile various
    statistics regarding chapter 7, 11 and 13 cases and to make
    these data available to the public. Other general provisions
    include allowing compensation to be shared with bona fide
    public service attorney referral programs, and mandating that a
    bankruptcy court conduct scheduling conferences in bankruptcy
    cases if necessary to further the expeditious and economical
    resolution of such cases.
        The bill makes several revisions to the Bankruptcy Code's
    preference provisions. Under H.R. 333, a defendant in a
    preference action may 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. The bill also establishes a threshold
    amount as a prerequisite to the commencement of a preferential
    transfer proceeding. In addition, H.R. 333 amends the venue
    provisions for preferential transfer actions. A preferential
    transfer action in the amount of $10,000 or less would have to
    be filed in the district where the defendant resides.
    Currently, this amount is fixed at $1,000.

                                    Hearings

        The committee held 2 days of hearings on H.R. 333 on
    February 7 and 8, 2001. Testimony was received from eight
    witnesses, representing seven organizations. During the course
    of the first hearing, the committee received testimony from
    Kenneth Beine on behalf of the Credit Union National
    Association who explained how the current bankruptcy system
    impacts small businesses and non-profits. The committee also
    received testimony from R. Bruce Josten on behalf of the U.S.
    Chamber of Commerce who described the current consumer
    bankruptcy law's adverse impact on businesses. In addition, the
    committee heard from Phillip Strauss, a professional with more
    than 25 years of experience in child support enforcement.
    Speaking on behalf of the California District Attorneys
    Association and the California Family Support Council, Mr.
    Strauss described the ways in which H.R. 333 would help ensure
    payment of these obligations. George Wallace, the final witness
    appeared on behalf of The Coalition for Responsible Bankruptcy
    Laws. He explained the differences between the version of the
    bill as reported by the committee in the 106th Congress and
    H.R. 333.
        The second day of hearings provided a different
    perspective. The witnesses included Charles Trapp, who was a
    former chapter 7 debtor. He was joined by Ralph Mabey, who
    appeared on behalf of the National Bankruptcy Conference and
    Professor Karen Gross of New York Law School. The final witness
    was Damon Silvers, who testified on behalf of the AFL-CIO.
    Although each of these witnesses acknowledged that H.R. 333 did
    make needed improvements to current bankruptcy law, they
    questioned the efficacy of certain provisions of the bill.

                            Committee Consideration

        On February 14, 2001, the committee met in open session and
    ordered favorably reported the bill H.R. 333 with amendment by
    a recorded vote of 19 to 8, a quorum being present.

                             Votes of the Committee

        1. An amendment offered by Mr. Conyers and Ms. Waters to
    create an exception to the nondischargeability of certain
    specified debts if the debtor's ability to pay domestic support
    obligations is impaired by such limitation on the debtor's
    discharge. Defeated 10 to 14.

            AYES                          NAYS
    Mr. Conyers                         Mr. Sensenbrenner
    Mr. Nadler                          Mr. Gekas
    Mr. Watt                            Mr. Smith (TX)
    Mr. Lofgren                         Mr. Goodlatte
    Ms. Jackson Lee                     Mr. Chabot
    Ms. Waters                          Mr. Barr
    Mr. Meehan                          Mr. Hutchinson
    Mr. Delahunt                        Mr. Cannon
    Mr. Baldwin                         Mr. Graham
    Mr. Weiner                          Mr. Bachus
                                        Mr. Hostettler
                                        Mr. Green
                                        Mr. Keller
                                        Ms. Hart

        2. An amendment offered by Mr. Watt to specify that the
    terms ``cash advances'' and ``extensions of consumer credit
    under an open end credit plan'' do not include expenditures
    reasonably necessary for the support or maintenance of the
    debtor or a dependent of the debtor with respect to determining
    the dischargeability of these debts. Defeated 8 to 15.

            AYES                          NAYS
    Mr. Conyers                         Mr. Sensenbrenner
    Mr. Nadler                          Mr. Gekas
    Mr. Watt                            Mr. Smith (TX)
    Mr. Lofgren                         Mr. Gallegly
    Ms. Jackson Lee                     Mr. Goodlatte
    Ms. Waters                          Mr. Chabot
    Mr. Weiner                          Mr. Barr
    Mr. Schiff                          Mr. Hutchinson
                                        Mr. Cannon
                                        Mr. Graham
                                        Mr. Bachus
                                        Mr. Hostettler
                                        Mr. Green
                                        Mr. Keller
                                        Ms. Hart

        3. An amendment offered by Mr. Conyers (1) to permit the
    extension of certain time periods pertaining to the assumption
    and rejection of unexpired leases of nonresidential real
    property, the filing of chapter 11 plans of reorganization and
    the obtaining of acceptances, the provision of adequate
    assurance of payment for utility service in a chapter 11 case,
    the performance of specified duties of trustees and debtors in
    possession in small business cases, and plan filing and
    confirmation in small business cases; and (2) to create an
    exception to the exclusion of asset-backed securitizations as
    property of the estate in section 912. Defeated 6 to 18.

            AYES                          NAYS
    Mr. Nadler                          Mr. Sensenbrenner
    Mr. Watt                            Mr. Gekas
    Ms. Jackson Lee                     Mr. Smith (TX)
    Ms. Waters                          Mr. Gallegly
    Mr. Weiner                          Mr. Goodlatte
    Mr. Schiff                          Mr. Barr
                                        Mr. Jenkins
                                        Mr. Hutchinson
                                        Mr. Cannon
                                        Mr. Graham
                                        Mr. Bachus
                                        Mr. Scarborough
                                        Mr. Hostettler
                                        Mr. Green
                                        Mr. Keller
                                        Mr. Issa
                                        Ms. Hart
                                        Mr. Flake

        4. An amendment offered by Mr. Nadler to make specified
    debts relating to violations of law concerning certain health
    care facilities and the provision of health services
    nondischargeable. Defeated 9 to 20.

            AYES                          NAYS
    Mr. Nadler                          Mr. Sensenbrenner
    Mr. Scott                           Mr. Gekas
    Mr. Watt                            Mr. Coble
    Mr. Lofgren                         Mr. Smith (TX)
    Ms. Jackson Lee                     Mr. Gallegly
    Ms. Waters                          Mr. Goodlatte
    Ms. Baldwin                         Mr. Chabot
    Mr. Weiner                          Mr. Barr
    Mr. Schiff                          Mr. Jenkins
                                        Mr. Hutchinson
                                        Mr. Cannon
                                        Mr. Graham
                                        Mr. Bachus
                                        Mr. Scarborough
                                        Mr. Hostettler
                                        Mr. Green
                                        Mr. Keller
                                        Mr. Issa
                                        Ms. Hart
                                        Mr. Flake

        5. An amendment offered by Ms. Jackson Lee to prohibit a
    creditor in a bankruptcy case from asserting any claim if the
    creditor failed to comply with certain requirements of the
    Consumer Credit Protection Act for the amount of the debt that
    a debtor incurred on a credit card issued in violation of such
    requirements. Defeated 6 to 18.

            AYES                          NAYS
    Mr. Scott                           Mr. Sensenbrenner
    Mr. Watt                            Mr. Gekas
    Ms. Jackson Lee                     Mr. Coble
    Ms. Waters                          Mr. Smith (TX)
    Ms. Baldwin                         Mr. Gallegly
    Mr. Schiff                          Mr. Chabot
                                        Mr. Barr
                                        Mr. Jenkins
                                        Mr. Hutchinson
                                        Mr. Cannon
                                        Mr. Graham
                                        Mr. Bachus
                                        Mr. Scarborough
                                        Mr. Hostettler
                                        Mr. Green
                                        Mr. Keller
                                        Ms. Hart
                                        Mr. Flake

        6. An amendment offered by Mr. Watt to an amendment by Ms.
    Waters to exempt certain debtors from specified filing
    requirements. Defeated 9 to 13.

            AYES                          NAYS
    Mr. Scarborough                     Mr. Sensenbrenner
    Mr. Conyers                         Mr. Gekas
    Mr. Frank                           Mr. Coble
    Mr. Scott                           Mr. Goodlatte
    Mr. Watt                            Mr. Chabot
    Ms. Waters                          Mr. Hutchinson
    Mr. Delahunt                        Mr. Bachus
    Ms. Baldwin                         Mr. Hostettler
    Mr. Schiff                          Mr. Green
                                        Mr. Keller
                                        Mr. Issa
                                        Ms. Hart
                                        Mr. Flake

        7. An amendment offered by Ms. Waters to provide that the
    exceptions to the automatic stay do not apply to certain types
    of debtors. Defeated 9 to 13.

            AYES                          NAYS
    Mr. Conyers                         Mr. Sensenbrenner
    Mr. Frank                           Mr. Gekas
    Mr. Scott                           Mr. Smith (TX)
    Ms. Jackson Lee                     Mr. Chabot
    Ms. Waters                          Mr. Barr
    Mr. Meehan                          Mr. Hutchinson
    Ms. Baldwin                         Mr. Graham
    Mr. Weiner                          Mr. Bachus
    Mr. Schiff                          Mr. Hostettler
                                        Mr. Green
                                        Mr. Keller
                                        Mr. Issa
                                        Ms. Hart

        8. An amendment offered by Mr. Meehan to require the
    applicable State median income amount specified in sections 102
    (needs-based reforms) and 318 (duration of chapter 13 plans) to
    be adjusted, under certain circumstances, to reflect the
    percentage change in the Consumer Price Index for All Urban
    Consumers for each subsequent year during which median income
    is not reported by the Bureau of the Census. Defeated 9 to 13.

            AYES                          NAYS
    Mr. Conyers                         Mr. Sensenbrenner
    Mr. Frank                           Mr. Gekas
    Mr. Scott                           Mr. Smith (TX)
    Mr. Watt                            Mr. Barr
    Ms. Jackson Lee                     Mr. Hutchinson
    Mr. Meehan                          Mr. Graham
    Mr. Delahunt                        Mr. Bachus
    Ms. Baldwin                         Mr. Scarborough
    Mr. Schiff                          Mr. Hostettler
                                        Mr. Green
                                        Mr. Keller
                                        Ms. Hart
                                        Mr. Flake

        9. An amendment offered by Mr. Delahunt to eliminate the 2-
    year reachback period applicable to the exemption limitation in
    section 322 and to increase the exemption amount to $500,000.
    Defeated 6 to 18.

            AYES                          NAYS
    Mr. Scott                           Mr. Sensenbrenner
    Mr. Watt                            Mr. Gekas
    Ms. Waters                          Mr. Coble
    Mr. Delahunt                        Mr. Smith (TX)
    Ms. Baldwin                         Mr. Chabot
    Mr. Schiff                          Mr. Barr
                                        Mr. Hutchinson
                                        Mr. Graham
                                        Mr. Bachus
                                        Mr. Scarborough
                                        Mr. Hostettler
                                        Mr. Green
                                        Mr. Keller
                                        Mr. Issa
                                        Ms. Hart
                                        Mr. Flake
                                        Ms. Jackson Lee
                                        Mr. Wexler

        10. An amendment offered by Ms. Baldwin to accord
    administrative expense priority under section 503(b)(1)(A) of
    the Bankruptcy Code to wages and benefits attributable to any
    period of time after a bankruptcy case is filed as a result of
    the debtor's violation of Federal or State law, without regard
    to when the original unlawful act occurred or to whether any
    services were rendered. Defeated 3 to 15.

            AYES                          NAYS
    Mr. Watt                            Mr. Sensenbrenner
    Ms. Baldwin                         Mr. Gekas
    Mr. Schiff                          Mr. Coble
                                        Mr. Smith (TX)
                                        Mr. Chabot
                                        Mr. Barr
                                        Mr. Hutchinson
                                        Mr. Graham
                                        Mr. Bachus
                                        Mr. Hostettler
                                        Mr. Green
                                        Mr. Keller
                                        Mr. Issa
                                        Ms. Hart
                                        Mr. Flake

        11. An amendment offered by Ms. Baldwin to expand the
    Bankruptcy Code's definition of ``family farmer''. Defeated 4
    to 13.

            AYES                          NAYS
    Mr. Scott                           Mr. Sensenbrenner
    Mr. Watt                            Mr. Gekas
    Ms. Baldwin                         Mr. Coble
    Mr. Schiff                          Mr. Smith (TX)
                                        Mr. Chabot
                                        Mr. Barr
                                        Mr. Hutchinson
                                        Mr. Graham
                                        Mr. Bachus
                                        Mr. Keller
                                        Mr. Issa
                                        Ms. Hart
                                        Mr. Flake

        12. An amendment offered by Mr. Schiff to amend a safe
    harbor provision in section 102 with respect to the treatment
    of spousal income. Defeated 5 to 13.

            AYES                          NAYS
    Mr. Scott                           Mr. Sensenbrenner
    Mr. Watt                            Mr. Gekas
    Ms. Waters                          Mr. Coble
    Ms. Baldwin                         Mr. Chabot
    Mr. Schiff                          Mr. Barr
                                        Mr. Hutchinson
                                        Mr. Graham
                                        Mr. Bachus
                                        Mr. Hostettler
                                        Mr. Green
                                        Mr. Issa
                                        Ms. Hart
                                        Mr. Flake

        13. An amendment offered by Mr. Schiff to require the
    Comptroller General of the United States to study and file a
    report containing the results of the study to determine any
    effect that H.R. 333 has on the ability of a parent to pay
    child support or the ability of a parent to collect child
    support. Defeated 5 to 16.

            AYES                          NAYS
    Mr. Scott                           Mr. Sensenbrenner
    Mr. Watt                            Mr. Gekas
    Ms. Waters                          Mr. Coble
    Ms. Baldwin                         Mr. Smith (TX)
    Mr. Schiff                          Mr. Chabot
                                        Mr. Barr
                                        Mr. Hutchinson
                                        Mr. Cannon
                                        Mr. Graham
                                        Mr. Bachus
                                        Mr. Hostettler
                                        Mr. Green
                                        Mr. Keller
                                        Mr. Issa
                                        Ms. Hart
                                        Mr. Flake

        14. Part one of an amendment offered by Mr. Sensenbrenner,
    which conforms the fee allocation percentage in section 325
    with that specified under Section 406(b) of the Judiciary
    Appropriations Act, as amended. Passed 22 to 0.

            AYES                          NAYS
    Mr. Sensenbrenner
    Mr. Gekas
    Mr. Smith (TX)
    Mr. Goodlatte
    Mr. Chabot
    Mr. Barr
    Mr. Hutchinson
    Mr. Cannon
    Mr. Graham
    Mr. Bachus
    Mr. Scarborough
    Mr. Hostettler
    Mr. Green
    Mr. Keller
    Mr. Issa
    Ms. Hart
    Mr. Flake
    Mr. Nadler
    Mr. Scott
    Mr. Watt
    Ms. Baldwin
    Mr. Schiff

        15. Part two of an amendment by Mr. Sensenbrenner to
    conform a statutory cross reference necessitated by the
    enactment of the Commodity Futures Modernization Act of 2000.
    Passed 21 to 0.

            AYES                          NAYS
    Mr. Sensenbrenner
    Mr. Gekas
    Mr. Goodlatte
    Mr. Chabot
    Mr. Barr
    Mr. Hutchinson
    Mr. Cannon
    Mr. Graham
    Mr. Bachus
    Mr. Scarborough
    Mr. Hostettler
    Mr. Green
    Mr. Keller
    Mr. Issa
    Ms. Hart
    Mr. Flake
    Mr. Nadler
    Mr. Scott
    Mr. Watt
    Ms. Baldwin
    Mr. Schiff

        16. Motion to move the previous question. Passed 18 to 5.

            AYES                          NAYS
    Mr. Sensenbrenner                   Mr. Conyers
    Mr. Gekas                           Mr. Scott
    Mr. Coble                           Mr. Watt
    Mr. Goodlatte                       Ms. Baldwin
    Mr. Chabot                          Mr. Schiff
    Mr. Barr
    Mr. Hutchinson
    Mr. Cannon
    Mr. Graham
    Mr. Bachus
    Mr. Scarborough
    Mr. Hostettler
    Mr. Green
    Mr. Keller
    Mr. Issa
    Ms. Hart
    Mr. Flake
    Mr. Nadler

        17. Motion to table the motion to reconsider the vote
    ordering the previous question. Passed 18 to 7.

            AYES                          NAYS
    Mr. Sensenbrenner                   Mr. Conyers
    Mr. Gekas                           Mr. Nadler
    Mr. Coble                           Mr. Scott
    Mr. Smith (TX)                      Mr. Watt
    Mr. Goodlatte                       Ms. Jackson Lee
    Mr. Chabot                          Ms. Baldwin
    Mr. Barr                            Mr. Schiff
    Mr. Hutchinson
    Mr. Cannon
    Mr. Graham
    Mr. Bachus
    Mr. Scarborough
    Mr. Hostettler
    Mr. Green
    Mr. Keller
    Mr. Issa
    Ms. Hart
    Mr. Flake

        18. Motion to report favorably H.R. 333, as amended. Passed
    19 to 8.

            AYES                          NAYS
    Mr. Sensenbrenner                   Mr. Conyers
    Mr. Gekas                           Mr. Nadler
    Mr. Coble                           Mr. Scott
    Mr. Smith (TX)                      Mr. Watt
    Mr. Goodlatte                       Ms. Jackson Lee
    Mr. Chabot                          Ms. Waters
    Mr. Barr                            Ms. Baldwin
    Mr. Hutchinson                      Mr. Schiff
    Mr. Cannon
    Mr. Graham
    Mr. Bachus
    Mr. Scarborough
    Mr. Hostettler
    Mr. Green
    Mr. Keller
    Mr. Issa
    Ms. Hart
    Mr. Flake
    Mr. Boucher

                          Committee Oversight Findings

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

                        Performance Goals and Objectives

        The bill is intended to improve the bankruptcy system by
    deterring abuse, setting enhanced standards for bankruptcy
    professionals, and streamlining case administration.

                   New Budget Authority and Tax Expenditures

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

                            Committee Cost Estimate

        The estimate of the Congressional Budget Office (CBO) was
    not available at the time of the filing of this report. In
    compliance with clause 3(d)(2) of rule XIII of the Rules of the
    House of Representatives, the committee believes that the bill
    will have a budget effect for fiscal year 2001 and subsequent
    years comparable to that projected by the CBO for H.R. 833, the
    Bankruptcy Reform Act of 1999, a bill substantively similar to
    H.R. 333 that was passed by the House during the 106th
    Congress, with some differences. Although H.R. 333 and H.R. 833
    both authorize the extension of five existing temporary
    bankruptcy judgeships, H.R. 333 authorizes 23 new temporary
    bankruptcy judges (five more than H.R. 833). With salaries and
    benefits considered as mandatory costs, the committee estimates
    that these costs may approximate $ 14 million a year over 5
    years. The committee believes that this provision is necessary
    to facilitate the improvements proposed by the legislation and
    will enhance the efficiency of the system.
        As indicated, H.R. 333 is substantially similar to H.R.
    833. In a letter dated May 5, 1999, the CBO prepared an initial
    Federal cost estimate and an assessment of H.R. 833's impact on
    state, local, and tribal governments. \1\ In that cost
    estimate, the CBO stated that implementing H.R. 833 would
    ``cost $333 million over the 2000-2004 period--$322 million in
    discretionary spending, subject to appropriation of the
    necessary funds''. In addition, the CBO observed that because
    H.R. 833 would have decreased ``receipts by about $4 million
    over the next 5 years,'' the bill would have affected direct
    spending and governmental receipts and pay-as-you-go procedures
    would apply. With regard to the Unfunded Mandates Reform Act
    (UMRA), the CBO noted that H.R. 833 contained an
    intergovernmental mandate, but that the bill's ``costs would be
    insignificant and would not exceed the threshold established in
    that act ($50 million in 1996, adjusted annually for
    inflation).'' As to new private-sector mandates (as defined in
    UMRA) that H.R. 833 would impose on bankruptcy attorneys,
    creditors, and credit and charge-card companies, CBO estimated
    that the costs of these mandates would exceed the $100 million
    (in 1996 dollars) threshold established in UMRA. ``Overall,''
    the CBO expected that ``enacting this bill would benefit state
    and local governments by enhancing their ability to collect
    outstanding obligations in bankruptcy cases.''
    ---------------------------------------------------------------------------
        \1\ 145 Cong. Rec. H2656 (daily ed. May 5, 1999).
    ---------------------------------------------------------------------------
        The committee notes that H.R. 333 could result in some
    increased discretionary expenditures with regard to such
    matters integral to the reforms proposed as: a debtor financial
    management training test program; mandatory case auditing; and
    the compilation and publication of bankruptcy data and
    statistics as well as other provisions. However, costs related
    to some of these expenditures, such as increased auditing, are
    subject to appropriations and likely to be offset by enhanced
    collections resulting from greater protections accorded to
    Federal taxing authorities in Title VII of H.R. 333, as
    amended.

                         Committee Jurisdiction Letters

                         House Committee on Financial Services,
                                     Washington, DC, February 21, 2001.
    Hon. F. James Sensenbrenner, Jr., Chairman,
    Committee on the Judiciary,
    House of Representatives, Washington, DC.
        Dear Jim: On February 14, 2001, the Committee on the
    Judiciary ordered reported H.R. 333, the Bankruptcy Abuse
    Prevention and Consumer Protection Act of 2001. As you know,
    the Committee on Financial Services was granted an additional
    referral upon the bill's introduction pursuant to the
    Committee's jurisdiction under Rule X of the Rules of the House
    of Representatives over banks and banking, credit, and
    securities and exchanges.
        Because of your willingness to consult with the Committee
    on Financial Services regarding this matter, your continuing
    support for our requested changes, and the need to move this
    legislation expeditiously, I will waive consideration of the
    bill by the Financial Services Committee. By agreeing to waive
    its consideration of the bill, the Financial Services Committee
    does not waive its jurisdiction over H.R. 333. In addition, the
    Committee on Financial Services reserves its authority to seek
    conferees on any provisions of the bill that are within the
    Financial Services Committee's jurisdiction during any House-
    Senate conference that may be convened on this legislation. I
    ask your commitment to support any request by the Committee on
    Financial Services for conferees on H.R. 333 or related
    legislation.
        I request that you include this letter and your response as
    part of your committee's report on the bill and the
    Congressional Record during consideration of the legislation on
    the House floor.
        Thank you for your attention to these matters.
                Sincerely,
                                    Michael G. Oxley, Chairman.

    MGO/hnh

    cc:
            The Honorable J. Dennis Hastert, Speaker
            The Honorable John J. LaFalce
            The Honorable Spencer Baccus
            The Honorable Richard H. Baker
            The Honorable Charles W. Johnson, III, Parliamentarian

                            Committee on the Judiciary,
                                      House of Representatives,
                                     Washington, DC, February 22, 2001.
    Hon. Michael G. Oxley, Chairman,
    House Committee on Financial Services,
    Washington, DC.
        Dear Mike: This letter responds to your letter dated
    February 21, 2001, concerning H.R. 333, the ``Bankruptcy Abuse
    Prevention and Consumer Protection Act of 2001'' which was
    favorably reported by the House Committee on the Judiciary on
    February 14, 2001.
        I agree that the bill contains matters within the Financial
    Services Committee's jurisdiction and appreciate your
    willingness to be discharged from further consideration of H.R.
    333 so that we may proceed to the floor.
        Pursuant to your request, a copy of your letter and this
    letter will be included in the report of the Committee on the
    Judiciary on H.R. 333.
                Sincerely,
                         F. James Sensenbrenner, Jr., Chairman.

    cc:
            The Honorable J. Dennis Hastert
            The Honorable John Conyers, Jr.
            The Honorable John J. LaFalce
            The Honorable Charles W. Johnson, III

                       Constitutional Authority Statement

        Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
    House of Representatives, the committee finds the authority for
    this legislation in Article I, section 8, clauses 3 and 4 of
    the Constitution.

                            Preemption of State Law

        Pursuant to section 423(e) of the Congressional Budget and
    Impoundment Act, the committee states that the following
    provisions of H.R. 333 may preempt state law to the extent
    described herein.
        Section 219(b) provides that, notwithstanding any other
    provision of law, a creditor who discloses a debtor's last
    known address in connection with such request is not liable to
    the debtor or any other person by reason of making that
    disclosure.
        Section 227 contains provisions delineating the
    responsibilities that a ``debt relief agency'' must perform
    with respect to an ``assisted person'' and specifies the
    procedures for their enforcement. Section 227(a), in pertinent
    part, states that ``[n]o provision of this section, section
    527, or section 528 shall . . . annul, alter, affect, or exempt
    any person subject to such sections from complying with any law
    of any State except to the extent that such law is inconsistent
    with those sections, and then only to the extent of the
    inconsistency[.]''
        Section 417 permits a utility to recover or set off against
    a security deposit provided prepetition by the debtor to the
    utility without notice or court order, notwithstanding any
    other provision of law.
        Section 906 includes a number of provisions pertaining to
    the enforceability of certain bilateral netting contracts and
    clearing organization netting contracts, notwithstanding any
    other provision of state law.
        Section 1310(a) provides that notwithstanding any other
    provision of law or contract, a court within the United States
    shall not recognize or enforce certain judgments rendered by
    foreign courts under specified circumstances.

                   Section-by-Section Analysis and Discussion

    Section 1. Short Title; References; Table of Contents
        The title of the bill is the Bankruptcy Abuse Prevention
    and Consumer Protection Act of 2001 (hereinafter the ``Act'').

                        TITLE I. NEEDS-BASED BANKRUPTCY

    Section 101. Conversion
        Section 101 amends section 706(c) of the Bankruptcy Code to
    allow a chapter 7 case to be converted to a case under chapter
    12 or chapter 13 on consent of the debtor.
    Section 102. Dismissal or conversion
        Section 102 implements the Act's needs-based bankruptcy
    reforms. Subsection (a) amends section 707(b) of the Bankruptcy
    Code to permit a court, on its own motion, or on motion of the
    United States trustee, trustee, bankruptcy administrator, or
    party in interest, to dismiss on the basis of abuse a chapter 7
    case filed by an individual debtor whose debts are primarily
    consumer debts. Alternatively, it permits the United States
    trustee, trustee, bankruptcy administrator, or party in
    interest to seek conversion of a chapter 7 case to a case under
    chapter 11 or chapter 13 on consent of the debtor. Under
    current law, only the court or the United States Trustee may
    seek dismissal of a chapter 7 case under section 707(b) for
    substantial abuse.
        In addition, section 102(a) replaces the current law's
    presumption in favor of the debtor with a mandatory presumption
    of abuse that is triggered under certain conditions. Section
    102(a) requires a court to presume that abuse exists if the
    amount remaining, after certain expenses and other specified
    amounts are deducted from the debtor's current monthly income
    (a defined term), when multiplied by 60, exceeds (1) 25 percent
    of the debtor's nonpriority unsecured claims, or $6000
    (whichever is greater); or (2) $10,000, whichever is lower.
    Under section 102(a), the debtor's monthly expenses--exclusive
    of any payments for debts (unless otherwise permitted)--must be
    the applicable monthly amounts set forth in the Internal
    Revenue Service Financial Analysis Handbook as Necessary
    Expenses under the National and Local Standards categories and
    the debtor's actual monthly expenditures for items categorized
    as Other Necessary Expenses in the Internal Revenue Service
    Financial Analysis Handbook. For purposes of this provision,
    the expenses include those of the debtor, the debtor's
    dependents, and the debtor's spouse, if not otherwise a
    dependent.
        Section 102(a) mandates that the debtor's monthly expenses
    include reasonably necessary expenses incurred to maintain the
    safety of the debtor and the debtor's family from family
    violence as identified in section 309 of the Family Violence
    Prevention and Services Act or other applicable law. In
    addition, the debtor may deduct up to an additional 5 percent
    of the food and clothing expense allowances under the National
    Standards category, if demonstrated to be reasonable and
    necessary.
        For purposes of determining whether the mandatory
    presumption of abuse applies under the needs-based test,
    section 102(a) permits the debtor to deduct certain other
    liabilities. These include the debtor's average monthly
    payments on account of secured debts, calculated as the total
    of all amounts scheduled as contractually due over the 60-month
    period following the filing of the bankruptcy, divided by 60
    months. This amount may include any additional payments to
    secured creditors that a chapter 13 debtor must make to retain
    possession of a primary residence, motor vehicle, or other
    property necessary for the support of the debtor and the
    debtor's dependents. With respect to claims and expenses
    entitled to priority under section 507 of the Bankruptcy Code,
    section 102(a) specifies that the debtor may deduct payments
    for these obligations, calculated as the total amount of all
    priority debts, divided by 60. If applicable, the debtor may
    deduct the following additional expenses:

            (1) the continuation of actual expenses paid by the
            debtor that are reasonable and necessary for the care
            and support of an elderly, chronically ill, or disabled
            household member or member of the debtor's immediate
            family who is unable to pay such expenses;
            (2) the actual administrative expenses (including
            reasonable attorneys' fees) of administering a chapter
            13 plan for the district in which the debtor resides,
            up to 10 percent of projected plan payments, as
            determined under schedules issued by the Executive
            Office for United States Trustees; and
            (3) the actual expenses for each dependent child under
            the age of 18 years up to $1,500 per year per child to
            attend a private elementary or secondary school, if the
            debtor documents these expenses and provides a detailed
            explanation of why they are reasonable and necessary.

        The mandatory presumption of abuse may only be rebutted if
    (1) the debtor demonstrates special circumstances that justify
    any additional expense or adjustment to the debtor's current
    monthly income for which there is no reasonable alternative;
    and (2) such additional expense or income adjustment causes the
    debtor's current monthly income (reduced by various amounts)
    when multiplied by 60 to be less than the lesser of either (i)
    25 percent of the debtor's nonpriority unsecured claims, or
    $6,000 (whichever is greater), or (ii) $10,000. The debtor must
    itemize and provide documentation of each additional expense or
    income adjustment and an explanation of the special
    circumstances that make such expense or income adjustment
    reasonable and necessary. In addition, the debtor must attest
    under oath to the accuracy of any information provided to
    demonstrate that such additional expenses or adjustments to
    income are required.
        Section 102(a) specifies that the debtor file a statement
    of current monthly income and the calculations that determine
    whether a presumption arises under this provision as part of
    the schedules that the debtor must file pursuant to section 521
    of the Bankruptcy Code. The statement must also explain how
    each amount is calculated.
        Where the mandatory presumption of abuse does not apply or
    has been rebutted, the court, in order to determine whether the
    granting of relief under chapter 7 would be an abuse of such
    chapter, must consider (1) whether the debtor filed the chapter
    7 case in bad faith; or (2) whether the totality of
    circumstances of the debtor's financial situation (including
    whether the debtor seeks to reject a personal services contract
    and the financial need for such rejection) demonstrates abuse.
        Should a court grant a section 707(b) motion made by a
    trustee and find that the action of debtor's counsel in filing
    the chapter 7 case violated Federal Rule of Bankruptcy
    Procedure 9011, section 102(a) mandates that the court order
    the attorney to reimburse the trustee for all reasonable costs
    in prosecuting the motion, including reasonable attorneys'
    fees. In addition, if the court finds that the debtor's
    attorney violated rule 9011, the court, at a minimum, must
    assess an appropriate civil penalty, payable to the trustee,
    bankruptcy administrator, or the United States trustee.
        Section 102(a) specifies that the signature of an attorney
    on a bankruptcy petition, pleading, or written motion
    constitutes a certification that the attorney has (1) performed
    a reasonable investigation into the circumstances giving rise
    to such petition, pleading or motion; and (2) determined that
    the document is well grounded in fact or 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 section 707(b)(1) of the Bankruptcy Code. Pursuant to
    section 102(a), the signature of an attorney on a bankruptcy
    petition constitutes a certification that the attorney has no
    knowledge after an inquiry that the information in the
    schedules filed with such petition is incorrect.
        A court may award a debtor all reasonable costs, including
    reasonable attorneys' fees, incurred by the debtor in
    successfully contesting a section 707(b) motion brought by a
    party in interest (other than a trustee, United States trustee
    or bankruptcy administrator) if the court finds that either (1)
    the action of the party in filing the motion violated rule 9011
    or (2) the party filed the motion solely for the purpose of
    coercing the debtor into waiving a right guaranteed to the
    debtor under the Bankruptcy Code. An exception with respect to
    the rule 9011 ground applies to a small business having an
    aggregate claim of less than $1,000. For purposes of this
    provision, a small business is defined as an unincorporated
    business, partnership, corporation, association, or
    organization with less than 25 full-time employees that is
    engaged in commercial or business activity. The number of
    employees of a wholly-owned subsidiary of a corporation
    includes the employees of the subsidiary's parent corporation
    and any other subsidiary corporation of the parent corporation.
        Two forms of ``safe harbors'' are recognized under section
    102(a). One provides that only a judge, United States trustee,
    bankruptcy administrator, or trustee may bring a motion under
    section 707(b) of the Bankruptcy Code if the chapter 7 debtor's
    income (or in a joint case, the income of debtor and the
    debtor's spouse) does not exceed the State median family income
    for a family of equal or lesser size (adjusted for larger sized
    families), or the State median family income for one earner in
    the case of a one-person household. The second safe harbor
    provides that no motion under section 707(b)(2) may be filed by
    a judge, United States trustee, bankruptcy administrator,
    trustee, or other party in interest if the debtor and the
    debtor's spouse combined have income that does not exceed the
    State median family income for a family of equal or lesser size
    (adjusted for larger sized families), or the State median
    family income for one earner in the case of a one-person
    household.
        Section 102(b) defines ``current monthly income'' as the
    average monthly income from all sources that the debtor
    receives (or, in a joint case, the debtor and the debtor's
    spouse receive), without regard to whether it is taxable
    income, in the 6-month period preceding the date of
    determination. It includes any amount paid on a regular basis
    by any entity (other than the debtor or, in a joint case, the
    debtor and the debtor's spouse) 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. It excludes
    Social Security Act benefits and payments to victims of war
    crimes or crimes against humanity on account of their status as
    victims of such crimes.
        Section 102(c) amends section 704 to require the United
    States trustee or bankruptcy administrator to review all
    materials filed by an individual chapter 7 debtor and to file
    with the court not later than 10 days after the date of the
    first meeting of creditors a statement as to whether or not the
    case should be presumed to be an abuse under section 707(b).
    The court, in turn, must provide a copy of such statement
    within 5 days of its filing to all creditors.
        If 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 debtor's current monthly
    income is not less than the applicable State median income,
    such United States trustee or bankruptcy administrator must
    file within 30 days after the filing of the statement
    (described in the preceding paragraph) either a (1) motion to
    dismiss or convert the case under section 707(b); or (2) a
    statement setting forth the reasons why such a motion is not
    appropriate. In a case where a motion to dismiss or convert or
    a statement is required to be filed under section 704(b)(2),
    the United States trustee or bankruptcy administrator may
    decline to file such a motion if (1) the debtor's current
    monthly income (when multiplied by 12) exceeds 100 percent, but
    does not exceed 150 percent of the applicable State median
    income; and (2) after subtracting certain deductions, the
    debtor's remaining income when multiplied by 60 is less than
    the lesser of (i) 25 percent of the debtor's nonpriority
    unsecured claims or $6,000 (whichever is greater); or (ii)
    $10,000.
        Section 102(d) amends section 342 of the Bankruptcy Code to
    require the clerk to give written notice to all creditors not
    later than 10 days after the filing of a chapter 7 case in
    which the presumption of abuse applies. It is anticipated that
    the Judicial Conference of the United States will develop an
    official form to implement this provision.
        Section 102(e) specifies that no provision of the
    Bankruptcy Code shall limit the ability of a creditor to supply
    information to a judge (except for information communicated ex
    parte, unless otherwise permitted by applicable law), United
    States trustee, bankruptcy administrator, or trustee.
        Section 102(f) amends section 707 of the Bankruptcy Code to
    provide that a court may dismiss a chapter 7 case filed by an
    individual debtor convicted of a crime of violence (as defined
    in 18 U.S.C. Sec. 16), or a drug trafficking crime (as defined
    in 18 U.S.C. Sec. 924(c)(2)) on motion of the victim, if
    dismissal is in the best interest of such victim. The court,
    however, may not dismiss a case under this provision if the
    debtor establishes by a preponderance of the evidence that the
    filing of the chapter 7 case is necessary to satisfy a domestic
    support obligation.
        Section 102(g) amends section 1325(a) of the Bankruptcy
    Code to require the court to find, as a condition of
    confirmation, that the debtor filed the chapter 13 case in good
    faith.
        Section 102(h) amends section 1325(b) of the Bankruptcy
    Code to revise the definition of disposable income. As revised,
    the term means current monthly income received by the debtor
    (exclusive of child support payments, foster care payments, or
    disability payments for a dependent child made in accordance
    with applicable nonbankruptcy law to the extent reasonably
    necessary to be expended for such child), less amounts
    reasonably necessary to be expended for (1) the maintenance or
    support of the debtor or dependent of the debtor; (2) a
    domestic support obligation that first becomes due after the
    petition is filed; (3) certain charitable contributions; and
    (4) if the debtor is engaged in business, the payment of
    expenditures necessary for the continuation, preservation, and
    operation of such business. If the debtor's income exceeds the
    applicable State median income threshold, then the expenses of
    the debtor under this provision are determined in accordance
    with section 707(b)(2)(A) and (B), which specifies what monthly
    expenses a debtor may claim.
        Section 102(i) makes a clerical amendment to the table of
    sections.
    Section 103. Sense of Congress and study
        Section 103(a) states that it is the sense of Congress that
    the Secretary of the Treasury has the authority to alter the
    Internal Revenue Service expense standards established to set
    guidelines for repayment plans as needed to accommodate their
    use under section 707(b) of the Bankruptcy Code.
        Section 103(b) requires the Director of the Executive
    Office for United States Trustees to submit a report, not later
    than 2 years from the enactment date of the Act, containing
    findings with regard to the use of the Internal Revenue Service
    expense standards for determining a debtor's current monthly
    expenses under section 707(b) of the Bankruptcy Code and the
    impact that these standards have on debtors and the bankruptcy
    courts. The report may include recommendations for amendments
    to the Bankruptcy Code consistent with the Director's findings.
    Section 104. Notice of alternatives
        Section 104 amends section 342(b) of the Bankruptcy Code to
    require the clerk to give an individual with primarily consumer
    debts--before he or she files for bankruptcy relief--notice of
    the following:

            (1) a brief description of the various forms of
            bankruptcy relief, including an explanation of the
            general purpose, benefits, and costs of proceeding
            under each form of relief;
            (2) a brief description of the services available from
            credit counseling agencies;
            (3) a statement explaining that a person who knowingly
            and fraudulently conceals assets or makes a false oath
            or statement under penalty of perjury shall be subject
            to fine, imprisonment, or both; and
            (4) a statement explaining that all information
            supplied by a debtor in connection with the case is
            subject to examination by the Attorney General.
    Section 105. Debtor financial management training test program
        Section 105(a) requires the Director of the Executive
    Office for United States trustees to (1) consult with debtor
    education experts and others who operate financial management
    education programs; and (2) develop a financial management
    training curriculum and materials to teach individual debtors
    how to manage their personal finances better.
        Section 105(b) requires the Director to select six judicial
    districts to test the effectiveness of such curriculum and
    materials for an 18-month period beginning not later than 270
    days after the Act's enactment date. The curriculum and
    materials shall be used in these six districts as the personal
    financial management instructional course required by section
    111 of the Bankruptcy Code, as added by the Act.
        Section 105(c) requires the Director to evaluate the
    effectiveness of the curriculum and materials as well as to
    assess the effectiveness of a sample of existing consumer
    education programs (such as those described in the Report of
    the National Bankruptcy Review Commission) that are
    representative of consumer education programs sponsored by the
    credit industry, chapter 13 trustees, and consumer counseling
    groups. Not later than 3 months after concluding such
    evaluation, the Director must submit a report on the
    effectiveness and cost of such curriculum, materials, and
    programs.
    Section 106. Credit counseling
        Section 106(a) amends section 109 of the Bankruptcy Code to
    require, as a condition for eligibility to be a debtor, that an
    individual receive credit counseling within the 180-day period
    preceding the filing of a bankruptcy case by such individual.
    The credit counseling must be provided by an approved nonprofit
    budget and credit counseling agency consisting of either an
    individual or group briefing (which may include a briefing
    conducted telephonically or via the Internet) that outlines
    opportunities for available credit counseling and assists the
    individual in performing a budget analysis.
        The determination by the United States trustee or
    bankruptcy administrator with regard to whether approved
    nonprofit budget and credit counseling agencies in that
    district are not reasonably able to provide adequate services
    must be reviewed annually. The United States trustee or
    bankruptcy administrator, however, may disapprove a nonprofit
    budget and credit counseling service at any time.
        The mandatory credit counseling requirement does not apply
    if the debtor resides in a district where the United States
    trustee or bankruptcy administrator determines that the
    approved nonprofit budget and credit counseling agencies in
    that district are not reasonably able to provide adequate
    services.
        In addition, this requirement does not apply if the debtor
    files a certification that: (1) describes exigent circumstances
    meriting a waiver of this requirement; (2) states that the
    debtor requested credit counseling services from an approved
    nonprofit budget and credit counseling agency, but was unable
    to obtain such services within the 5-day period beginning on
    the date the debtor made the request; and (3) is satisfactory
    to the court. This exemption terminates when the debtor meets
    the requirements for credit counseling participation, but not
    longer than 30 days after the case is filed, unless the court,
    for cause, extends this period for an additional 15 days.
        Section 106(b) amends section 727(a) of the Bankruptcy Code
    to provide that a chapter 7 debtor's discharge must be denied
    if the debtor fails to complete a personal financial management
    instructional course after the filing of the bankruptcy case.
    This provision, however, does not apply if the debtor resides
    in a district where the United States trustee or bankruptcy
    administrator has determined that the approved instructional
    courses in that district are not adequate. Such determination
    must be reviewed annually by the United States trustee or
    bankruptcy administrator.
        Section 106(c) amends section 1328 of the Bankruptcy Code
    to add a chapter 13 debtor's failure to complete an
    instructional course concerning personal financial management
    as a ground for denying a discharge, unless the debtor resides
    in a district where the United States trustee or bankruptcy
    administrator has determined that the approved instructional
    courses in that district are not adequate. Such determination
    must be reviewed annually by the United States trustee or
    bankruptcy administrator.
        Section 106(d) amends section 521 of the Bankruptcy Code to
    mandate that an individual debtor file with the court a
    certificate from the approved nonprofit budget and credit
    counseling agency that rendered the requisite services
    described under section 109(h), as added by this act. The
    debtor must file a copy of the repayment plan, if any, that was
    developed by the agency together with the certificate, which
    must describe the services rendered.
        Section 106(e) adds a new provision to the Bankruptcy Code
    requiring the clerk for each district to maintain for the
    public's use a list of approved (1) credit counseling agencies
    that provide the services described in section 109(h) of the
    Bankruptcy Code, as added by this Act; and (2) personal
    financial management instructional courses. Under this
    provision, the United States trustee or bankruptcy
    administrator may only approve a credit counseling agency or
    personal financial management instructional course that
    satisfies certain specified criteria. If such agency or
    instruction course is approved, the approval may only be for a
    probationary period of up to 6 months. At the conclusion of the
    probationary period, the United States trustee or bankruptcy
    administrator may only approve such agency or instructional
    course for an additional 1-year period and thereafter for
    successive 1-year periods. Within 30 days after any final
    decision occurring after the expiration of the initial
    probationary period or after any 2-year period thereafter, an
    interested person may seek judicial review of such decision in
    the appropriate United States district court.
        In addition, section 106(e) provides that the United States
    district court may, at any time, investigate the qualifications
    of a credit counseling agency and request it to produce
    documents to ensure the agency's integrity and effectiveness.
    The district court may remove a credit counseling agency from
    the approved list that does not meet the specified
    qualifications. Section 106(e) prohibits a credit counseling
    agency from providing information as to whether an individual
    debtor has received or sought personal financial management
    instruction from such agency to a credit reporting entity.
        A credit counseling agency that willfully or negligently
    fails to comply with any requirement under the Bankruptcy Code
    with respect to a debtor shall be liable to the debtor for
    damages in an amount equal to (1) actual damages sustained by
    the debtor as a result of the violation and (2) any court costs
    or reasonable attorneys' fees incurred to recover such damages.
        Section 106(f) amends section 362 of the Bankruptcy Code in
    two respects. First, it provides that if a chapter 7, 11, or 13
    case is dismissed due to the creation of a debt repayment plan,
    the presumption under section 362(c)(2) shall not apply to any
    subsequent bankruptcy case commenced by the debtor. Second, it
    directs that the court, on request of a party in interest, must
    issue an order under section 362(c) confirming that the
    automatic stay has terminated.
    Section 107. Schedules of reasonable and necessary expenses
        Section 107 requires the Director of the Executive Office
    for United States Trustees to issue schedules of reasonable and
    necessary administrative expenses (including reasonable
    attorneys' fees) relating to the administration of a chapter 13
    plan for each judicial district.

                     TITLE II. ENHANCED CONSUMER PROTECTION

              SUBTITLE A. PENALTIES FOR ABUSIVE CREDITOR PRACTICES

    Section 201. Promotion of alternative dispute resolution
        Section 201(a) amends section 502 of the Bankruptcy Code to
    permit the court, after a hearing on motion of the debtor, to
    reduce a wholly unsecured consumer claim by up to 20 percent if
    the debtor can establish by clear and convincing evidence that
    the claim was filed by a creditor who unreasonably refused to
    negotiate a reasonable alternative repayment schedule proposed
    by an approved credit counseling agency on behalf of the
    debtor. The debtor must also establish by clear and convincing
    evidence that the offer was made at least 60 days before the
    filing of the petition. In addition, the offer must have
    provided for payment of at least 60 percent of the amount of
    the claim over a period not exceeding the loan's repayment
    period, or a reasonable extension thereof. Further, no part of
    the claim under the alternative repayment schedule may be
    nondischargeable.
        Section 201(b) amends section 547 of the Bankruptcy Code to
    prohibit the avoidance as a preferential transfer a payment by
    a debtor to a creditor pursuant to an alternative repayment
    plan created by an approved credit counseling agency.
    Section 202. Effect of discharge
        Section 202 amends section 524 of the Bankruptcy Code in
    two respects. First, it makes the willful failure of a creditor
    to credit payments received under a confirmed chapter 11, 12,
    or 13 plan a violation of the discharge injunction if the
    creditor's action to collect and failure to credit payments
    caused material injury to the debtor. This provision does not
    apply if the plan is dismissed or in default, or where the
    creditor did not receive payments pursuant to the plan.
        Second, section 202 amends section 524 of the Bankruptcy
    Code to provide that the discharge injunction does not apply to
    an act by a creditor having a claim secured by an interest in
    real property that is the debtor's principal residence if such
    act is (1) in the ordinary course of business between the
    creditor and the debtor; and (2) limited to seeking or
    obtaining periodic payments associated with a valid security
    interest in lieu of the creditor pursuing in rem relief to
    enforce the underlying lien.
    Section 203. Discouraging abuse of reaffirmation practices
        Section 203 consists of a comprehensive overhaul of the law
    applicable to reaffirmation agreements. Section 203(a) mandates
    the provision of certain specified disclosures, which are the
    only disclosures required in connection with a reaffirmation
    agreement. These disclosures must be in written form and be
    made clearly and conspicuously. In addition, the disclosure
    statement must include certain advisories and explanations. At
    the election of the creditor, the disclosure statement may
    include a repayment schedule. If the debtor is represented by
    counsel, section 203(a) mandates that the attorney file a
    certification stating, inter alia, that the agreement
    represents a fully informed and voluntary agreement by the
    debtor, that the agreement does not impose an undue hardship on
    the debtor or any dependent of the debtor, and that the
    attorney advised the debtor of the legal effect and
    consequences of such agreement. Where the presumption of undue
    hardship applies, the attorney must also certify that it is his
    or her opinion that the debtor is able to make the payments
    required under the reaffirmation agreement. Further, the debtor
    must submit a statement setting forth the debtor's monthly
    income and expenditures. If the debtor is represented by
    counsel and the debt being reaffirmed is owed to a credit
    union, a modified version of this statement may be used.
        Notwithstanding any other provision of the Bankruptcy Code,
    section 203(a) permits a creditor to (1) accept payments from a
    debtor before and after the filing of a reaffirmation agreement
    with the court; and (2) accept payments from a debtor pursuant
    to a reaffirmation agreement that the creditor believes in good
    faith to be effective. It further provides that certain
    specified disclosure requirements shall be satisfied if such
    disclosures are given in good faith.
        If the amount of the scheduled payment due on the
    reaffirmed debt (as disclosed in the debtor's statement) is
    greater than the debtor's available income, it is presumed for
    60 days from the date on which the reaffirmation agreement is
    filed with the court that the agreement presents an undue
    hardship. Section 203(a) requires the court to review such
    presumption, which can be rebutted if the debtor identifies in
    writing additional sources of funds that would enable the
    debtor to make the required payments on the reaffirmed debt. If
    the presumption is not rebutted to the satisfaction of the
    court, the court may disapprove the reaffirmation agreement. No
    reaffirmation agreement may be disapproved without notice and
    hearing to the debtor and creditor. The hearing must be
    concluded before the entry of the debtor's discharge. The
    requirements set forth in this paragraph do not apply to
    reaffirmation agreements where the creditor is a credit union,
    as defined.
        Section 203(b) requires the Attorney General to designate a
    U.S. attorney for each judicial district and an Federal Bureau
    of Investigation agent for each field office to have primary
    law enforcement responsibility for violations of sections 152
    and 157 of title 18 of the United States Code with respect to
    abusive reaffirmation agreements and materially fraudulent
    statements in bankruptcy schedules that are intentionally false
    or misleading. The U.S. attorney designated under this
    provision has primary responsibility with respect to bankruptcy
    investigations under section 3057 of title 18, United States
    Code. The bankruptcy courts must establish procedures for
    referring any case in which a materially fraudulent bankruptcy
    schedule has been filed. The provision also makes a clerical
    amendment to the table of sections in title 18.

                       SUBTITLE B. PRIORITY CHILD SUPPORT

    Section 211. Definition of domestic support obligation
        Section 211 amends section 101 of the Bankruptcy Code to
    define a domestic support obligation as a debt that accrues
    pre- or postpetition (including interest that accrues pursuant
    to applicable nonbankruptcy law) and is owed to or recoverable
    by a spouse, former spouse, or child of the debtor, or that
    child's parent or legal guardian, or a responsible relative. It
    also includes a debt owed to or recoverable by a governmental
    unit. To qualify as a domestic support obligation, the debt
    must be in the nature of alimony, maintenance, or support,
    without regard to whether such debt is expressly so designated.
    It must be established or subject to establishment either pre-
    or postpetition pursuant to a: (i) 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. It does not apply to a debt assigned to a nongovernmental
    entity, unless it was assigned voluntarily by the spouse,
    former spouse, child, or parent solely for the purpose of
    collecting the debt.
    Section 212. Priorities for claims for domestic support obligations
        Section 212 amends 507(a) of the Bankruptcy Code to make
    domestic support obligations owed to or recoverable by a
    spouse, former spouse, or child of the debtor, or the parent,
    legal guardian, or responsible relative of such child or filed
    by a governmental unit on behalf of such person payable before
    all other expenses and claims, including expenses of
    administration from the assets of a bankruptcy estate. Within
    this priority, allowed claims for domestic support obligations
    filed by a governmental unit must be paid on the condition that
    funds received by such unit under this provision be applied and
    distributed in accordance with nonbankruptcy law. Remaining
    funds may be used to pay a domestic support obligation assigned
    to a governmental unit (unless such obligation is assigned
    voluntarily by a spouse, former spouse, child, parent, legal
    guardian, or responsible relative of the child for the purpose
    of collecting the debt) or owed directly to such entity if the
    funds are applied and distributed in accordance with applicable
    nonbankruptcy law.
    Section 213. Requirements to obtain confirmation and discharge in cases
            involving domestic support obligations
        Section 213(1) amends section 1129(a) of the Bankruptcy
    Code to mandate the payment of certain postpetition domestic
    support obligations as a condition of confirmation in a chapter
    11 case. Section 213(2) amends section 1208(c) of the
    Bankruptcy Code to provide that the failure of a chapter 12
    debtor to pay a postpetition domestic support obligation
    constitutes cause for conversion or dismissal of the debtor's
    case. Section 213(3) amends section 1222(a) of the Bankruptcy
    Code to permit a chapter 12 debtor to propose a plan that
    provides for less than full payment of all amounts owed for a
    claim entitled to priority under section 507(a)(1)(B) if all of
    the debtor's projected disposable income for a 5-year period is
    applied to make payments under the plan. Section 213(4) amends
    section 1222(b) of the Bankruptcy Code to permit a chapter 12
    debtor, pursuant to a plan, to pay postpetition interest on
    claims that are nondischargeable under Section 1328(a), but
    only to the extent that the debtor has disposable income
    available to pay such interest after payment of all allowed
    claims. Section 213(5) amends section 1225(a) of the Bankruptcy
    Code to require a chapter 12 debtor to be current with certain
    postpetition domestic support obligations as a condition of
    confirmation. Section 213(6) amends section 1228(a) to
    condition the granting of a chapter 12 discharge on the
    debtor's payment of certain postpetition domestic support
    obligations. Section 213(7) amends section 1307 of the
    Bankruptcy Code to add nonpayment of a postpetition domestic
    support obligation as a ground for conversion or dismissal of a
    chapter 13 case. Section 213(8) amends section 1322(a) to
    permit a chapter 13 debtor, pursuant to a plan, to pay less
    than the full amount of a claim entitled to priority under
    section 507(a)(1)(B) if the plan provides that all of the
    debtor's projected disposable income over a 5-year period will
    be applied to make payments under the plan. Section 213(9)
    amends section 1322(b) to permit a chapter 13 debtor, pursuant
    to a plan, to pay postpetition interest on claims that are
    nondischargeable under section 1328(a), but only to the extent
    that the debtor has disposable income available to pay such
    interest after payment of all allowed claims. Section 213(10)
    amends section 1325(a) of the Bankruptcy Code to require, as a
    condition of confirmation, that a chapter 13 debtor pay certain
    postpetition domestic support obligations. Section 213(11)
    amends section 1328(a) of the Bankruptcy Code to condition the
    granting of a chapter 13 discharge on the debtor's payment of
    certain postpetition domestic support obligations.
    Section 214. Exceptions to automatic stay in domestic support
            proceedings
        Section 214 amends section 362(b) of the Bankruptcy Code to
    except from the automatic stay actions or proceedings
    pertaining to child custody and visitation, domestic violence,
    and marriage dissolution to the extent that they do not pertain
    to property determinations concerning property of the estate.
    In addition, section 214 amends section 362(b) to except from
    the automatic stay the withholding, suspension, or restriction
    of a driver's license, or a professional, occupational or
    recreational license under State law pursuant to section
    466(a)(16) of the Social Security Act. Further, section 214
    excepts from the automatic stay the reporting of overdue
    support owed by a parent to any consumer reporting agency
    pursuant to section 466(a)(7) of the Social Security Act; the
    interception of tax refunds as authorized by sections 464 and
    466(a)(3) of the Social Security Act; and the enforcement of
    medical obligations as specified under title IV of the Social
    Security Act.
    Section 215. Nondischargeability of certain debts for alimony,
            maintenance, and support
        Section 215 amends section 523(a)(5) of the Bankruptcy Code
    to provide that a ``domestic support obligation'' (as defined
    in section 211 of the Act) is nondischargeable. With respect to
    obligations that are not domestic support obligations, but
    incurred in connection with a divorce or separation or related
    action, section 215 provides that these obligations are also
    nondischargeable irrespective of the debtor's inability to pay
    such debts. In addition, section 215 amends section 523(c) of
    the Bankruptcy Code to delete the reference to section
    523(a)(15).
    Section 216. Continued liability of property
        Section 216 amends section 522(c) of the Bankruptcy Code to
    make exempt property liable for nondischargeable domestic
    support obligations notwithstanding any contrary provision of
    applicable nonbankruptcy law. It also makes a conforming
    amendment to section 522(f)(1)(A) of the Bankruptcy Code and
    corrects an erroneous statutory reference in section 522(g)(2).
    Section 217. Protection of domestic support claims against preferential
            transfer motions
        Section 217 makes a conforming amendment to section
    547(c)(7) of the Bankruptcy Code, which provides that a bona
    fide payment of a debt for a domestic support obligation may
    not be avoided as a preferential transfer.
    Section 218. Disposable income defined
        Section 218(a) amends section 1225(b)(2)(A) of the
    Bankruptcy Code to provide that disposable income in a chapter
    12 case does not include payments for postpetition domestic
    support obligations.
        Section 218(b) amends section 1325(b)(2)(A) of the
    Bankruptcy Code to provide that disposable income in a chapter
    13 case does not include payments for postpetition domestic
    support obligations.
    Section 219. Collection of child support
        Section 219 amends sections 704, 1106, 1202, and 1302 of
    the Bankruptcy Code to require trustees in chapter 7, 11, 12,
    and 13 cases to provide certain types of notices to child
    support claimants and governmental enforcement agencies. First,
    the trustee must notify the claimant in writing of the right to
    use the services of a State child support enforcement agency
    established under sections 464 and 466 of the Social Security
    Act in the State where the claimant resides and include the
    agency's address and telephone number. The notice must also
    explain the claimant's right to payment under the applicable
    chapter of the Bankruptcy Code. Second, the trustee must
    provide written notice to the governmental enforcement agency
    of the name, address, and telephone number of the child support
    claimant. Third, the trustee must notify both the child support
    claimant and the State agency that the debtor was granted a
    discharge as well as supply them with the debtor's last known
    address, the last known name and address of the debtor's
    employer, and the name of each creditor holding a debt that is
    not discharged under section 523(a)(2), (4) or (14A), or
    holding a debt that is reaffirmed pursuant to section 524 of
    the Bankruptcy Code. If a child support claimant or State
    agency is not able to locate the debtor, such claimant or
    agency may request such information from a creditor holding a
    debt that is not discharged under section 523(a)(2), (4) or
    (14A) or that is reaffirmed pursuant to section 524 of the
    Bankruptcy Code. Section 219, in addition, provides that,
    notwithstanding any other provision of law, a creditor who
    discloses a debtor's last known address in connection with such
    request is not liable to the debtor or any other person by
    reason of making that disclosure.
    Section 220. Nondischargeability of certain educational benefits and
            loans
        Section 220 amends section 523(a)(8) of the Bankruptcy Code
    to provide that a debt for a qualified education loan (as
    defined in section 221(e)(1) of the Internal Revenue Code) is
    nondischargeable, unless excepting such debt from discharge
    would impose an undue hardship on the debtor and the debtor's
    dependents.

                     SUBTITLE C. OTHER CONSUMER PROTECTIONS

    Section 221. Amendments to discourage abusive bankruptcy filings
        Section 221 makes a series of amendments to section 110 of
    the Bankruptcy Code. First, it clarifies the definition of a
    bankruptcy petition preparer with respect to persons under the
    direct supervision of an attorney. Second, it amends
    subsections (b)(1) and (c)(2) of section 110 to provide that if
    a bankruptcy petition preparer is not an individual, then an
    officer, principal, responsible person, or partner of the
    preparer must sign certain documents filed in connection with
    the bankruptcy case as well as state the person's name and
    address on such documents. Third, it requires a bankruptcy
    petition preparer to give the debtor written notice explaining
    that the preparer is not an attorney and may not practice law
    or give legal advice. The notice may include examples of legal
    advice that a preparer may not provide. The notice, which must
    be signed by the preparer under penalty of perjury and the
    debtor, is required to be filed with any document for filing.
    Fourth, it requires the Supreme Court to promulgate rules or
    the Judicial Conference of the United States to issue
    guidelines for setting maximum fees. Fifth, it specifies that
    the bankruptcy petition preparer file a declaration certifying
    that the preparer complied with the notification requirements
    concerning the preparer's fees. Sixth, it requires the court to
    order the turnover of specified fees for services rendered
    within 12 months of the filing if such fees violate any rule or
    guideline. Seventh, it allows a debtor to exempt fees recovered
    under this provision pursuant to section 522(b) of the
    Bankruptcy Code. Eighth, it specifically authorizes the court
    to enjoin a bankruptcy petition preparer who has failed to
    comply with a prior order issued under section 110. Ninth, it
    generally revises section 110's penalty provisions and
    specifies that the penalties are to be paid to a special fund
    of the United States trustee to pay for enforcement of this
    provision.
    Section 222. Sense of Congress
        Section 222 expresses the sense of Congress that the States
    should develop personal finance curricula for use in elementary
    and secondary schools.
    Section 223. Additional amendments to title 11, United States Code
        Section 223 amends section 507(a) to add a tenth-level
    priority for claims based on death or personal injuries
    resulting from the debtor's operation of a motor vehicle or
    vessel while intoxicated.
    Section 224. Protection of retirement savings in bankruptcy
        Section 224(a) amends section 522 to permit a debtor to
    exempt certain retirement funds to the extent that those monies
    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 and that have received a favorable
    determination pursuant to Internal Revenue Code section 7805.
    If the retirement monies are in a retirement fund that has not
    received a favorable determination, those monies are exempt if
    the debtor demonstrates that no prior unfavorable determination
    has been made by a court or the Internal Revenue Service, and
    the retirement fund is in substantial compliance with the
    applicable requirements of the Internal Revenue Code. If the
    retirement fund fails to be in substantial compliance with
    applicable law, the debtor may claim the retirement funds as
    exempt if the debtor is not materially responsible for such
    failure. This section also applies to certain direct transfers
    and rollover distributions. In addition, this provision ensures
    that the specified retirement funds are exempt under State as
    well as Federal law.
        Section 224(b) amends section 362(b) of the Bankruptcy Code
    to except from the automatic stay the withholding of income
    from a debtor's wages pursuant to an agreement authorizing such
    withholding for the benefit of a pension, profit-sharing, stock
    bonus, or other employer-sponsored plan established under
    Internal Revenue Code section 401, 403, 408, 408A, 414, 457, or
    501(a) to the extent that the amounts withheld are used solely
    to repay a loan from a plan as authorized by section 408(b)(1)
    of the Employee Retirement Income Security Act of 1974 or that
    they are subject to Internal Revenue Code section 72(p). The
    exception also applies to certain thrift savings plan loans.
        Section 224(c) amends section 523(a) of the Bankruptcy Code
    to except from discharge any amount owed by the debtor to a
    pension, profit-sharing, stock bonus, or other plan established
    under Internal Revenue Code section 401, 403, 408, 408A, 414,
    457, or 501(c) under a loan authorized under section 408(b)(1)
    of the Employee Retirement Income Security Act of 1974 or
    subject to Internal Revenue Code section 72(p). The exception
    also pertains to a loan from a thrift savings plan made under a
    governmental plan pursuant to section 414(d) or a contract or
    account under section 403(b) of the Internal Revenue Code.
        Section 224(d) amends section 1322 of the Bankruptcy Code
    to provide that a chapter 13 plan may not materially alter the
    terms of a loan owed to a pension, profit-sharing, stock bonus,
    or other plan established under the Internal Revenue Code
    section 401, 403, 408, 408A, 414, 457, or 501(a). In addition,
    it specifies that any amounts required to repay such loan shall
    not constitute ``disposable income'' under section 1325 of the
    Bankruptcy Code.
        Section 224(e) amends section 522 of the Bankruptcy Code to
    impose a $1 million cap (periodically adjusted pursuant to
    section 104 of the Bankruptcy Code to reflect changes in the
    Consumer Price Index) on the value of the debtor's interest in
    an individual retirement account established under either
    section 408 or 408A of the Internal Revenue Code (other than a
    simplified employee pension account under section 408(k) or a
    simple retirement account under section 408(p) of the Internal
    Revenue Code) that a debtor may claim as exempt property. This
    limit applies without regard to amounts attributable to
    rollover contributions made pursuant to section 402(c),
    402(e)(6), 403(a)(4), 403(a)(5), or 403(b)(8) of the Internal
    Revenue Code and earnings thereon. The cap may be increased if
    required in the interest of justice.
    Section 225. Protection of education savings in bankruptcy
        Section 225(a) amends section 541 of the Bankruptcy Code to
    provide that funds placed not less than 365 days before the
    filing of the bankruptcy case in a education individual
    retirement account are not property of the estate if certain
    criteria are met. First, the designated beneficiary of such
    account must be a child, stepchild, grandchild or step-
    grandchild of the debtor for the taxable year during which
    funds were placed in the account. A legally adopted child or a
    foster child, under certain circumstances, may also qualify as
    a designated beneficiary. Second, such funds may not be pledged
    or promised to an entity in connection with any extension of
    credit and they may not be excess contributions (as described
    in section 4973(e) of the Internal Revenue Code). Third, a
    $5,000 cap applies to funds deposited between 720 days and 365
    days before the filing date. Similar criteria apply with
    respect to funds used to purchase a tuition credit or
    certificate or to funds contributed to a qualified State
    tuition plan under section 529(b)(1)(A) of the Internal Revenue
    Code.
        Section 225(b) requires a debtor to file with the court a
    record of any interest that the debtor has in an education
    individual retirement account or qualified State tuition
    program.
    Section 226. Definitions
        Section 226(a) amends section 101 of the Bankruptcy Code to
    add certain definitions with respect to debt relief agencies.
    Section 226(a)(1) defines an ``assisted person'' as a person
    whose debts consist primarily of consumer debts and whose
    nonexempt assets are less than $150,000. Section 226(a)(2)
    defines ``bankruptcy assistance'' as any goods or services sold
    or otherwise provided with the express or implied purpose of
    giving information, advice, or counsel; preparing documents for
    filing; or attending a meeting of creditors pursuant to section
    341; appearing in a proceeding on behalf of a person; or
    providing legal representation with respect to a case or
    proceeding under the Bankruptcy Code. Section 226(a)(3) defines
    a ``debt relief agency'' as any person (including a bankruptcy
    petition preparer) who provides bankruptcy assistance to an
    assisted person in return for the payment of money or other
    valuable consideration. The definition does not include a
    section 501(c)(3) nonprofit organization, depository
    institution, or Federal credit union which provides assistance
    with respect to restructuring debts. In addition, the
    definition does not apply to an author, publisher, distributor,
    or seller of works subject to copyright protection under title
    17 of the United States Code when acting in such capacity.
        Section 226(b) amends section 104(B)(1) of the Bankruptcy
    Code to permit the monetary amount set forth in the definition
    of an ``assisted person'' to be automatically adjusted to
    reflect the change in the Consumer Price Index.
    Section 227. Restrictions on debt relief agencies
        Section 227 creates a new provision in the Bankruptcy Code
    to prohibit a debt relief agency from engaging in certain
    activities. First, section 227 bars the agency from failing to
    perform any service that it informed an assisted person would
    be provided. Second, this provision prohibits a debt relief
    agency from advising an assisted person to make an untrue or
    misleading statement. Third, it prohibits a debt relief agency
    from misrepresenting the services it provides and the benefits
    that an assisted person may receive as a result of bankruptcy.
    Fourth, section 227 bans a debt relief agency from advising an
    assisted person or prospective assisted person to incur
    additional debt in contemplation of filing for bankruptcy
    relief or for the purpose of paying fees for services rendered
    by an attorney or petition preparer in connection with the
    bankruptcy case. Any waiver by an assisted person of the
    protections under this provision are unenforceable, except
    against a debt relief agency.
        In addition, section 227 imposes penalties for the
    violation of section 526, 527 or 528 of the Bankruptcy Code (as
    enacted by this Act). First, any contract between a debt relief
    agency and an assisted person that does not comply with these
    provisions is void and may not be enforced by any State or
    Federal court or by any person, except an assisted person.
    Second, a debt relief agency is liable to an assisted person,
    under certain circumstances, for any fees or charges paid by
    such person to the agency, actual damages, and reasonable
    attorneys' fees and costs. A chief law enforcement officer of a
    State having reason to believe that a person has violated or is
    violating section 526 may seek to have such violation enjoined
    and recover actual damages arising from such violation. Third,
    section 227 provides that the United States district court has
    concurrent jurisdiction of certain actions under section 526.
    Fourth, section 227 provides that sections 526, 527 and 528
    preempt inconsistent State law. In addition, it provides that
    these provisions do not limit or curtail the authority of a
    Federal court, a State, or a subdivision or instrumentality of
    a State, to determine and enforce qualifications for the
    practice of law before the Federal court or under the laws of
    that State.
    Section 228. Disclosures
        Section 228 mandates that a debt relief agency provide
    certain written notices to an assisted person. These include
    the notice required under section 342(b)(1), as amended by this
    Act, as well as a notice advising that: (1) all information the
    assisted person provides in connection with the case must be
    complete, accurate and truthful; (2) all assets and liabilities
    must be completely and accurately disclosed in the documents
    filed to commence the case, including the replacement value of
    each asset (if required) after reasonable inquiry to establish
    such value; (3) current monthly income, monthly expenses and,
    in a chapter 13 case, disposable income must be stated after
    reasonable inquiry; and (4) information an assisted person
    provides may be audited and that the failure to provide such
    information may result in dismissal of the case or other
    sanction including, in some instances, criminal sanctions. In
    addition, the agency must supply certain specified advisories
    and explanations regarding the bankruptcy process. Further,
    this provision requires the agency to advise an assisted person
    (to the extent permitted under nonbankruptcy law) concerning
    asset valuation, the calculation of disposable income, and the
    determination of exempt property.
    Section 229. Requirements for debt relief agencies
        Section 229 requires a debt relief agency--not later than
    five business days after the first date on which it provides
    any bankruptcy assistance services to an assisted person (but
    prior to such assisted person's petition being filed)--to
    execute a written contract with the assisted person specifying
    clearly and conspicuously the services the agency will provide,
    the basis on which fees will be charged for such services, and
    the terms of payment. The assisted person must be given a copy
    of the fully executed and completed contract in a form the
    person can retain. The debt relief agency must include certain
    specified mandatory statements in any advertisement of
    bankruptcy assistance services or regarding the benefits of
    bankruptcy that is directed to the general public whether
    through the general media, seminars, specific mailings,
    telephonic or electronic messages, or otherwise.
    Section 230. GAO study
        Section 230 directs the Comptroller General of the United
    States to conduct a study of and to report on the feasibility,
    efficacy and cost of requiring a trustee to supply certain
    specified information about a debtor's bankruptcy case to the
    Office of Child Support Enforcement for the purpose of
    determining whether a debtor has outstanding child support
    obligations.

                    TITLE III--DISCOURAGING BANKRUPTCY ABUSE

    Section 301. Reinforcement of the fresh start
        Section 301 makes a clarifying amendment to section
    523(a)(17) of the Bankruptcy Code concerning the
    dischargeability of court fees incurred by prisoners. Section
    523(a)(17) was added to the Bankruptcy Code by the Omnibus
    Consolidated Rescissions and Appropriations Act of 1996 \1\ to
    except from discharge the filing fees and related costs and
    expenses assessed by a court in a civil case or appeal. Because
    of a drafting error, however, this provision might be construed
    to apply to filing fees, costs or expenses incurred by any
    debtor, not solely by those who are prisoners. The amendment
    eliminates the ambiguity and makes other conforming changes to
    narrow its application in accordance with its original intent.
    ---------------------------------------------------------------------------
        \1\ Pub. L. No. 104-134, Section 804(b) (1996).
    ---------------------------------------------------------------------------
    Section 302. Discouraging bad faith repeat filings
        Section 302(a) amends section 362(c) of the Bankruptcy Code
    to terminate the automatic stay within 30 days in a chapter 7,
    11, or 13 case filed by or against an individual if such
    individual was a debtor in a previously dismissed case pending
    within the preceding 1-year period. The provision does not
    apply to a case refiled under a chapter other than chapter 7
    after dismissal of the prior chapter 7 case pursuant to section
    707(b) of the Bankruptcy Code. Upon motion of a party in
    interest, the court may continue the stay after notice and a
    hearing completed prior to the expiration of the 30-day period
    if such party demonstrates that the latter case was filed in
    good faith as to the creditors who are stayed by the filing.
    For purposes of this provision, a case is presumptively not
    filed in good faith as to all creditors if:

            (1) more than one bankruptcy case under chapter 7, 11
            or 13 was previously filed by the debtor within the
            preceding 1-year period;
            (2) the prior chapter 7, 11, or 13 case of the debtor
            was dismissed within the preceding year for the
            debtor's failure to (a) file or amend without
            substantial excuse a document required under the
            Bankruptcy Code or the court, (b) provide adequate
            protection ordered by the court, or (c) perform the
            terms of a confirmed plan; or
            (3) there has been no substantial change in the
            debtor's financial or personal affairs since the
            dismissal of the prior case, or there is no reason to
            conclude that the pending case will conclude either
            with a discharge (if a chapter 7 case) or confirmation
            (if a chapter 11 or 13 case).

        In addition, a case is presumptively deemed filed not in
    good faith as to any creditor who obtained relief from the
    automatic stay in the prior case or sought such relief in the
    prior case and such action was pending at the time of the prior
    case's dismissal. The presumption may be rebutted by clear and
    convincing evidence. A similar presumption applies if two or
    more bankruptcy cases were pending in the 1-year preceding the
    filing of the pending case.
    Section 303. Curbing abusive filings
        Section 303(a) amends section 362(d) of the Bankruptcy Code
    to add a new ground for relief from the automatic stay. It
    provides that cause for relief from the automatic stay may be
    established for a creditor whose claim is secured by an
    interest in real estate, if the court finds that the filing of
    the bankruptcy case was part of a scheme to delay, hinder and
    defraud creditors that involved either (a) a transfer of all or
    part of an ownership interest in real property without such
    creditor's consent or without court approval; or (b) multiple
    bankruptcy filings affecting the real property. If recorded in
    compliance with applicable State law governing notice of an
    interest in or a lien on real property, an order entered under
    this provision is binding in any other bankruptcy case for 2
    years from the date of entry of such order. A debtor in a
    subsequent case may move for relief based upon changed
    circumstances or for good cause shown after notice and a
    hearing. Section 303(a) further provides that any Federal,
    State or local governmental unit that accepts a notice of
    interest or a lien in real property, must accept a certified
    copy of an order entered under this provision.
        Section 303(b) amends section 362(b) of the Bankruptcy Code
    to except from the automatic stay an act to enforce any lien
    against or security interest in real property within 2 years
    following the entry of an order entered under section
    362(d)(4). A debtor, in a subsequent case, may move for relief
    from such order based upon changed circumstances or for other
    good cause shown after notice and a hearing. Section 303(b)
    also provides that the automatic stay does not apply in a case
    where the debtor (a) is ineligible to be a debtor in a
    bankruptcy case pursuant to section 109(g) of the Bankruptcy
    Code; or (b) filed the bankruptcy case in violation of an order
    issued in a prior bankruptcy case prohibiting the debtor from
    being a debtor in a subsequent bankruptcy case.
    Section 304. Debtor retention of personal property security
        Section 304(1) amends section 521(a) of the Bankruptcy Code
    to provide that an individual who is a chapter 7 debtor may not
    retain possession of personal property securing, in whole or in
    part, a purchase money security interest unless the debtor,
    within 45 days after the first meeting of creditors, enters
    into a reaffirmation agreement with the creditor, or redeems
    the property. If the debtor fails to so act within the
    prescribed period, the property is not subject to the automatic
    stay and is no longer property of the estate. An exception
    applies if the court: (a) determines on motion of the trustee
    filed before the expiration of the 45-day period that the
    property has consequential value or would benefit the
    bankruptcy estate; (b) orders adequate protection of the
    creditor's interest; and (c) directs the debtor to deliver any
    collateral in the debtor's possession.
        Section 304(2) amends section 722 to clarify that a chapter
    7 debtor must pay the redemption value in a lump sum payment at
    the time of redemption.
    Section 305. Relief from the automatic stay when the debtor does not
            complete intended surrender of consumer debt collateral
        Section 305(1) amends section 362 of the Bankruptcy Code to
    terminate the automatic stay with respect to personal property
    of the estate or of the debtor in a chapter 7, 11, or 13 case
    that secures a claim (in whole or in part) or is subject to an
    unexpired lease if the debtor fails to:

            (1) file timely a statement of intention as required
            by section 521(a)(2) of the Bankruptcy Code with
            respect to such property;
            (2) indicate in such statement whether the property
            will be surrendered or retained, and if retained,
            whether the debtor will redeem the property or reaffirm
            the debt, or assume an unexpired lease, if the trustee
            does not; and
            (3) undertake timely the actions specified in such
            statement of intention, unless the statement specifies
            reaffirmation and the creditor refuses to enter into
            the reaffirmation agreement on the original contract
            terms.

    In addition to terminating the automatic stay, this provision
    renders such property no longer property of the estate. An
    exception pertains where the court determines, on the motion of
    the trustee made prior to the expiration of the applicable time
    period under section 521(a)(2), and after notice and a hearing,
    that such property is of consequential value or benefit to the
    estate, orders adequate protection of the creditor's interest,
    and directs the debtor to deliver any collateral in the
    debtor's possession.
        Section 305(2) amends section 521 of the Bankruptcy Code to
    make the requirement to file a statement of intention
    applicable to all secured debts, not just secured consumer
    debts. In addition, it requires the debtor to effectuate his or
    her stated intention within 30 days from the first date set for
    the meeting of creditors. If the debtor fails to timely
    undertake certain specified actions with respect to property
    that a lessor or bailor owns and has leased, rented or bailed
    to the debtor, or in which a creditor has a security interest
    (not otherwise avoidable under section 522(f), 544, 545, 547,
    548 or 549 of the Bankruptcy Code), then nothing in the
    Bankruptcy Code shall prevent or limit the operation of a
    provision in a lease or agreement that places the debtor in
    default by reason of the debtor's bankruptcy or insolvency.
    Section 306. Giving secured creditors fair treatment in chapter 13
        Section 306(a) amends section 1325(a)(5)(B)(i) of the
    Bankruptcy Code to require--as a condition of confirmation--
    that a chapter 13 plan provide that a secured creditor retain
    its lien until the earlier of when the underlying debt is paid
    or the debtor receives a discharge. If the case is dismissed or
    converted prior to completion of the plan, the secured creditor
    is entitled to retain its lien to the extent recognized under
    applicable nonbankruptcy law.
        Section 306(b) amends section 1325(a) of the Bankruptcy
    Code to provide that section 506 of the Code does not apply to
    a debt incurred within the 5-year period preceding the filing
    of the bankruptcy case if the debt is secured by a purchase
    money security interest in a motor vehicle acquired for the
    personal use of the debtor. Where the collateral consists of
    any other type of property having value, section 306(b)
    provides that section 506 of the Bankruptcy Code does not apply
    if the debt was incurred during the 1-year period preceding the
    filing of the bankruptcy case.
        Section 306(c)(1) adds to section 101 of the Bankruptcy
    Code a definition of the term, ``debtor's principal
    residence,'' which it defines as a residential structure
    (including incidental property) whether or not such structure
    is attached to real property. The definition includes an
    individual condominium or cooperative unit as well as a mobile
    or manufactured home, and a trailer. Section 306(c)(2) defines
    ``incidental property'' as property commonly conveyed with a
    principal residence in the area where the residence is located.
    The term includes all easements, rights, appurtenances,
    fixtures, rents, royalties, mineral rights, oil or gas rights
    or profits, water rights, escrow funds, and insurance proceeds.
    Further, the term includes all replacements and additions.
    Section 307. Domiciliary requirements for exemptions
        Section 307 amends 522(b)(2)(A) of the Bankruptcy Code to
    extend the time that a debtor must be domiciled in a State
    before he or she may claim that State's exemptions. If the
    debtor's domicile was not located in a single State for the
    730-day period, then the State where the debtor was domiciled
    in the 180-day period preceding the 730-day period (or the
    longer portion of such 180-day period) controls.
    Section 308. Residency requirements for homestead exemption
        Section 308 amends section 522 of the Bankruptcy Code to
    reduce the value of a debtor's interest in the following
    property that may be claimed as exempt under certain
    circumstances: (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. Where
    nonexempt property is converted to the above-specified exempt
    property within the 7-year period preceding the filing of the
    bankruptcy case, the exemption must be reduced to the extent
    such value was acquired with the intent to hinder, delay or
    defraud a creditor.
    Section 309. Protection secured creditors in chapter 13 cases
        Section 309(a) amends section 348(f)(1) of the Bankruptcy
    Code to specify that valuations of property and allowed secured
    claims in a chapter 13 case only apply if the case is
    subsequently converted to one under chapter 11 or 12. If the
    chapter 13 case is converted to one under chapter 7, then the
    creditor holding security as of the petition date shall
    continue to be secured unless its claim was paid in full as of
    the conversion date. In addition, unless a prebankruptcy
    default has been fully cured at the time of conversion, then
    the default in any bankruptcy proceeding shall have the effect
    given under applicable nonbankruptcy law.
        Section 309(b) amends section 365 of the Bankruptcy Code to
    provide that if a lease of personal property is rejected or not
    timely assumed by the trustee, the leased property is no longer
    property of the estate and the automatic stay under section 362
    is terminated. With regard to a chapter 7 case of an individual
    debtor, the debtor may notify the creditor in writing of his or
    her desire to assume the lease. Upon being so notified, the
    creditor may, at its option, inform the debtor that it is
    willing to have the lease assumed and condition such assumption
    on cure of any outstanding default on terms set by the
    contract. If within 30 days after such notice the debtor
    notifies the lessor in writing that the lease is assumed, the
    debtor (not the bankruptcy estate) assumes the liability under
    the lease. Section 309(b) provides that the automatic stay of
    section 362 and the discharge injunction of section 524 are not
    violated if the creditor notifies the debtor and negotiates a
    cure under section 365(p)(2) (as codified by this Act).
        In an individual chapter 11 or 13 case where the debtor is
    the lessee with respect to personal property and the lease is
    not assumed in the confirmed plan, the lease is deemed rejected
    as of the conclusion of the confirmation hearing. If the lease
    is rejected, the automatic stay under section 362 as well as
    the chapter 13 codebtor stay under section 1301 are
    automatically terminated with respect to such property.
        Section 309(c)(1) amends section 1325(a)(5)(B) of the
    Bankruptcy Code to require that periodic payments pursuant to a
    chapter 13 plan with respect to a secured claim be made in
    equal monthly installments and that the amount of such payments
    shall not be less than the amount sufficient to provide
    adequate protection to the holder of such claim.
        Section 309(c)(2) amends section 1326(a) of the Bankruptcy
    Code to require a chapter 13 debtor to commence making payments
    within 30 days after the filing of the plan or the order for
    relief, whichever is earlier. The amount of such payment must
    be the amount proposed in the plan, scheduled in a personal
    property lease for that portion of the obligation that becomes
    due postpetition (which amount shall reduce the payment
    required to be made to such lessor pursuant to the plan), and
    provides adequate protection directly to a creditor holding an
    allowed claim secured by personal property to the extent the
    claim is attributable to the purchase of such property (which
    amount shall reduce the payment required to be made to such
    secured creditor pursuant to the plan). Payments made pursuant
    to a plan must be retained by the chapter 13 trustee until
    confirmation or denial of confirmation. Section 309(c)(2)
    provides that if the plan is confirmed, the trustee must
    distribute payments received from the debtor as soon as
    practicable in accordance with the plan. If the plan is not
    confirmed, the trustee must return to the debtor payments not
    yet due and owing to creditors. Pending confirmation and
    subject to section 363, the court, after notice and a hearing,
    may modify the payments required under this provision. Section
    309(c)(2) requires the debtor, within 60 days following the
    filing of the bankruptcy case, to provide reasonable evidence
    of any required insurance coverage with respect to the use or
    ownership of leased personal property or property securing, in
    whole or in part, a purchase money security interest.
    Section 310. Limitation on luxury goods
        Section 310 amends section 523(a)(2)(C) of the Bankruptcy
    Code to establish a presumption that consumer debts owed to a
    single creditor and aggregating more than $250 for luxury goods
    or services incurred by an individual debtor within 90 days
    before the order for relief are nondischargeable. With respect
    to cash advances aggregating more than $750 that are extensions
    of consumer credit under an open-end credit plan obtained by an
    individual debtor within 70 days prepetition, section 310
    establishes a presumption that these debts are
    nondischargeable. 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. In addition, ``an extension of consumer credit under an
    open-end credit plan'' has the same meaning as it has under the
    Consumer Credit Protection Act.
    Section 311. Automatic stay
        Section 311 amends section 362(b) of the Bankruptcy Code to
    except the following proceedings from the automatic stay:

            (1) the continuation of any eviction, unlawful
            detainer action, or similar proceeding by a lessor
            against a debtor involving residential real property
            where the debtor resides as a tenant under a rental
            agreement;
            (2) the commencement of any eviction, unlawful
            detainer action, or similar proceeding by a lessor
            against a debtor involving residential real property
            where the debtor resides as a tenant under a rental
            agreement that has terminated pursuant to the lease
            agreement or applicable State law; and
            (3) an eviction action based on endangerment to
            property or person, or the use of illegal drugs.

        Section 311 also excepts from the automatic stay a transfer
    that is not avoidable under section 544 and that is not
    avoidable under section 549 of the Bankruptcy Code. This
    amendment responds to a 1997 Ninth Circuit case,\2\ in which
    two purchase money lenders (without knowledge that the debtor
    had recently filed an undisclosed chapter 11 case that was
    later converted to chapter 7), funded the debtor's acquisition
    of an apartment complex and recorded their purchase-money deed
    of trust immediately following recordation of the deed to the
    debtors. Specifically, it amends the definition of ``transfer''
    to include the ``creation of a lien.'' This amendment gives
    expression to a widely held understanding that a transfer
    includes the creation of a lien.
    ---------------------------------------------------------------------------
        \2\ Thompson v. Margen (In re McConville), 110 F.3d 47 (9th Cir.
    1997). The bankruptcy trustee sought to avoid the lien created by the
    lenders' deed of trust by asserting that the deed was an unauthorized,
    postpetition transfer under section 549(a) of the Bankruptcy Code. The
    lenders claimed that the voluntary transfer to them was a transfer of
    real property to good faith purchasers for value, which thereby
    excepted it, under section 549(c) of the Bankruptcy Code, from
    avoidance. The bankruptcy court held that: the postpetition recordation
    of the lenders' deed of trust was without authorization under the
    Bankruptcy Code or by the court and was therefore avoidable under
    section 549(a) and that the lenders did not qualify under the section
    549(c) exception as good faith purchasers of real property for value.
    The District Court subsequently affirmed the bankruptcy court's ruling
    granting the trustee the authority to avoid the lenders' lien.
    McConville v. David Margen and Lawton Associates (In re McConville),
    No. C 94-3308, 1994 U.S. Dist. LEXIS 18095 (N.D. Cal. Dec. 14, 1994).
    On appeal, the lower court's decision in McConville was initially
    affirmed. Thompson v. Margen (In re McConville), 84 F.3d 340 (9th Cir.
    1996). The Ninth Circuit, however, subsequently issued an amended
    opinion, also affirming the lower court, Thompson v. Margen (In re
    McConville), 97 F.3d 316 (9th Cir. 1996), and finally issued an opinion
    withdrawing its prior opinion and deciding the case on other grounds.
    It held that by obtaining secured credit from the lenders after filing
    but before the appointment of a trustee, the debtors violated their
    fiduciary responsibility to their creditors. Thompson v. Margen (In re
    McConville), 110 F.3d 47 (9th Cir. 1997).
    ---------------------------------------------------------------------------
    Section 312. Extension of period between bankruptcy discharges
        Section 312(1) amends section 727(a)(8) of the Bankruptcy
    Code to extend the period before which a chapter 7 debtor may
    receive a subsequent chapter 7 discharge from six to 8 years.
    Section 312(2) amends section 1328 to prohibit the issuance of
    a discharge in a subsequent chapter 13 case if the debtor
    received a discharge in a prior bankruptcy case within 5 years
    preceding the filing of the subsequent chapter 13 case.
    Section 313. Definition of household goods and antiques
        Section 313(a) amends section 522(f) of the Bankruptcy Code
    to codify a modified version of the Federal Trade Commission's
    definition of ``household goods'' for purposes of the avoidance
    of a nonpossessory, nonpurchase money lien in such property.
    Section 313(b) requires the Director of the Executive Office
    for United States Trustees to prepare a report containing
    findings with respect to the use of this definition under
    section 522(f)(4). The report may include recommendations for
    amendments to section 522(f)(4).
    Section 314. Debt incurred to pay nondischargeable debts
        Section 314(a) amends section 523(a) of the Bankruptcy Code
    to make a debt incurred to pay a nondischargeable tax owed to a
    governmental unit (other than a tax owed to the United States)
    nondischargeable as well.
        Section 314(b) amends section 1328(a) of the Bankruptcy
    Code to make the following additional debts nondischargeable in
    a chapter 13 case:

            (1) debts for money, property, services, or extensions
            of credit obtained through fraud or by a false
            statement in writing under section 523(a)(2)(A) and (B)
            of the Bankruptcy Code;
            (2) consumer debts owed to a single creditor that
            aggregate to more than $250 for luxury goods or
            services incurred by an individual debtor within 90
            days before the filing of the bankruptcy case, and cash
            advances aggregating more than $750 that are extensions
            of consumer credit obtained by a debtor under an open-
            end credit plan within 70 days before the order for
            relief under section 523(a)(2)(C) (as amended by this
            Act);
            (3) pursuant to section 523(a)(3) of the Bankruptcy
            Code, debts that require timely request for a
            dischargeability determination, if the creditor lacks
            notice or does not have actual knowledge of the case in
            time to make such request;
            (4) debts resulting from fraud or defalcation by the
            debtor acting as a fiduciary under section 523(a)(4) of
            the Bankruptcy Code;
            (5) debts for restitution or damages, awarded in a
            civil action against the debtor as a result of willful
            or malicious conduct by the debtor that caused personal
            injury to an individual or the death of an individual.
    Section 315. Giving creditors fair notice in chapters 7 and 13 cases
        Section 315(a) amends section 342 of the Bankruptcy Code in
    several respects. First, it deletes the provision specifying
    that the failure of a notice to include certain information
    required to be given by a debtor to a creditor does not
    invalidate the notice's legal effect. Second, it mandates that
    a debtor send any notice required under the Bankruptcy Code to
    the address specified by the creditor and to include on such
    notice the account number, if within 90 days prior to the date
    that the debtor filed for bankruptcy relief the creditor sent
    at least two communications to the debtor specifying such
    account number and address. If the creditor would be in
    violation of applicable nonbankruptcy law by sending any such
    communication during this time period, then the debtor must
    send the notice to the address provided by the creditor stated
    in the last two communications containing the creditor's
    address and such notice shall include the current account
    number. Third, it permits a creditor in a chapter 7 or 13 case
    of an individual debtor to file with the court and serve on the
    debtor the address to be used to notify such creditor in that
    case. Five days after receipt of such notice, the court or
    debtor must use the address so specified for noticing such
    creditor. Fourth, section 315(a) specifies that if an entity
    files a notice with the court stating an address to be used
    generally in chapter 7 and chapter 13 cases, this address must
    be used by the court for such cases within 30 days following
    the filing of such notice. Fifth, it provides that any notice
    shall not be effective until it has been brought to the
    creditor's attention. If the creditor has designated an entity
    to be responsible for receiving notices concerning bankruptcy
    cases and has established reasonable procedures so that these
    notices will be delivered to such entity, a notice will not be
    deemed to have been received by the creditor until it has been
    received by such entity. Sixth, it prohibits the imposition of
    any sanction for violation of the automatic stay or for the
    failure to comply with the Bankruptcy Code's turnover
    provisions in sections 542 and 543 if a creditor has not
    received proper notice.
        Section 315(b)(1) amends section 521 to require the debtor
    to file a certificate executed by the debtor's attorney or
    bankruptcy petition preparer stating that the attorney or
    preparer supplied the debtor with the notice required under
    section 342(b) (as amended by this Act). If the debtor is pro
    se and did not use the services of a bankruptcy petition
    preparer, then the debtor must sign a certificate stating that
    he or she obtained and read such notice. In addition, the
    debtor must file:
        (1) copies of all payment advices or other evidence of
    payment from any employer within 60 days preceding the
    bankruptcy filing;
        (2) a statement of the amount of monthly net income,
    itemized to show how such amount is calculated; and
        (3) a statement disclosing any reasonably anticipated
    increase in income or expenditures in the 12-month period
    following the date of filing.
        Upon request of a creditor, section 315(b)(2) requires the
    court to make the petition, schedules, and statement of
    financial affairs of an individual who is a chapter 7 or
    chapter 13 debtor available to such creditor. In addition, it
    requires the debtor to provide either a copy of his or her tax
    return or transcript (at the election of the debtor) for the
    latest taxable period prior to the filing of the bankruptcy
    case for which a tax return has been or should have been filed
    to the trustee not later than 7 days before the date first set
    for the first meeting of creditors. The debtor's failure to
    comply requires dismissal of the case unless the debtor
    demonstrates that such failure was due to circumstances beyond
    the debtor's control. If a creditor has requested a copy of the
    tax return or transcript, the debtor must provide such document
    to the creditor at the time the debtor supplies the return or
    transcript to the trustee. Should the debtor fail to comply
    with this requirement, the case must be dismissed, unless the
    debtor demonstrates that such failure is due to circumstances
    beyond the debtor's control. A creditor in a chapter 13 case
    may, at any time, file a notice with the court requesting a
    copy of the plan. The court must supply a copy of the chapter
    13 plan at a reasonable cost not later than 5 days after such
    request.
        At the time filed with the taxing authority, an individual
    debtor in a case under chapter 7, 11 or 13 must file copies of
    tax returns (including any schedules or attachments) with the
    court at the request of any party in interest during the
    pendency of the case. This requirement pertains to all tax
    returns (including any schedules or attachments) that were not
    filed for the 3-year period preceding the date on which the
    order for relief was entered. In addition, the debtor must file
    copies of any amendments to such tax returns.
        In a chapter 13 case, the debtor must file a statement,
    under penalty of perjury, of income and expenditures in the
    preceding tax year and monthly income showing how the amounts
    were calculated. The statement must be filed 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. Thereafter, the statement must be filed on or
    before the date that is 45 days before the anniversary date of
    the plan's confirmation, until the case is closed. The
    statement must disclose the amount and sources of the debtor's
    income, the identity of any persons responsible with the debtor
    for the support of the debtor's dependents, the identity of any
    persons who contributed to the debtor's household expenses, and
    the amount of any such contributions.
        Section 315(b)(2) mandates that the tax returns, amendments
    thereto, and the statement of income and expenditures of an
    individual who is a chapter 7 or chapter 13 debtor be made
    available to the United States trustee or bankruptcy
    administrator, the trustee, and any party in interest for
    inspection and copying, subject to procedures established by
    the Director of the Administrative Office for United States
    Courts within 180 days from the Act's enactment date. The
    procedures must safeguard the confidentiality of any tax
    information required under this provision and include
    restrictions on creditor access to such information. In
    addition, the Director must, within 1 year and 180 days from
    the Act's enactment date, prepare and submit to the Congress a
    report that assesses the effectiveness of such procedures and,
    if appropriate, includes recommendations for legislation to
    further protect the confidentiality of such tax information and
    to impose penalties for its improper use.
        If requested by the United States trustee or trustee, the
    debtor must provide a document establishing the debtor's
    identity, which may include a driver's license, passport, or
    other document containing a photograph of the debtor, and such
    other personal identifying information relating to the debtor.
    Section 316. Dismissal for failure to timely file schedules or provide
            required information
        Section 316 amends section 521 of the Bankruptcy Code to
    provide that if an individual debtor in a voluntary chapter 7
    or chapter 13 case fails to file all of the information
    required under section 521(a)(1) within 45 days of the date on
    which the case is filed, the case must be automatically
    dismissed, effective on the 46th day. The 45-day period may be
    extended for an additional 45-day period providing the debtor
    requests such extension prior to the expiration of the original
    45-day period and the court finds justification for such
    extension. Upon request of a party in interest, the court must
    enter an order of dismissal within 5 days of such request.
    Section 317. Adequate time to prepare for hearing on confirmation of
            the plan
        Section 317 amends section 1324 of the Bankruptcy Code to
    require the chapter 13 confirmation hearing to be held not
    earlier than 20 days following the first date set for the
    meeting of creditors and not later than 45 days from this date.
    Section 318. Chapter 13 plans to have a 5-year duration in certain
            cases
        Section 318(1) amends section 1322(d) to specify that a
    chapter 13 plan may not provide for payments over a period that
    is longer than 5 years if the current monthly income of the
    debtor and the debtor's spouse (when multiplied by 12) is not
    less than the applicable State median family income last
    reported by the Census Bureau for a family of equal or lesser
    size. For a household of one person, the income threshold is
    the applicable State median family income for one earner.
    Section 318(1) adjusts the income threshold for households with
    more than four individuals. If the income of the debtor and the
    debtor's spouse fall below this threshold, then the duration of
    the plan may not be longer than 3 years, unless the court, for
    cause, approves a longer period up to 5 years. Section 318(2),
    (3), and (4) make conforming amendments to section 1325(b) and
    1329(c) of the Bankruptcy Code.
    Section 319. Sense of Congress regarding expansion of rule 9011 of the
            Federal Rules of Bankruptcy Procedure
        Section 319 expresses a sense of the Congress that rule
    9011 of the Federal Rules of Bankruptcy Procedure be modified
    to require that all signed and unsigned documents, including
    schedules, supplied to the court or the trustee by a debtor be
    submitted only after the debtor or the debtor's attorney has
    made reasonable inquiry to verify that the information
    contained in such documents is well grounded in fact and
    warranted by existing law or a good faith argument for the
    extension, modification, or reversal of existing law.
    Section 320. Prompt relief from stay in individual cases
        Section 320 amends section 362(e) of the Bankruptcy Code to
    terminate the automatic stay in a chapter 7, 11 or 13 case of
    an individual debtor within 60 days following a request for
    relief from the stay, unless the bankruptcy court renders a
    final decision prior to the expiration of the 60-day time
    period, such period is extended pursuant to agreement of all
    parties in interest, or a specific extension of time is
    required for good cause as described in findings made by the
    court.
    Section 321. Chapter 11 cases filed by individuals
        Section 321(a)(1) creates a new provision under chapter 11
    of the Bankruptcy Code specifying that property of the estate
    of an individual debtor includes, in addition to that
    identified in section 541 of the Bankruptcy Code, all property
    of the kind described in section 541 that the debtor acquires
    after commencement of the case, but before the case is closed,
    dismissed or converted to a case under chapter 7, 12 or 13
    (whichever occurs first). In addition, it includes earnings
    from services performed by the debtor after commencement of the
    case, but before the case is closed, dismissed or converted to
    a case under chapter 7, 12 or 13. Except as provided in section
    1104 of the Bankruptcy Code or the order confirming a chapter
    11 plan, section 321(a) provides that the debtor remains in
    possession of all property of the estate.
        Section 321(b) amends section 1123 to require the chapter
    11 plan of an individual debtor to provide for the payment to
    creditors of all or such portion of the debtor's earnings from
    personal services performed after commencement of the case or
    other future income that is necessary for the plan's execution.
        Section 321(c) amends section 1129(a) to include an
    additional requirement for confirmation in a chapter 11 case of
    an individual debtor upon objection to confirmation by a holder
    of an allowed unsecured claim. In such instance, the value of
    property to be distributed under the plan (1) on account of
    such claim, as of the plan's effective date, must not be less
    than the amount of such claim; or (2) is not less than the
    debtor's projected disposable income (as defined in section
    1325(b)(2)) to be received during the 5-year period beginning
    on the date that the first payment is due under the plan or
    during the plan's term, whichever is longer. Section 321(c)
    also amends section 1129(b)(2)(B)(ii) of the Bankruptcy Code to
    provide that an individual chapter 11 debtor may retain
    property included in the estate under section 1115 (as codified
    by the Act), subject to section 1129(a)(14).
        Section 321(d)(1) amends section 1141(d) to provide that
    debts under section 523 of the Bankruptcy Code are
    nondischargeable in a chapter 11 case. Section 321(d)(2)
    provides that in the chapter 11 case of an individual debtor,
    the debtor is not discharged until all plan payments have been
    made. The court may grant a hardship discharge if the value of
    property actually distributed under the plan--as of the plan's
    effective date--is not less than the amount that would have
    been available for distribution if the case was liquidated
    under chapter 7 on such date, and modification of the plan is
    not practicable.
        Section 321(e) amends section 1127 to permit a plan in a
    chapter 11 case of an individual debtor to be modified
    postconfirmation for the purpose of increasing or reducing the
    amount of payments, extending or reducing the time period for
    such payments, or altering the amount of distribution to a
    creditor whose claim is provided for by the plan. Such
    modification may be made at any time on request of the debtor,
    trustee, United States trustee, or holder of an allowed
    unsecured claim, if the plan has not been substantially
    consummated. The provision specifies that sections 1121 through
    1129 apply to such modification. In addition, it provides that
    the modified plan shall become the confirmed plan only if: (a)
    there has been disclosure pursuant to section 1125 (as the
    court directs); (b) notice and a hearing; and (c) such
    modification is approved.
    Section 322. Limitation
        Section 322(a) amends section 522 of the Bankruptcy Code to
    impose an aggregate monetary limitation of $100,000, subject to
    sections 544 and 548, on the value of property that the debtor
    may claim as exempt under State or local law pursuant to
    section 522(b)(3)(A) under certain circumstances. The monetary
    cap applies if the debtor acquired such property within the 2-
    year period preceding the filing of the petition and the
    property consists of any of the following: (a) real or personal
    property of the debtor or that a dependent of the debtor uses
    as a residence; (b) an interest in a cooperative that owns
    property, which the debtor or the debtor's dependent uses as a
    residence; or (c) a burial plot for the debtor or the debtor's
    dependent. This limitation does not apply to a principal
    residence claimed as exempt by a family farmer. In addition,
    the limitation does not apply to any interest transferred from
    a debtor's principal residence (which was acquired prior to the
    beginning of the 2-year period) to the debtor's current
    principal residence, if both the previous and current
    residences are located in the same State.
        Section 322(b) makes the monetary limitation set forth in
    section 322(a) subject to automatic adjustment pursuant to
    section 104 of the Bankruptcy Code.
        Section 323. Excluding employee benefit plan participant
    contributions and other property from the estate
        Section 323(a) amends section 541(b) of the Bankruptcy Code
    to exclude as property of the estate funds withheld or received
    by an employer from its employees' wages for payment as
    contributions to specified employee retirement plans, deferred
    compensation plans, and tax-deferred annuities. Such
    contributions do not constitute disposable income as defined in
    section 1325(b)(2) of the Bankruptcy Code. Section 323(a) also
    excludes as property of the estate funds withheld by an
    employer from the wages of its employees for payment as
    contributions to health insurance plans regulated by State law.
        Section 323(b) specifies that the amendments made by this
    provision do not apply to bankruptcy cases commenced prior to
    the expiration of the 180-day period beginning on the Act's
    enactment date.
    Section 324. Exclusive jurisdiction in matters involving bankruptcy
            professionals
        Section 324 amends section 1334 of title 28 of the United
    State Code to give a district court exclusive jurisdiction of
    all claims or causes of action involving the construction of
    section 327 of the Bankruptcy Code and rules relating to
    disclosure requirements under such provision.
    Section 325. United States Trustee Program filing fee increase
        Section 325(a) amends section 1930(a) of title 28 of the
    United States Code to increase the filing fees for chapter 7
    and chapter 13 cases respectively to $160 and $150. Subsections
    325(b) and (c) amend section 589a of title 28 of the United
    States Code and section 406(b) of the Judiciary Appropriations
    Act of 1990 to increase the percentage of the fees collected
    under section 1930 of title 28 of the United States Code that
    are paid to the United States Trustee System Fund.
    Section 326. Sharing of compensation
        Section 326 amends section 504 of the Bankruptcy Code to
    create a limited exception to the prohibition against fee
    sharing. The provision allows the sharing of compensation with
    bona fide public service attorney referral programs that
    operate in accordance with non-federal law regulating attorney
    referral services and with professional responsibility rules
    applicable to attorney acceptance of referrals.
    Section 327. Fair valuation of collateral
        Section 327 amends section 506(a) to provide that the value
    of an allowed claim secured by personal property that is an
    asset in an individual debtor's chapter 7 or chapter 13 case is
    determined based on the replacement value of such property as
    of the filing date of the bankruptcy case without deduction for
    costs of sale or marketing. With respect to property acquired
    for personal, family, or household purposes, replacement value
    is the price a retail merchant would charge for property of
    that kind considering the age and condition of the property at
    the time its value is determined.
    Section 328. Defaults based on nonmonetary obligations
        Section 328(a)(1) amends section 365(b) to provide that a
    trustee does not have to cure a default that is a breach of a
    provision (other than a penalty rate or penalty provision)
    relating to a default arising from any failure to perform a
    nonmonetary obligation under an unexpired lease of real
    property, if it is impossible for the trustee to cure the
    default by performing such nonmonetary act at and after the
    time of assumption. If the default arises from a failure to
    operate in accordance with a nonresidential real property
    lease, the default must be cured by performance at and after
    the time of assumption in accordance with the lease. Pecuniary
    losses resulting from such default must be compensated pursuant
    to section 365(b)(1). In addition, section 328(a)(1) amends
    section 365(b)(2)(D) to clarify that it applies to penalty
    provisions.
        Section 328(a)(2) through (4) make technical revisions to
    section 365(c), (d) and (f) by deleting language that is no
    longer effective pursuant to the Rail Safety Enforcement and
    Review Act.\3\
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        \3\ Pub. L. No. 102-365.
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        Section 328(b) amends section 1124(2)(A) of the Bankruptcy
    Code to clarify that a claim is not impaired if section
    365(b)(2) (as amended by this Act) expressly does not require a
    default with respect to such claim to be cured. In addition, it
    provides that any claim or interest that arises from the
    failure to perform a nonmonetary obligation (other than a
    default arising from the failure to operate a nonresidential
    real property lease subject to section 365(b)(1)(A)), is
    impaired unless the holder of such claim or interest (other
    than the debtor or an insider) is compensated for any actual
    pecuniary loss incurred by the holder as a result of such
    failure.

           TITLE IV. GENERAL AND SMALL BUSINESS BANKRUPTCY PROVISIONS

               SUBTITLE A. GENERAL BUSINESS BANKRUPTCY PROVISIONS

    Section 401. Adequate protection for investors
        Section 401(a) amends section 101 of the Bankruptcy Code to
    define ``securities self regulatory organization'' as a
    securities association or national securities exchange
    registered with the Securities and Exchange Commission.
        Section 401(b) amends section 362 of the Bankruptcy Code to
    except from the automatic stay certain enforcement actions by a
    securities self regulatory organization.
    Section 402. Meetings of creditors and equity security holders
        Section 402 amends section 341 of the Bankruptcy Code to
    permit a court, on request of a party in interest and after
    notice and a hearing, to order the United States trustee to not
    convene a meeting of creditors or equity security holders if a
    chapter 11 debtor has filed a plan for which the debtor
    solicited acceptances prior to the commencement of the case.
    Section 403. Protection of refinance of security interest
        Section 403 amends section 547(e)(2) of the Bankruptcy Code
    to increase the perfection period from 10 to 30 days for the
    purpose of determining whether such transfer is an avoidable
    preferential transfer.
    Section 404. Executory contracts and unexpired leases
        Section 404(a) amends section 365(d)(4) of the Bankruptcy
    Code to establish more finite deadlines by which an unexpired
    lease of nonresidential real property must be assumed or
    rejected. It provides that such lease shall be deemed rejected
    if the trustee fails to assume it by the earlier of 120 days
    after the date of the order for relief or the date on which an
    order of confirmation is entered. The court may extend this
    time period for an additional 90 days on motion of the trustee
    or lessor for cause. If such extension is granted, the court
    may permit a subsequent extension only upon the lessor's
    written consent.
        Section 404(b) amends section 365(f)(1) to make a trustee's
    authority to assign an executory contract or unexpired lease
    subject to section 365(b), amended by the Act.
    Section 405. Creditors and equity security holders committees
        Section 405(a) amends section 1102(a)(2) to permit, after
    notice and a hearing, a bankruptcy court, on its own motion or
    on motion of a party in interest, to order a change in a
    committee's membership to ensure adequate representation of
    parties in a case. In addition, it specifies that the court may
    direct the United States trustee to increase the membership of
    a committee for the purpose of including a small business
    concern if the court determines that such creditor's claim is
    of the kind represented by the committee and that, in the
    aggregate, is disproportionately large when compared to the
    creditor's annual gross revenue.
        Section 405(b) requires the committee to allow creditors
    having claims of the kind represented by the committee access
    to information. In addition, the committee must solicit and
    receive comments from these creditors and, pursuant to court
    order, make additional reports or disclosures available to
    them.
    Section 406. Amendment to section 546 of title 11, United States Code
        Section 406(1) corrects an erroneous subsection designation
    in section 546 of the Bankruptcy Code. Section 406(2) amends
    section 546 to provide that a trustee may not avoid a warehouse
    lien for storage, transportation, or other costs incidental to
    the storage and handling of goods. In addition, it specifies
    that this prohibition must be applied in a manner consistent
    with any applicable State statute that is similar to section 7-
    209 of the Uniform Commercial Code.
    Section 407. Amendments to section 330(a) of title 11, United States
            Code
        Section 407 amends section 330(a)(3) of the Bankruptcy Code
    to clarify that this provision applies to examiners, chapter 11
    trustees, and professional persons. This section also amends
    section 330(a) to add a provision that requires a court, in
    determining the amount of reasonable compensation to award to a
    trustee, to treat such compensation as a commission pursuant to
    section 326 of the Bankruptcy Code.
    Section 408. Postpetition disclosure and solicitation
        Section 408 amends section 1125 of the Bankruptcy Code to
    permit an acceptance or rejection of a chapter 11 plan to be
    solicited from the holder of a claim or interest if the holder
    was solicited before the commencement of the case in a manner
    that complied with applicable nonbankruptcy law.
    Section 409. Preferences
        Section 409(1) amends section 547(c)(2) of the Bankruptcy
    Code to provide that a trustee may not avoid a transfer to the
    extent the transfer was in payment of a debt incurred by the
    debtor in the ordinary course of the business or financial
    affairs of the debtor and the transferee and such transfer was
    either made (1) in the ordinary course of the debtor's
    financial affairs or business, or (2) in accordance with
    ordinary business terms. Present law requires the recipient of
    a preferential transfer to establish both of these grounds in
    order to sustain a defense to a preferential transfer
    proceeding. In a case that does not have primarily consumer
    debts, section 409 provides that a transfer may not be avoided
    if the aggregate amount of all property constituting or
    affected by the transfer is less than $5,000.
    Section 410. Venue of certain proceedings
        Section 410 amends section 1409(b) of title 28 of the
    United States Code to provide that a preferential transfer
    action in the amount of $10,000 or less must be filed in the
    district where the defendant resides. This amount is presently
    fixed at $1,000.
    Section 411. Period for filing plan under chapter 11
        Section 411 amends section 1121(d) of the Bankruptcy Code
    to mandate 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. In addition, it 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 412. Fees arising from certain ownership interests
        Section 412 amends section 523(a)(16) of the Bankruptcy
    Code to broaden the protections accorded to community
    associations with respect to fees or assessments arising from
    the debtor's interest in a condominium, cooperative or
    homeowners' association. Irrespective of whether or not the
    debtor physically occupies such property, any fees or
    assessments that accrue during the period the debtor or the
    trustee has a legal, equitable, or possessory ownership
    interest in such property are nondischargeable.
    Section 413. Creditor representation at first meeting of creditors
        Section 413 amends section 341(c) of the Bankruptcy Code to
    permit a creditor holding a consumer debt or any representative
    of such creditor to appear and participate at the meeting of
    creditors in chapter 7 and chapter 13 cases either alone or in
    conjunction with an attorney. In addition, the provision
    clarifies that it cannot be construed to require a creditor to
    be represented by counsel at any meeting of creditors.
    Section 414. Definition of disinterested person
        Section 414 amends section 101(14) of the Bankruptcy Code
    to eliminate the requirement that an investment banker be a
    disinterested person.
    Section 415. Factors for compensation of professional persons
        Section 415 amends section 330(a)(3) of the Bankruptcy Code
    to permit the court to consider, in awarding compensation,
    whether the person is board certified or otherwise has
    demonstrated skill and experience in the practice of bankruptcy
    law.
    Section 416. Appointment of elected trustee
        Section 416 refines existing law by clarifying the
    procedure for the election of a private trustee in a chapter 11
    case. Section 1104(b) of the Bankruptcy Code permits creditors
    to elect an eligible, disinterested person to serve as the
    trustee in the case, provided certain conditions are met.
    Section 416 adds a provision to section 1104(b) requiring the
    United States trustee to file a report certifying the election
    of a chapter 11 trustee. Upon the filing of the report, the
    elected trustee is deemed to be selected and appointed for
    purposes of section 1104 and the service of any prior trustee
    appointed in the case is terminated. Section 416 also clarifies
    that the court shall resolve any dispute arising out of a
    chapter 11 trustee election.
    Section 417. Utility service
        Section 417 amends section 366 of the Bankruptcy Code to
    provide that assurance of payment, for purposes of this
    provision, includes a cash deposit, letter of credit,
    certificate of deposit, surety bond, prepayment of utility
    consumption, or other form of security that is mutually agreed
    upon by the debtor or trustee and the utility. It also
    specifies that an administrative expense priority does not
    constitute an assurance of payment.
        With respect to chapter 11 cases, section 417 permits a
    utility to refuse or discontinue service if it does not receive
    adequate assurance of payment within 30 days of the filing of
    the petition that is satisfactory to the utility. The court,
    upon request of a party in interest, may modify the amount of
    this payment after notice and a hearing. In determining the
    adequacy of such payment, section 417 prevents a court from
    taking into consideration (1) the absence of security before
    the case was filed; (2) the debtor's timely payment of utility
    service charges before the case was filed; or (3) the
    availability of an administrative expense priority.
    Notwithstanding any other provision of law, section 417 permits
    a utility to recover or set off against a security deposit
    provided prepetition by the debtor to the utility without
    notice or court order.
    Section 418. Bankruptcy fees
        Section 418 amends section 1930 of title 28 of the United
    States Code to permit a district court or a bankruptcy court,
    pursuant to procedures prescribed by the Judicial Conference of
    the United States, to waive the chapter 7 filing fee for an
    individual and certain other fees under subsections (b) and (c)
    of section 1930 if such individual's income is less than 150
    percent of the official poverty level (as defined by the Office
    of Management and Budget) and the individual is unable to pay
    such fee in installments. Section 418 also clarifies that
    section 1930, as amended, does not prevent a district or
    bankruptcy court from waiving other fees for creditors and
    debtors, if in accordance with Judicial Conference policy.
    Section 419. More complete information regarding assets of the estate
        Section 419 requires the Advisory Committee on Bankruptcy
    Rules, after consideration of the views of the Director of the
    Executive Office for United States Trustees, to propose
    official rules and forms directing chapter 11 debtors to
    disclose information concerning the value, operations, and
    profitability of any closely held corporation, partnership, or
    other entity in which the debtor holds a substantial or
    controlling interest. This provision is intended to ensure that
    the debtor's interest in any of these entities is used for the
    payment of allowed claims against the debtor.

                SUBTITLE B. SMALL BUSINESS BANKRUPTCY PROVISIONS

    Section 431. Flexible rules for disclosure statement and plan
        Section 431 is intended to streamline the disclosure
    statement process and to provide for more flexibility. Section
    431(1) amends section 1125(a)(1) of the Bankruptcy Code to
    require a bankruptcy court, in determining whether a disclosure
    statement supplies adequate information, to consider the
    complexity of the case, the benefit of additional information
    to creditors and other parties in interest, and the cost of
    providing such additional information.
        With regard to a small business case, section 431(2) amends
    section 1125(f) to provide that if the plan itself supplies
    adequate information, a separate disclosure statement may not
    be required. In addition, it provides that the court may
    approve a disclosure statement submitted on standard forms
    approved by the court or adopted under section 2075 of title 28
    of the United States Code. Further, section 431(2) provides
    that the court may conditionally approve a disclosure
    statement, subject to final approval after notice and a
    hearing, and allow the debtor to solicit acceptances of the
    plan based on such disclosure statement. The hearing on the
    disclosure statement may be combined with the confirmation
    hearing.
    Section 432. Definitions
        Section 432 amends section 101 of the Bankruptcy Code to
    define a ``small business case'' as a chapter 11 case in which
    the debtor is a small business debtor. This provision, in turn,
    defines a ``small business debtor'' as a person (including
    affiliates that are also debtors, but excluding a person whose
    primary activity is the business of owning or operating real
    property or activities incidental thereto) having
    noncontingent, liquidated secured and unsecured debts of less
    than $3 million in the aggregate (excluding debts owed to
    affiliates or insiders of the debtor) as of the commencement of
    the case. This definition applies only in a case where the
    United States trustee has not appointed a creditors' committee
    or where the court has determined that the committee of
    unsecured creditors is not sufficiently active and
    representative to provide effective oversight of the debtor.
    The definition does not apply to any member of a group of
    affiliated debtors that has aggregate noncontingent, liquidated
    secured and unsecured debts in excess of $3 million (excluding
    debts owed to one or more affiliates or insiders).
    Section 433. Standard form disclosure statement and plan
        Section 433 requires the Advisory Committee on Bankruptcy
    Rules of the Judicial Conference of the United States to
    propose for adoption standard form disclosure statements and
    plans for small business debtors. The provision directs that
    the forms be designed to achieve a practical balance between
    the needs of the court, case administrators, and other parties
    in interest to have reasonably complete information as well as
    the small business debtor's needs for economy and simplicity.
    Section 434. Uniform national reporting requirements
        Section 434(a) adds a new provision to the Bankruptcy Code
    imposing additional reporting requirements for small business
    debtors. It requires a small business debtor to file periodic
    financial reports and other documents containing the following
    information with respect to the debtor's business operations:
    (a) profitability; (b) reasonable approximations of projected
    cash receipts and disbursements; (c) comparisons of actual cash
    receipts and disbursements with projections in prior reports;
    (d) whether the debtor is complying with postpetition
    requirements pursuant to the Bankruptcy Code and Federal Rules
    of Bankruptcy Procedure; and (5) whether the debtor is timely
    filing tax returns, paying taxes and other administrative
    expenses when due, and making other required government
    filings. In addition, the debtor must report on such other
    matters that are in the best interests of the debtor and the
    creditors and in the public interest.
        If the debtor is not in compliance with any postpetition
    requirements pursuant to the Bankruptcy Code and Federal Rules
    of Bankruptcy Procedure, or is not filing tax returns, paying
    taxes and other administrative expenses when due, or making
    other required government filings, the debtor must report: (a)
    what the failures are; (b) how they will be cured; (c) the cost
    of their cure; and (d) when they will be cured.
        Section 434(b) specifies that the effective date of this
    provision is 60 days after the date on which the rules required
    under this provision are promulgated.
    Section 435. Uniform reporting rules and forms for small business cases
        Section 435(a) mandates that the Advisory Committee on
    Bankruptcy Rules of the Judicial Conference of the United
    States propose official rules and forms with respect to the
    periodic financial reports and other information that a small
    business debtor must file concerning its profitability, cash
    receipts and disbursements, filing of its tax returns, and
    payment of its taxes and other administrative expenses.
        Section 435(b) requires the rules and forms to achieve a
    practical balance between the need for reasonably complete
    information by the bankruptcy court, United States trustee,
    creditors and other parties in interest; and the small business
    debtor's interest in having such forms be easy and inexpensive
    to complete. The forms should also be designed to help the
    small business debtor to understand its financial condition and
    plan its future.
    Section 436. Duties in small business cases
        Section 436 adds a provision to chapter 11 intended to
    implement greater administrative controls over such cases. The
    provision requires a chapter 11 trustee or debtor to:

            (1) file with a voluntary petition (or in an
            involuntary case, within 7 days from the date of the
            order for relief) the debtor's most recent financial
            statements (including a balance sheet, statement of
            operations, cash flow statement, and Federal income tax
            return) or a statement explaining why such information
            is not available;
            (2) attend, through its senior management personnel
            and counsel, meetings scheduled by the bankruptcy court
            or the United States trustee (including the initial
            debtor interview and meeting of creditors pursuant to
            section 341 of the Bankruptcy Code), unless the court
            waives this requirement after notice and a hearing upon
            a finding of extraordinary and compelling
            circumstances;
            (3) timely file all requisite schedules and the
            statement of financial affairs, unless the court, after
            notice and a hearing, grants an extension of up to 30
            days from the order of 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) maintain insurance that is customary and
            appropriate for the industry, subject to section
            363(c)(2);
            (6) timely file tax returns and make other required
            government filings;
            (7) timely pay all administrative expense taxes
            (except for certain contested claims), subject to
            section 363(c)(2); and
            (8) permit the United States trustee to inspect the
            debtor's business premises, books, and records at
            reasonable hours after appropriate prior written
            notice, unless notice is waived by the debtor.
    Section 437. Plan filing and confirmation deadlines
        Section 437 amends section 1121(e) of the Bankruptcy Code
    with respect to the period of time within which a small
    business debtor must file and confirm a plan of reorganization.
    It provides that a small business debtor's exclusive period to
    file a plan is 180 days from the date of the order for relief,
    unless the period is extended after notice and a hearing, or
    the court, for cause, orders otherwise. It further provides
    that a small business debtor must file a plan and any
    disclosure statement not later than 300 days after the order
    for relief. These time periods may be extended only if (a) the
    debtor, after providing notice to parties in interest,
    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 granting such
    extension is signed before the expiration of the existing
    deadline.
    Section 438. Plan confirmation deadline
        Section 438 amends section 1129 of the Bankruptcy Code to
    require that a plan in a small business case be confirmed not
    later than 175 days from the date of the order for relief,
    unless this period is extended pursuant to section 1121(e)(3)
    (as added by section 437 of the Act).
    Section 439. Duties of the United States trustee
        Section 439 amends section 586(a) of title 28 of the United
    States Code to require the United States trustee to perform the
    following additional duties with respect to small business
    debtors:

            (1) conduct an initial debtor interview before the
            meeting of creditors for the purpose of (a)
            investigating the debtor's viability, (b) inquiring
            about the debtor's business plan, (c) explaining the
            debtor's obligation to file monthly operating reports,
            (d) attempting to obtain an agreed scheduling order
            setting various time frames (such as the date for
            filing a plan and effecting confirmation), and (e)
            informing the debtor of other obligations;
            (2) if determined to be appropriate and advisable,
            inspect the debtor's business premises for the purpose
            of reviewing the debtor's books and records and
            verifying that the debtor has filed its tax returns;
            (3) review and monitor diligently the debtor's
            activities to determine as promptly as possible whether
            the debtor will be unable to confirm a plan; and
            (4) promptly apply to the court for relief in any case
            in which the United States trustee finds material
            grounds for dismissal or conversion of the case.
    Section 440. Scheduling conferences
        Section 440 amends section 105(d) to mandate that a
    bankruptcy court hold status conferences as necessary to
    further the expeditious and economical resolution of a
    bankruptcy case.
    Section 441. Serial filer provisions
        Section 441(1) amends section 362 of the Bankruptcy Code to
    provide that a court may award only actual damages for a
    violation of the automatic stay committed by an entity in the
    good faith belief that subsection (h) of section 362 (as added
    by this Act) applies to the debtor.
        Section 441(2) adds a new subsection to section 362 of the
    Bankruptcy Code specifying that the automatic stay does not
    apply where the chapter 11 debtor:

            (1)  is a debtor in a small business case pending at
            the time the petition is filed;
            (2) was a debtor in a small business case dismissed
            for any reason pursuant to an order that became final
            in the 2-year period ending on the date of the order
            for relief entered in the pending case;
            (3) was a debtor in small business case in which a
            plan was confirmed in the 2-year period ending on the
            date of the order for relief entered in the pending
            case; or
            (4) is an entity that has succeeded to substantially
            all of the assets or business of a small business
            debtor as described above.
        An exception to this provision applies to a chapter 11 case
    that is commenced involuntarily and involves no collusion
    between the debtor and the petitioning creditors. Also, it does
    not apply if the debtor proves by a preponderance of the
    evidence that (a) the filing of the subsequent case resulted
    from circumstances beyond the debtor's control and which were
    not foreseeable at the time the prior case was filed; and (b)
    it is more likely than not that the court will confirm a
    feasible plan of reorganization (but not a liquidating plan)
    within a reasonable time.
    Section 442. Expanded grounds for dismissal or conversion and
            appointment of trustee
        Section 442(a) amends section 1112(b) of the Bankruptcy
    Code to mandate that the court convert or dismiss a chapter 11
    case or appoint a trustee (whichever is in the best interests
    of creditors and the estate) if the movant establishes cause.
    An exception applies if: (a) the debtor or a party in interest
    objects and establishes by a preponderance of the evidence that
    a plan having a reasonable possibility of being confirmed will
    be filed within a reasonable period of time; and (b) the
    grounds include an act or omission for which there exists a
    reasonable justification for such act or omission and that will
    be cured within a reasonable period of time. The court must
    commence the hearing on a section 1112(b) motion within 30 days
    of its filing and decide the motion not later than 15 days
    after commencement of the hearing unless the movant expressly
    consents to a continuance for a specified period of time or
    compelling circumstances prevent the court from meeting these
    time limits.
        The term ``cause'' under section 1112(b), as amended by
    this provision, includes the following:

             (1) substantial or continuing loss to or diminution
            of the estate;
             (2) gross mismanagement of the estate;
             (3) failure to maintain appropriate insurance that
            poses a material risk to the estate or the public;
             (4) unauthorized use of cash collateral that is
            harmful to one or more creditors;
             (5) failure to comply with a court order;
             (6) repeated failure to timely satisfy any filing or
            reporting requirement under the Bankruptcy Code or
            applicable rule;
             (7) failure to attend the section 341 meeting of
            creditors or an examination pursuant to rule 2004 of
            the Federal Rules of Bankruptcy Procedure;
             (8) failure to timely provide information or to
            attend meetings reasonably requested by the United
            States trustee or bankruptcy administrator;
             (9) failure to timely pay postpetition taxes or file
            tax returns due postpetition;
            (10) failure to file a disclosure statement or to
            confirm a plan within the time fixed by the Bankruptcy
            Code or pursuant to court order;
            (11) failure to pay any requisite fees or charges
            under chapter 123 of title 28 of the United States
            Code;
            (12) revocation of a confirmation order;
            (13) inability to effectuate substantial consummation
            of a confirmed plan;
            (14) material default by the debtor with respect to a
            confirmed plan;
            (15) termination of a plan by reason of the occurrence
            of a condition specified in the plan; and
            (16) the debtor's failure to pay any domestic support
            obligation that first becomes payable postpetition.

    Section 442(a) requires the court to commence the hearing under
    section 1112(b) within 30 days of the filing of the motion and
    specifies that the court must decide the motion within 15 days
    after commencement of the hearing, unless the movant consents
    to a longer period or compelling circumstances prevent the
    court from meeting the specified time limits.
        Section 442(b) creates additional grounds for the
    appointment of a chapter 11 trustee under section 1104(a). It
    provides that should the bankruptcy court determine cause
    exists to convert or dismiss a chapter 11 case, it may appoint
    a trustee or examiner if in the best interests of creditors and
    the bankruptcy estate.
    Section 443. Study of operation of title 11, United States Code, with
            respect to small businesses
        Section 443 directs the Administrator of the Small Business
    Administration, in consultation with the Attorney General, the
    Director of the Executive Office for United States Trustees,
    and the Director of the Administrative Office of the United
    States Courts, to conduct a study to determine:

            (1) the internal and external factors that cause small
            businesses (particularly sole proprietorships) to seek
            bankruptcy relief and the factors that cause small
            businesses to successfully complete their chapter 11
            cases; and
            (2) how the bankruptcy laws may be made more effective
            and efficient in assisting small business to remain
            viable.
    Section 444. Payment of interest
        Section 444(1) amends section 362(d)(3) of the Bankruptcy
    Code to require a court to grant relief from the automatic stay
    within 30 days after it determines that a single asset real
    estate debtor is subject to this provision. Section 444(2)
    amends section 362(d)(3)(B) to specify that relief from the
    automatic stay shall be granted unless the single asset real
    estate debtor has commenced making monthly payments to each
    creditor secured by the debtor's real property (other than a
    claim secured by a judgment lien or unmatured statutory lien)
    in an amount equal to the interest at the then applicable
    nondefault contract rate of interest on the value of the
    creditor's interest in the real estate. It allows a debtor in
    its sole discretion to make the requisite interest payments out
    of rents or other proceeds generated by the real property.
    Section 445. Priority of administrative expenses
        Section 445 amends section 503(b) of the Bankruptcy Code to
    add a new administrative expense priority for a nonresidential
    real property lease that is assumed under section 365 and then
    subsequently rejected. The amount of the priority is the sum of
    all monetary obligations due under the lease (excluding
    penalties and obligations arising from or relating to a failure
    to operate) for the 2-year period following the rejection date
    or actual turnover of the premises (whichever is later),
    without reduction or setoff for any reason, except for sums
    actually received or to be received from a nondebtor. Any
    remaining sums due for the balance of the term of the lease is
    treated as a claim under section 502(b)(6) of the Bankruptcy
    Code.

                    TITLE V. MUNICIPAL BANKRUPTCY PROVISIONS

    Section 501. Petition and proceedings related to petition
        Section 501 amends sections 921(d) and 301 of the
    Bankruptcy Code to clarify that the court must enter the order
    for relief in a chapter 9 case.
    Section 502. Applicability of other sections to chapter 9
        Section 502 amends section 901 of the Bankruptcy Code to
    make the following sections applicable to chapter 9 cases:

            (1) section 555 (contractual right to liquidate,
            terminate or accelerate a securities contract);
            (2) section 556 (contractual right to liquidate,
            terminate or accelerate a commodities or forward
            contract);
            (3) section 559 (contractual right to liquidate,
            terminate or accelerate a repurchase agreement);
            (4) section 560 (contractual right to liquidate,
            terminate or accelerate a swap agreement);
            (5) section 561 (contractual right to liquidate,
            terminate, accelerate, or offset under a master netting
            agreement and across contracts); and
            (6) section 562 (damage measure in connection with
            swap agreements, securities contracts, forward
            contracts, commodity contracts, repurchase agreements,
            or master netting agreement).

                           TITLE VI. BANKRUPTCY DATA

    Section 601. Improved bankruptcy statistics
        Section 601 amends chapter 6 of title 28 of the United
    States Code to require the clerk for each district to collect
    certain statistics for chapter 7, 11, and 13 cases in a
    standardized form prescribed by the Director of the
    Administrative Office of the United States Courts and to make
    this information available to the public. In addition, section
    601 requires the Director to prepare an annual report and
    analysis for Congress concerning the information collected. The
    statistics must be itemized by chapter of the Bankruptcy Code
    and be presented in the aggregate for each district. The
    specific categories of information that must be gathered
    include the following:

            (1) scheduled total assets and liabilities by
            category;
            (2) the debtors' current monthly income, average
            income, and average expenses;
            (3) the aggregate amount of debts discharged during
            the reporting period based on the difference between
            the total amount of scheduled debts and by categories
            that are predominantly nondischargeable;
            (4) the average time between the filing of the
            bankruptcy case and the closing of the case;
            (5) the number of cases in which reaffirmation
            agreements were filed, the total number of
            reaffirmation agreements filed, the number of cases in
            which the debtor was pro se and a reaffirmation
            agreement was filed, and the number of cases in which
            the reaffirmation agreement was approved by the court;
            (6) for chapter 13 cases, information on the number of
            (a) orders determining the value of secured property in
            an amount less than the amount of the secured claim,
            (b) final orders that determined the value of property
            securing a claim, (c) cases dismissed, (d) cases
            dismissed for failure to make payments under the plan,
            (e) cases refiled after dismissal, (f) cases in which
            the plan was completed (separately itemized with
            respect to the number of modifications made before
            completion of the plan, and (g) cases in which the
            debtor had previously sought bankruptcy relief within
            the 6 years preceding the filing of the present case;
            (7) the number of cases in which creditors were fined
            for misconduct and the amount of any punitive damages
            awarded for creditor misconduct; and
            (8) the number of cases in which sanctions under rule
            9011 of the Federal Rules of Bankruptcy Procedure were
            imposed against a debtor's counsel and the damages
            awarded under this rule.

    Section 601 provides that the amendments in this provision take
    effect 18 months after the date of enactment of this Act.
    Section 602. Uniform rules for the collection of bankruptcy data
        Section 602 amends chapter 39 of title 28 of the United
    States Code to add a provision requiring the Attorney General
    to promulgate rules mandating the establishment of uniform
    forms for final reports in chapter 7, 12 and 13 cases and
    periodic reports in chapter 11 cases. It also specifies that
    these reports be designed to facilitate compilation of data and
    to provide maximum public access by physical inspection at one
    or more central filing locations and by electronic access
    through the Internet or other appropriate media. The
    information should enable an evaluation of the efficiency and
    practicality of the Federal bankruptcy system. In issuing
    rules, the Attorney General must consider: (a) the reasonable
    needs of the public for information about the Federal
    bankruptcy system; (b) the economy, simplicity, and lack of
    undue burden on persons obligated to file the reports; and (c)
    appropriate privacy concerns and safeguards. Section 602
    provides that final reports by trustees in chapter 7, 12, and
    13 cases include the following information:

            (1) the length of time the case was pending;
            (2) assets abandoned;
            (3) assets exempted;
            (4) receipts and disbursements of the estate;
            (5) administrative expenses, including those
            associated with section 707(b) of the Bankruptcy Code,
            and the actual costs of administering chapter 13 cases;
            (6) claims asserted;
            (7) claims allowed; and
            (8) distributions to claimants and claims discharged
            without payment.

        With regard to chapter 11 cases, section 602 provides that
    periodic reports include the following information regarding:

            (1) the standard industry classification for
            businesses conducted by the debtor, as published by the
            Department of Commerce;
            (2) the length of time that the case was pending;
            (3) the number of full-time employees as of the date
            of the order for relief and at the end of each
            reporting period;
            (4) cash receipts, cash disbursements, and
            profitability of the debtor for the most recent period
            and cumulatively from the date of the order for relief;
            (5) the debtor's compliance with the Bankruptcy Code,
            including whether tax returns have been filed and taxes
            have been paid;
            (6) professional fees approved by the court for the
            most recent period and cumulatively from the date of
            the order for relief; and
            (7) plans filed and confirmed, including the aggregate
            recoveries of holders by class and as a percentage of
            total claims of an allowed class.
    Section 603. Audit procedures
        Section 603(a)(1) requires the Attorney General (for
    judicial districts served by United States trustees) and the
    Judicial Conference of the United States (for judicial
    districts served by bankruptcy administrators) to establish
    procedures to determine the accuracy, veracity, and
    completeness of petitions, schedules and other information
    filed by debtors pursuant to sections 111, 521 and 1322 of the
    Bankruptcy Code. Section 603(a)(1) requires the audits to be
    conducted in accordance with generally accepted auditing
    standards and performed by independent certified public
    accountants or independent licensed public accountants. It
    permits the Attorney General and the Judicial Conference to
    develop alternative auditing standards not later than 2 years
    after the date of enactment of this Act.
    Section 603(a)(2) requires these procedures to:

            (1) establish a method of selecting appropriate
            qualified contractors to perform these audits;
            (2) establish a method of randomly selecting cases for
            audit, and that a minimum of at least one case out of
            every 250 cases be selected for audit;
            (3) require audits in cases where the schedules of
            income and expenses reflect greater than average
            variances from the statistical norm for the district if
            they occur by reason of higher income or higher
            expenses than the statistical norm in which the
            schedules were filed; and
            (4) require the aggregate results of such audits,
            including the percentage of cases by district in which
            a material misstatement of income or expenditures is
            reported, to be made available to the public on an
            annual basis.

        Section 603(b) amends section 586 of title 28 of the United
    States Code to require the United States trustee to submit
    reports as directed by the Attorney General, including the
    results of audits performed under section 603(a). In addition,
    it authorizes the United States trustee to contract with
    auditors to perform the audits specified in this provision.
    Further, it requires the report of each audit to be filed with
    the court and transmitted to the United States trustee. The
    report must specify material misstatements of income,
    expenditures or assets. In a case where a material misstatement
    has been reported, the clerk must provide notice of such
    misstatement to creditors and the United States trustee must
    report it to the United States Attorney, if appropriate, for
    possible criminal prosecution. If advisable, the United States
    trustee must also take appropriate action, such as revoking the
    debtor's discharge.
        Section 603(c) amends section 521 of the Bankruptcy Code to
    make it a duty of the debtor to cooperate with an auditor.
        Section 603(d) amends section 727 of the Bankruptcy Code to
    add, as a ground for revocation of a chapter 7 discharge the
    debtor's failure to: (a) satisfactorily explain a material
    misstatement discovered as the result of an audit pursuant to
    this provision; or (b) make available for inspection all
    necessary documents or property belonging to the debtor that
    are requested in connection with such audit.
        Section 603(e) provides that the amendments made by this
    provision take effect 18 months after the Act's enactment date.
    Section 604. Sense of Congress regarding availability of bankruptcy
            data
        Section 604 expresses a sense of Congress that it is a
    national policy of the United States that all data collected by
    bankruptcy clerks in electronic form (to the extent such data
    relates to public records pursuant to section 107 of the
    Bankruptcy Code) should be made available to the public in a
    useable electronic form in bulk, subject to appropriate privacy
    concerns and safeguards as determined by the Judicial
    Conference of the United States. It also states that a uniform
    bankruptcy data system should be established that uses a single
    set of data definitions and forms to collect such data and that
    data for any particular bankruptcy case should be aggregated in
    electronic format.

                      TITLE VII--BANKRUPTCY TAX PROVISIONS

    Section 701. Treatment of certain tax liens
        Section 701(a) makes several amendments to section 724 of
    the Bankruptcy Code to provide greater protection for holders
    of ad valorem tax liens on real or personal property of the
    estate. Many school boards obtain liens on real property to
    ensure collection of unpaid ad valorem taxes. Under current
    law, local governments are sometimes unable to collect these
    taxes despite the presence of a lien because they may be
    subordinated to certain claims and expenses as a result of
    section 724. Section 701(a) is intended to protect the holders
    of these tax liens from, among other things, erosion of their
    claims' status by expenses incurred under chapter 11 of the
    Bankruptcy Code. Pursuant to section 701(a), subordination of
    ad valorem tax liens is still possible under section 724(b),
    but limited to the payment of: (a) claims incurred under
    chapter 7 for wages, salaries, or commissions (but not expenses
    incurred under chapter 11); (b) claims for wages, salaries, and
    commissions entitled to priority under section 507(a)(4); and
    (c)claims for contributions to employee benefit plans entitled
    to priority under section 507(a)(5). Before a tax lien on real
    or personal property may be subordinated pursuant to section
    724, the chapter 7 trustee must exhaust all other unencumbered
    estate assets and, consistent with section 506, recover
    reasonably necessary costs and expenses of preserving or
    disposing of such property.
        Section 701(b) amends section 505(a)(2) of the Bankruptcy
    Code to prevent a bankruptcy court from determining the amount
    or legality of an ad valorem tax on real or personal property
    if the applicable period for contesting or redetermining the
    amount of the claim under nonbankruptcy law has expired.
    Section 702. Treatment of fuel tax claims
        Section 702 amends section 501 of the Bankruptcy Code to
    simplify the process for filing of claims by States for certain
    fuel taxes. Rather than requiring all States to file a claim
    for these taxes (as is the case under current law), section 702
    permits the designated ``base jurisdiction'' under the
    International Fuel Tax Agreement to file a claim on behalf of
    all States, which would then be allowed as a single claim.
    Section 703. Notice of request for a determination of taxes
        Under current law, debtors may request that the
    governmental unit determine administrative tax liabilities in
    order to receive a discharge of those liabilities. There are no
    requirements as to the content or form of such notice to the
    government. Section 703 amends section 505(b) of the Bankruptcy
    Code to require bankruptcy court clerks to maintain a list of
    addresses designated by governmental units for service of
    section 505 requests. In addition, the list may also include
    additional information concerning filing requires so specified
    by such governmental units. If a governmental entity does not
    designate an address and provide that address to the bankruptcy
    court clerk, any request made under section 505(b) of the
    Bankruptcy Code may be served at the address of the appropriate
    taxing authority of that governmental unit.
    Section 704. Rate of interest on tax claims
        Under current law, there is no uniform rate of interest
    applicable to tax claims. As a result, the bankruptcy courts
    have used varying standards to determine the applicable rate.
    Section 704 amends the Bankruptcy Code to add section 511 for
    the purpose of simplifying the interest rate calculation. It
    provides that for all tax claims (federal, State, and local),
    including administrative expense taxes, the interest rate shall
    be determined in accordance with applicable nonbankruptcy law.
    With respect to taxes paid under a confirmed plan, the rate of
    interest is determined as of the calendar month in which the
    plan is confirmed.
    Section 705. Priority of tax claims
        Under current law, a tax claim is entitled to be treated as
    a priority claim if it arises within certain specified time
    periods. In the case of income taxes, a priority arises, among
    other time periods, if the tax return was due within 3 years of
    the filing of the bankruptcy petition or if the assessment of
    the tax was made within 240 days of the filing of the petition.
    The 240-day period is tolled during the time that an offer in
    compromise is pending (plus 30 days). Though the statute is
    silent, most courts have also held that the 3-year and 240-day
    time periods are tolled during the pendency of a previous
    bankruptcy case. Section 705 amends section 507(a)(8) of the
    Bankruptcy Code to codify the rule tolling priority periods
    during the pendency of a previous bankruptcy case during that
    240-day period together with an additional 90 days. It also
    includes tolling provisions to adjust for the collection due
    process rights provided by the Internal Revenue Service
    Restructuring and Reform Act of 1998. During any period in
    which the government is prohibited from collecting a tax as a
    result of a request by the debtor for a hearing and an appeal
    of any collection action taken against the debtor, the priority
    is tolled, plus 90 days. Also, during any time in which there
    was a stay of proceedings in a prior bankruptcy case or
    collection of an income tax was precluded by a confirmed
    bankruptcy plan, the priority is tolled, plus 90 days.
    Section 706. Priority property taxes incurred
        Under current law, many provisions of the Bankruptcy Code
    are keyed to the word ``assessed.'' While this term has an
    accepted meaning in the Federal system, it is not used in many
    State and local statutes and has created some confusion. To
    eliminate this problem with respect to real property taxes,
    section 706 amends section 507(a)(8)(B) of the Bankruptcy Code
    by replacing the word ``assessed'' with ``incurred''.
    Section 707. No discharge of fraudulent taxes in chapter 13
        Under current law, a debtor's ability to discharge tax
    debts varies depending on whether the debtor is in chapter 7 or
    chapter 13. Under chapter 7, taxes from a return due within 3
    years of the petition date, taxes assessed within 240 days, or
    taxes related to an unfiled return or false return are not
    dischargeable. Chapter 13, on the other hand, allows these
    obligations to be discharged. Section 707 amends section
    1328(a)(2) to prohibit the discharge of tax claims described in
    section 523(a)(1)(B) and (C) as well as claims for a tax
    required to be collected or withheld and for which the debtor
    is liable in whatever capacity pursuant to section
    507(a)(8)(C).
    Section 708. No discharge of fraudulent taxes in chapter 11
        Under current law, the confirmation of a chapter 11 plan
    discharges the debtor from most debts. Section 708 amends
    section 1141(d) of the Bankruptcy Code to except from discharge
    in a corporate chapter 11 case a debt described in section
    523(a)(2) of the Bankruptcy Code (e.g., debts for money,
    property or services obtain by false pretenses, false
    representation or actual fraud, other than a statement
    respecting the debtor's or an insider's financial condition).
    In addition, a tax or customs duty with respect to which the
    debtor made a fraudulent tax return or willfully attempted in
    any manner to evade or defeat such tax is rendered
    nondischargeable in a chapter 11 case of a corporate debtor.
    Section 709. Stay of tax proceedings limited to prepetition taxes
        Under current law, the filing of a petition for relief
    under the Bankruptcy Code activates an automatic stay that
    enjoins the commencement or continuation of a case in the
    Federal tax court. This rule was arguably extended in Halpern
    v. Commissioner, 96 T.C. 895 (1991), which held that the tax
    court did not have jurisdiction to hear a case involving a
    postpetition year. To address this issue, section 709 amends
    section 362(a)(8) of the Bankruptcy Code to specify that the
    automatic stay is limited to an individual debtor's prepetition
    taxes (taxes incurred before entering bankruptcy). The
    amendment clarifies that the automatic stay does not apply to
    an individual debtor's postpetition taxes. In addition, section
    709 allows the bankruptcy court to determine whether the
    automatic stay applies to the postpetition tax liabilities of a
    corporate debtor.
    Section 710. Periodic payment of taxes in chapter 11 cases
        Section 710 amends section 1129(a)(9) of the Bankruptcy
    Code to provide that the allowed amount of priority tax claims
    (as of the plan's effective date) must be paid in regular cash
    installments within 5 years from the entry of the order for
    relief. The manner of payment may not be less favorable than
    that accorded the most favored nonpriority unsecured class of
    claims under section 1122(b).
    Section 711. Avoidance of statutory liens prohibited
        The Internal Revenue Code gives special protections to
    certain purchasers of securities and motor vehicles
    notwithstanding the existence of a filed tax lien. Section 711
    amends section 545(2) of the Bankruptcy Code to prevent
    trustees from using these special protections to avoid an
    otherwise valid lien. Specifically, it 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 a similar provision under State or local law.
    Section 712. Payment of taxes in the conduct of business
        Although current law generally requires trustees and
    receivers to pay taxes in the ordinary course of the debtor's
    business, the payment of administrative expenses must first be
    authorized by the court. Section 712(a) amends section 960 of
    title 28 of the United States Code to clarify that postpetition
    taxes in the ordinary course of business must be paid on or
    before when such tax is due under applicable nonbankruptcy law,
    with certain exceptions. This requirement does not apply if the
    obligation is a property tax secured by a lien against property
    that is abandoned under section 554 within a reasonable time
    after the lien attaches. In addition, the requirement does not
    pertain where the payment is excused under the Bankruptcy Code.
    With respect to chapter 7 cases, section 712(a) provides that
    the payment of a tax may be deferred until final distribution
    pursuant to section 726 if the tax was not incurred by a
    chapter 7 trustee or the court, prior to the due date of the
    tax, finds that the estate has insufficient funds to pay all
    administrative expenses in full.
        Section 712(b) amends section 503(b)(1)(B)(i) of the
    Bankruptcy Code to clarify that this provision applies to
    secured as well as unsecured tax claims, including property
    taxes based on liability that is in rem, in personam or both.
        Section 712(c) amends section 503(b)(1) to exempt a
    governmental unit from the requirement to file a request for
    payment of an administrative expense.
        Section 712(d)(1) amends section 506(b) to provide that to
    the extent that an allowed claim is oversecured, the holder is
    entitled to interest and any reasonable fees, costs, or charges
    provided for under State law. Section 712(d)(2), in turn,
    amends section 506(c) to permit a trustee to recover from a
    secured creditor the payment of all ad valorem property taxes.
    Section 713. Tardily filed priority tax claims
        Section 713 amends section 726(a)(1) of the Bankruptcy Code
    to require a 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 final report,
    whichever is earlier, in order for the claim to be entitled to
    distribution as an unsecured claim.
    Section 714. Income tax returns prepared by tax authorities
        Section 714 amends section 523(a) of the Bankruptcy Code to
    provide that a return filed on behalf of a taxpayer who has
    provided information sufficient to complete a return
    constitutes filing a return (and the debt can be discharged),
    but that a return filed on behalf of a taxpayer based on
    information the Secretary obtains through testimony or
    otherwise does not constitute filing a return (and the debt
    cannot be discharged).
    Section 715. Discharge of the estate's liability for unpaid taxes
        Under the Bankruptcy Code, a debtor may request a prompt
    audit to determine postpetition tax liabilities. If the
    government does not make a determination or request an
    extension of time to audit, then the debtor's determination of
    taxes will be final. Several court cases have held that while
    this protects the debtor and the trustee, it does not
    necessarily protect the estate. Section 715 amends section
    505(b) of the Bankruptcy Code to clarify that the estate is
    also protected if the government does not request an audit of
    the debtor's tax returns. Therefore, if the government does not
    make a determination of the debtor's postpetition tax
    liabilities or request extension of time to audit, then the
    estate's liability for unpaid taxes is discharged.
    Section 716. Requirement to file tax returns to confirm chapter 13
            plans
        Under current law, a debtor may enjoy the benefits of
    chapter 13 even if delinquent in the filing of tax returns. In
    response to this problem, section 716(a) amends section 1325(a)
    of the Bankruptcy Code to require a chapter 13 debtor file all
    applicable Federal, State, and local tax returns as a condition
    of confirmation pursuant to section 1308, as added by section
    716(b).
        Section 716(b) adds a new provision to chapter 13 requiring
    a chapter 13 debtor to be current on the filing of tax returns
    for the 4-year period preceding the filing of the case. If the
    returns are not filed by the date on which the meeting of
    creditors is first scheduled, the trustee may hold open that
    meeting for a reasonable period of time to allow the debtor to
    file any unfiled returns. The additional period of time may not
    extend beyond 120 days after the date of the meeting of the
    creditors or beyond the date on which the return is due under
    the last automatic extension of time for filing. The debtor,
    however, may obtain an extension of time from the court if the
    debtor demonstrates by a preponderance of the evidence that the
    failure to file was attributable to circumstances beyond the
    debtor's control.
        Section 716(c) amends section 1307 of the Bankruptcy Code
    to provide that if a chapter 13 debtor fails to file a tax
    return as required by section 1308, the court must dismiss the
    case or convert it to one under chapter 7 (whichever is in the
    best interests of creditors and the estate) on request of a
    party in interest or the United States trustee after notice and
    a hearing.
        Section 716(d) amends section 502(b)(9) of the Bankruptcy
    Code to provide that in a chapter 13 case, a governmental
    unit's tax claim based on a return filed under section 1308
    shall be deemed to be timely filed if the claim is filed within
    60 days from the date on which such return is filed.
        Section 716(e) states the sense of the Congress that the
    Advisory Committee on Bankruptcy Rules of the Judicial
    Conference of the United States should propose for adoption
    official rules with respect an objection by a governmental unit
    to confirmation of a chapter 13 plan when such claim pertains
    to a tax return filed pursuant section 1308.
    Section 717. Standards for tax disclosure
        Before a chapter 11 plan may be submitted to creditors and
    stockholders for a vote, the plan proponent must file a
    disclosure statement that provides adequate information to
    holders of claims and interests so they can make a decision as
    to whether or not to vote in favor of the plan. As the tax
    consequences of a plan can have a significant impact on the
    debtor's reorganization prospects, section 717 amends section
    1125(a) of the Bankruptcy Code to require that a chapter 11
    disclosure statement discuss the plan's potential material
    Federal tax consequences to the debtor and to a hypothetical
    investor that is representative of the claimants and interest
    holders in the case.
    Section 718. Setoff of tax refunds
        Under current law, the filing of a bankruptcy petition
    automatically stays the setoff of a prepetition tax refund
    against a prepetition tax obligation unless the bankruptcy
    court approves the setoff. Interest and penalties that may
    continue to accrue may also be nondischargeable pursuant to
    section 523(a)(1) of the Bankruptcy Code and cause individual
    debtors undue hardship. Section 718 amends section 362(b) of
    the Bankruptcy Code to create an exception to the automatic
    stay whereby such setoff could occur without court order unless
    it would not be permitted under applicable nonbankruptcy law
    because of a pending action to determine the amount or legality
    of the tax liability. In that circumstance, the governmental
    authority may hold the refund pending resolution of the action,
    unless the court, on motion of the trustee and after notice and
    a hearing, grants the taxing authority adequate protection
    pursuant to section 361.
    Section 719. Special provisions related to the treatment of State and
            local taxes
        Section 719 conforms State and local income tax
    administrative issues to the Internal Revenue Code. For
    example, under Federal law, a bankruptcy petitioner filing on
    March 5 has two tax years--January 1 to March 4, and March 5 to
    December 31. Under the Bankruptcy Code, however, State and
    local tax years are divided differently--January 1 to March 5,
    and March 6 to December 31. Section 719 requires the States to
    follow the Federal convention.
        It conforms State and local tax administration to the
    Internal Revenue Code in the following areas: division of tax
    liabilities and responsibilities between the estate and the
    debtor, tax consequences with respect to partnerships and
    transfers of property, and the taxable period of a debtor.
    Section 719 does not conform State and local tax rates to
    Federal tax rates.
    Section 720. Dismissal for failure to timely file tax returns
        Under existing law, there is no definitive rule with
    respect to whether a bankruptcy court may dismiss a bankruptcy
    case if the debtor fails to file returns for taxes incurred
    postpetition. Section 720 amends section 521 of the Bankruptcy
    Code to allow a taxing authority to request that the court
    dismiss or convert a bankruptcy case if the debtor fails to
    file a postpetition tax return or obtain an extension. If the
    debtor does not file the required return or obtain the
    extension within 90 days from the time of the request by the
    taxing authority to file the return, the court must convert or
    dismiss the case, whichever is in the best interest of
    creditors and the estate.

               TITLE VIII--ANCILLARY AND OTHER CROSS-BORDER CASES

        Title VIII of H.R. 833 adds a new chapter to the Bankruptcy
    Code for transnational bankruptcy cases. This incorporates the
    Model Law on Cross-Border Insolvency to encourage cooperation
    between the United States and foreign countries with respect to
    transnational insolvency cases. Title VIII is intended to
    provide greater legal certainty for trade and investment as
    well as to provide for the fair and efficient administration of
    cross-border insolvencies, which protects the interests of
    creditors and other interested parties, including the debtor.
    In addition, it serves to protect and maximize the value of the
    debtor's assets.
    Section 801. Amendment to add chapter 15 to title 11, United States
            Code
        Section 801 introduces chapter 15 to the Bankruptcy Code,
    which is the Model Law on Cross-Border Insolvency (``Model
    Law'') promulgated by the United Nations Commission on
    International Trade Law (``UNCITRAL'') at its Thirtieth Session
    on May 12-30, 1997.\4\ Cases brought under chapter 15 are
    intended to be ancillary to cases brought in a debtor's home
    country, unless a full United States bankruptcy case is brought
    under another chapter. Even if a full case is brought, the
    court may decide under section 305 to stay or dismiss the
    United States case under the other chapter and limit the United
    States' role to an ancillary case under this chapter.\5\ If the
    full case is not dismissed, it will be subject to the
    provisions of this chapter governing cooperation, communication
    and coordination with the foreign courts and representatives.
    In any case, an order granting recognition is required as a
    prerequisite to the use of sections 301 and 303 by a foreign
    representative.
    ---------------------------------------------------------------------------
        \4\ The text of the Model Law and the Report of UNCITRAL on its
    adoption are found at U.N. G.A., 52d Sess., Supp. No. 17 (A/52/17)
    (``Report''). That Report and the Guide to Enactment of the UNCITRAL
    Model Law on Cross-Border Insolvency, U.N. Gen. Ass., UNCITRAL 30th
    Sess. U.N. Doc. A/CN.9/442 (1997) (``Guide''), which was discussed in
    the negotiations leading to the Model Law and published by UNCITRAL as
    an aid to enacting countries, should be consulted for guidance as to
    the meaning and purpose of its provisions. The development of the
    provisions in the negotiations at UNCITRAL, in which the United States
    was an active participant, is recounted in the interim reports of the
    Working Group that are cited in the Report.
        \5\ See section 1529 and commentary.
    ---------------------------------------------------------------------------
    Section 1501. Purpose and scope of application
        Section 1501 combines the Preamble to the Model Law
    (subsection (1)) with its article 1 (subsections (2) and (3))
    \6\. It largely follows the language of the Model Law and fills
    in blanks with appropriate United States references. However,
    it adds in subsection (3) an exclusion of certain natural
    persons who may be considered ordinary consumers. Although the
    consumer exclusion is not in the text of the Model Law, the
    discussions at UNCITRAL recognized that some such exclusion
    would be necessary in countries like the United States where
    there are special provisions for consumer debtors in the
    insolvency laws.\7\
    ---------------------------------------------------------------------------
        \6\ Guide at 16-19.
        \7\ See id. at 18, para. 60; 19 para. 66.
    ---------------------------------------------------------------------------
        The reference to section 109(e) essentially defines
    ``consumer debtors'' for purposes of the exclusion by
    incorporating the debt limitations of that section, but not its
    requirement of regular income. The exclusion adds a requirement
    that the debtor or debtor couple be citizens or long-term legal
    residents of the United States. This ensures that residents of
    other countries will not be able to manipulate this exclusion
    to avoid recognition of foreign proceedings in their home
    countries or elsewhere.
        The first exclusion in subsection (c) constitutes, for the
    United States, the exclusion provided in article 1, subsection
    (2), of the Model Law.\8\ Foreign representatives of foreign
    proceedings which are excluded from the scope of chapter 15 may
    seek comity from courts other than the bankruptcy court since
    the limitations of section 1509(b)(2) and (3) would not apply
    to them.
    ---------------------------------------------------------------------------
        \8\ Id. at 17.
    ---------------------------------------------------------------------------
        The reference to section 109(b) interpolates into chapter
    15 the entities governed by specialized insolvency regimes
    under United States law which are currently excluded from
    liquidation proceedings under title 11. Section 1501 contains
    an exception to the section 109(b) exclusions so that foreign
    proceedings of foreign insurance companies are eligible for
    recognition and relief under chapter 15 as they had been under
    section 304. However, section 1501(d) has the effect of leaving
    to State regulation any deposit, escrow, trust fund or the like
    posted by a foreign insurer under State law.
    Section 1502. Definitions
        ``Debtor'' is given a special definition for this chapter.
    That definition does not come from the Model Law but is
    necessary to eliminate the need to refer repeatedly to ``the
    same debtor as in the foreign proceeding.'' With certain
    exceptions, the term ``person'' used in the Model Law has been
    replaced with ``entity,'' which is defined broadly in section
    101(15) to include natural persons and various legal entities,
    thus matching the intended breadth of the term ``person'' in
    the Model Law. The exceptions include contexts in which a
    natural person is intended and those in which the Model Law
    language already refers to both persons and entities other than
    persons. The definition of ``trustee'' for this chapter ensures
    that debtors in possession and debtors, as well as trustees,
    are included in the term.\9\
    ---------------------------------------------------------------------------
        \9\ See section 1505.
    ---------------------------------------------------------------------------
        The definition of ``within the territorial jurisdiction of
    the United States'' in subsection (7) is not taken from the
    Model Law. It has been added because the United States, like
    some other countries, asserts insolvency jurisdiction over
    property outside its territorial limits under appropriate
    circumstances. Thus a limiting phrase is useful where the Model
    Law and this chapter intend to refer only to property within
    the territory of the enacting State. In addition, a definition
    of ``recognition'' supplements the Model Law definitions and
    merely simplifies drafting of various other sections of chapter
    15.
        Two key definitions of ``foreign proceeding'' and ``foreign
    representative,'' are found in sections 101(23) and (24), which
    have been amended consistent with Model Law article 2.\10\ The
    definitions of ``establishment,'' ``foreign court,'' ``foreign
    main proceeding,'' and ``foreign non-main proceeding'' have
    been taken from Model Law article 2, with only minor language
    variations necessary to comport with United States terminology.
    Additionally, defined terms have been placed in alphabetical
    order.\11\ In order to be recognized as a foreign non-main
    proceeding, the debtor must at least have an establishment in
    that foreign country.\12\
    ---------------------------------------------------------------------------
        \10\ Guide at 19-21, para.para. 67-68.
        \11\ See Guide at 19, (Model Law) 21 para. 75 (concerning
    establishment); 21 para. 74 (concerning foreign court); 21 para.para.
    72, 73 and 75 (concerning foreign main and non-main proceedings).
        \12\ See id. at 21, para. 75.
    ---------------------------------------------------------------------------
    Section 1503. International obligations of the United States
        This section is taken exactly from the Model Law with only
    minor adaptations of terminology.\13\ Although this section
    makes an international obligation prevail over chapter 15, the
    courts will attempt to read the Model Law and the international
    obligation so as not to conflict, especially if the
    international obligation addresses a subject matter less
    directly related than the Model Law to a case before the court.
    ---------------------------------------------------------------------------
        \13\ See id. at 22, Art. 3.
    ---------------------------------------------------------------------------
    Section 1504. Commencement of ancillary case
        Article 4 of the Model Law is designed for designation of
    the competent court which will exercise jurisdiction under the
    Model Law. In United States law, section 1334(a) of title 28
    gives exclusive jurisdiction to the district courts in a
    ``case'' under this title.\14\ Therefore, since the competent
    court has been determined in title 28, this section instead
    provides that a petition for recognition commences a ``case,''
    an approach that also invokes a number of other useful
    procedural provisions. In addition, a new subsection (P) to
    section 157 of title 28 makes cases under this chapter part of
    the core jurisdiction of bankruptcy courts when referred to
    them by the district courts, thus completing the designation of
    the competent court. Finally, the particular bankruptcy court
    that will rule on the petition is determined pursuant to a
    revised section 1410 of title 28 governing venue and
    transfer.\15\
    ---------------------------------------------------------------------------
        \14\ See id. at 23, Art. 4.
        \15\ New section 1410 of title 28 provides as follows:

          A case under chapter 15 of title 11 may be commenced in the
    ---------------------------------------------------------------------------
          district court for the district----

          (1) in which the debtor has its principal place of
          business or principal assets in the United States;
          (2) if the debtor does not have a place of business or
          assets in the United States, in which there is pending
          against the debtor an action or proceeding or enforcement
          of judgment in a Federal or State court; or
          (3) in a case other than those specified in paragraph (1)
          or (2), in which venue will be consistent with the
          interests of justice and the convenience of the parties
          having regard to the relief sought by the foreign
          representative.
        The title ``ancillary'' in this section and in the title of
    this chapter emphasizes the United States policy in favor of a
    general rule that countries other than the home country of the
    debtor, where a main proceeding would be brought, should
    usually act through ancillary proceedings in aid of the main
    proceedings, in preference to a system of full bankruptcies
    (often called ``secondary'' proceedings) in each State where
    assets are found. Under the Model Law, notwithstanding the
    recognition of a foreign main proceeding, full bankruptcy cases
    are permitted in each country (see sections 1528 and 1529). In
    the United States, the court will have the power to suspend or
    dismiss such cases where appropriate under section 305.
    Section 1505. Authorization to act in a foreign country
        The language in this section varies from the wording of
    article 5 of the Model Law as necessary to comport with United
    States law and terminology. The slight alteration to the
    language in the last sentence is meant to emphasize that the
    identification of the trustee or other entity entitled to act
    is under United States law, while the scope of actions that may
    be taken by the trustee or other entity under foreign law is
    limited by the foreign law.\16\
    ---------------------------------------------------------------------------
        \16\ See Guide at 24.
    ---------------------------------------------------------------------------
        The related amendment to section 586(a)(3) of title 28
    makes acting pursuant to authorization under this section an
    additional power of a trustee or debtor in possession. While
    the Model Law automatically authorizes an administrator to act
    abroad, this section requires all trustees and debtors to
    obtain court approval before acting abroad. That requirement is
    a change from the language of the Model Law, but one that is
    purely internal to United States law.\17\ Its main purpose is
    to ensure that the court has knowledge and control of possibly
    expensive activities, but it will have the collateral benefit
    of providing further assurance to foreign courts that the
    United States debtor or representative is under judicial
    authority and supervision. This requirement means that the
    first-day orders in reorganization cases should include
    authorization to act under this section where appropriate.
    ---------------------------------------------------------------------------
        \17\ See id. at 24, Art. 5.
    ---------------------------------------------------------------------------
        This section also contemplates the designation of an
    examiner or other natural person to act for the estate in one
    or more foreign countries where appropriate. One instance might
    be a case in which the designated person had a special
    expertise relevant to that assignment. Another might be where
    the foreign court would be more comfortable with a designated
    person than with an entity like a debtor in possession. Either
    are to be recognized under the Model Law.\18\
    ---------------------------------------------------------------------------
        \18\ See id. at 23-24, para. 82.
    ---------------------------------------------------------------------------
    Section 1506. Public policy exception
        This provision follows the Model Law article 5 exactly, is
    standard in UNCITRAL texts, and has been narrowly interpreted
    on a consistent basis in courts around the world. The word
    ``manifestly'' in international usage restricts the public
    policy exception to the most fundamental policies of the United
    States.\19\
    ---------------------------------------------------------------------------
        \19\ See id. at 25.
    ---------------------------------------------------------------------------
    Section 1507. Additional assistance
        Subsection (1) follows the language of Model Law article
    7.\20\ Subsection (2) makes the authority for additional relief
    (beyond that permitted under sections 1519-1521, below) subject
    to the conditions for relief heretofore specified in United
    States law under section 304, which is repealed. This section
    is intended to permit the further development of international
    cooperation begun under section 304, but is not to be the basis
    for denying or limiting relief otherwise available under this
    chapter. The additional assistance is made conditional upon the
    court's consideration of the factors set forth in the current
    subsection 304(c) in a context of a reasonable balancing of
    interests following current case law. The references to
    ``estate'' in section 304 have been changed to refer to the
    debtor's property, because many foreign systems do not create
    an estate in insolvency proceedings of the sort recognized
    under this chapter. Although the case law construing section
    304 makes it clear that comity is the central consideration,
    its physical placement as one of six factors in subsection (c)
    of section 304 is misleading, since those factors are
    essentially elements of the grounds for granting comity.
    Therefore, in subsection (2) of this section, comity is raised
    to the introductory language to make it clear that it is the
    central concept to be addressed.\21\
    ---------------------------------------------------------------------------
        \20\ Id. at 26.
        \21\ Id.
    ---------------------------------------------------------------------------
    Section 1508. Interpretation
        This provision follows conceptually Model Law article 8 and
    is a standard one in recent UNCITRAL treaties and model laws.
    Language changes were made to express the concepts more clearly
    in United States vernacular.\22\ Interpretation of this chapter
    on a uniform basis will be aided by reference to the Guide and
    the Reports cited therein, which explain the reasons for the
    terms used and often cite their origins as well. Uniform
    interpretation will also be aided by reference to CLOUT, the
    UNCITRAL Case Law On Uniform Texts, which is a service of
    UNCITRAL. CLOUT receives reports from national reporters all
    over the world concerning court decisions interpreting
    treaties, model laws, and other text promulgated by UNCITRAL.
    Not only are these sources persuasive, but they are important
    to the crucial goal of uniformity of interpretation. To the
    extent that the United States courts rely on these sources,
    their decisions will more likely be regarded as persuasive
    elsewhere.
    ---------------------------------------------------------------------------
        \22\ Id. at 26, para. 91.
    ---------------------------------------------------------------------------
    Section 1509. Right of direct access
        This section implements the purpose of article 9 of the
    Model Law, enabling a foreign representative to commence a case
    under this chapter by filing a petition directly with the court
    without preliminary formalities that may delay or prevent
    relief. It varies the language to fit United States procedural
    requirements and it imposes recognition of the foreign
    proceeding as a condition to further rights and duties of the
    foreign representative. If recognition is granted, the foreign
    representative will have full capacity under United States law
    (subsection (b)(1)), may request such relief in a State or
    Federal court other than the bankruptcy court (subsection
    (b)(2)), and may be granted comity or cooperation by such non-
    bankruptcy court (subsection (b)(3) and (c)). Subsections
    (b)(2), (b)(3), and (c) make it clear that chapter 15 is
    intended to be the exclusive door to ancillary assistance to
    foreign proceedings. The goal is to concentrate control of
    these questions in one court. That goal is important in a
    Federal system like that of the United States with many
    different courts, State and Federal, that may have pending
    actions involving the debtor or the debtor's property. This
    section, therefore, completes for the United States the work of
    article 4 of the Model Law (``competent court'') as well as
    article 9.\23\
    ---------------------------------------------------------------------------
        \23\ See id. at 23, Art. 4, para.para. 79-83; 27 Art. 9, para. 93.
    ---------------------------------------------------------------------------
        Although a petition under current section 304 is the proper
    method for achieving deference by a United States court to a
    foreign insolvency under present law, some cases in State and
    Federal courts under current law have granted comity suspension
    or dismissal of cases involving foreign proceedings without
    requiring a section 304 petition or even referring to the
    requirements of that section. Even if the result is correct in
    a particular case, the procedure is undesirable, because there
    is room for abuse of comity. Parties would be free to avoid the
    requirements of this chapter and the expert scrutiny of the
    bankruptcy court by applying directly to a State or Federal
    court unfamiliar with the statutory requirements. Such an
    application could be made after denial of a petition under this
    chapter. This section concentrates the recognition and
    deference process in one United States court, ensures against
    abuse, and empowers a court that will be fully informed of the
    current status of all foreign proceedings involving the
    debtor.\24\
    ---------------------------------------------------------------------------
        \24\ See id. at 27, Art. 9; 34-35, Art. 15 and para.para. 116-119;
    39-40, Art. 18, para.para. 133-134; see also sections 1515(3), 1518.
    ---------------------------------------------------------------------------
        Subsection (d) has been added to ensure that a foreign
    representative cannot seek relief in courts in the United
    States after being denied recognition by the court under this
    chapter. Subsection (e) makes activities in the United States
    by a foreign representative subject to applicable United States
    law, just as 28 U.S.C. section 959 does for a domestic trustee
    in bankruptcy.\25\ Subsection (f) provides a limited exception
    to the prior recognition requirement so that collection of a
    claim which is property of the debtor, for example an account
    receivable, by a foreign representative may proceed without
    commencement of a case or recognition under this chapter.
    ---------------------------------------------------------------------------
        \25\ Id. at 27, para. 93.
    ---------------------------------------------------------------------------
    Section 1510. Limited jurisdiction
        Section 1510, article 10 of the Model Law, is modeled on
    section 306 of the Bankruptcy Code. Although the language
    referring to conditional relief in section 306 is not included,
    the court has the power under section 1522 to attach
    appropriate conditions to any relief it may grant.
    Nevertheless, the authority in section 1522 is not intended to
    permit the imposition of jurisdiction over the foreign
    representative beyond the boundaries of the case under this
    chapter and any related actions the foreign representative may
    take, such as commencing a case under another chapter of this
    title.
    Section 1511. Commencement of case under section 301 or 303
        This section follows the intent of article 11 of the Model
    Law, but adds language that conforms to United States law or
    that is otherwise necessary in the United States given its many
    bankruptcy court districts and the importance of full
    information and coordination among them.\26\ Article 11 does
    not distinguish between voluntary and involuntary proceedings,
    but seems to have implicitly assumed an involuntary
    proceeding.\27\ Subsection 1(a)(2) goes farther and permits a
    voluntary filing, with its much simpler requirements, if the
    foreign proceeding that has been recognized is a main
    proceeding.
    ---------------------------------------------------------------------------
        \26\ See id. at 28, Art. 11.
        \27\ Id. at 38, para.para. 97-99.
    ---------------------------------------------------------------------------
    Section 1512. Participation of a foreign representative in a case under
            this title
        This section follows article 12 of the Model Law with a
    slight alteration to tie into United States procedural
    terminology.\28\ The effect of this section is to make the
    recognized foreign representative a party in interest in any
    pending or later commenced United States bankruptcy case.\29\
    Throughout this chapter, the word ``case'' has been substituted
    for the word ``proceeding'' in the Model Law when referring to
    cases under the United States Bankruptcy Code, to conform to
    United States usage.
    ---------------------------------------------------------------------------
        \28\ Id. at 29, Art. 12.
        \29\ Id. at 29, para.para. 10-102.
    ---------------------------------------------------------------------------
    Section 1513. Access of foreign creditors to a case under this title
        This section mandates nondiscriminatory or ``national''
    treatment for foreign creditors, except as provided in
    subsection (b) and section 1514. It follows the intent of Model
    Law article 13, but the language required alteration to fit
    into the Bankruptcy Code.\30\ The law as to priority for
    foreign claims that fit within a class given priority treatment
    under section 507 (for example, foreign employees or spouses)
    is unsettled. This section permits the continued development of
    case law on that subject and its general principle of national
    treatment should be an important factor to be considered. At a
    minimum, under this section, foreign claims must receive the
    treatment given to general unsecured claims without priority,
    unless they are in a class of claims in which domestic
    creditors would also be subordinated.\31\ The Model Law allows
    for an exception to the policy of nondiscrimination as to
    foreign revenue and other public law claims.\32\ Such claims
    (such as tax and Social Security claims) have been denied
    enforcement in the United States traditionally, inside and
    outside of bankruptcy. The Bankruptcy Code is silent on this
    point, so the rule is purely a matter of traditional case law.
    It is not clear if this policy should be maintained or
    modified, so this section leaves it to developing case law. It
    also allows the Department of the Treasury to negotiate
    reciprocal arrangements with our tax treaty partners in this
    regard, although it does not mandate any restriction of the
    evolution of case law pending such negotiations.
    ---------------------------------------------------------------------------
        \30\ Id. at 30, para. 103.
        \31\ See id. at 30, para. 104.
        \32\ See id. at 31, para. 105.
    ---------------------------------------------------------------------------
    Section 1514. Notification of foreign creditors concerning a case under
            title 11
        This section ensures that foreign creditors receive proper
    notice of cases in the United States.\33\ As a ``foreign
    creditor'' is not a defined term, foreign addresses are used as
    the distinguishing factor. The Federal Rules of Bankruptcy
    Procedure (``Rules'') should be amended to conform to the
    requirements of this section, including a special form for
    initial notice to such creditors. In particular, the Rules must
    provide for additional time for such creditors to file proofs
    of claim where appropriate and must provide for the court to
    make specific orders in that regard in proper circumstances.
    The notice must specify that secured claims must be asserted,
    because in many countries such claims are not affected by an
    insolvency proceeding and need not be filed.\34\ Of course, if
    a foreign creditor has made an appropriate request for notice,
    it will receive notices in every instance where notices would
    be sent to other creditors who have made such requests.
    Subsection (d) replaces the reference to ``a reasonable time
    period'' in Model Law article 14(3)(a).\35\ It makes clear that
    the Rules, local rules, and court orders must make appropriate
    adjustments in time periods and bar dates so that foreign
    creditors have a reasonable time within which to receive notice
    or take an action.
    ---------------------------------------------------------------------------
        \33\ See Model Law, Art. 14; Guide at 31-32, para.para. 106-109.
        \34\ Guide at 33, para. 111.
        \35\ Id. at 31, Art. 14(3)(a).
    ---------------------------------------------------------------------------
    Section 1515. Application for recognition of a foreign proceeding
        This section follows article 15 of the Model Law with minor
    changes.\36\ The rules will require amendment to provide forms
    for some or all of the documents mentioned in this section, to
    make necessary additions to rules 1000 and 2002 to facilitate
    appropriate notices of the hearing on the petition for
    recognition, and to require filing of lists of creditors and
    other interested persons who should receive notices. Throughout
    the Model Law, the question of notice procedure is left to the
    law of the enacting State.\37\
    ---------------------------------------------------------------------------
        \36\ Id. at 33.
        \37\ See id. at 36, para. 121.
    ---------------------------------------------------------------------------
    Section 1516. Presumptions concerning recognition
        This section follows article 16 of the Model Law with minor
    changes.\38\ Although sections 1515 and 1516 are designed to
    make recognition as simple and expedient as possible, the court
    may hear proof on any element stated. The ultimate burden as to
    each element is on the foreign representative, although the
    court is entitled to shift the burden to the extent indicated
    in section 1516. The word ``proof'' in subsection (3) has been
    changed to ``evidence'' to make it clearer using United States
    terminology that the ultimate burden is on the foreign
    representative.\39\ ``Registered office'' is the term used in
    the Model Law to refer to the place of incorporation or the
    equivalent for an entity that is not a natural person.\40\ The
    presumption that the place of the registered office is also the
    center of the debtor's main interest is included for speed and
    convenience of proof where there is no serious controversy.
    ---------------------------------------------------------------------------
        \38\ Id. at 36
        \39\ Id. at 36, Art. 16(3).
        \40\ Id.
    ---------------------------------------------------------------------------
    Section 1517. Order granting recognition
        This section closely follows article 17 of the Model Law,
    with a few exceptions.\41\ The decision to grant recognition is
    not dependent upon any findings about the nature of the foreign
    proceedings of the sort previously mandated by section 304(c)
    of the Bankruptcy Code. The requirements of this section, which
    incorporates the definitions in section 1502 and sections
    101(23) and (24), are all that must be fulfilled to attain
    recognition. Reciprocity was specifically suggested as a
    requirement for recognition on more than one occasion in the
    negotiations that resulted in the Model Law. It was rejected by
    overwhelming consensus each time. The United States was one of
    the leading countries opposing the inclusion of a reciprocity
    requirement.\42\ In this regard, the Model Law conforms to
    section 304, which has no such requirement.
    ---------------------------------------------------------------------------
        \41\ Id. at 37.
        \42\ Report of the working group on Insolvency Law on the work of
    its Twentieth Session (Vienna, 7-18 October 1996), at 6, para.para. 16-
    20.
    ---------------------------------------------------------------------------
        The drafters of the Model Law understood that only a main
    proceeding or a non-main proceeding meeting the standards of
    section 1502 (that is, one brought where the debtor has an
    establishment) were entitled to recognition under this section.
    The Model Law has been slightly modified to make this point
    clear by referring to the section 1502 definition of main and
    non-main proceedings, as well as to the general definition of a
    foreign proceeding in section 101(23). Naturally, a petition
    under section 1515 must show that proceeding is a main or a
    qualifying non-main proceeding in order to win recognition
    under this section.
        Consistent with the position of various civil law
    representatives in the drafting of the Model Law, recognition
    creates a status with the effects set forth in section 1520, so
    those effects are not viewed as orders to be modified, as are
    orders granting relief under sections 1519 and 1521. Subsection
    (4) states the grounds for modifying or terminating
    recognition. On the other hand, the effects of recognition
    (found in section 1520 and including an automatic stay) are
    subject to modification under section 362(d), made applicable
    by section 1520(2), which permits relief from the automatic
    stay of section 1520 for cause.
        Paragraph 1(d) of section 17 of the Model Law has been
    omitted as an unnecessary requirement for United States
    purposes, because a petition submitted to the wrong court will
    be dismissed or transferred under other provisions of United
    States law.\43\ The reference to section 350 refers to the
    routine closing of a case that has been completed and will
    invoke requirements including a final report from the foreign
    representative in such form as the rules may provide or a court
    may order.\44\
    ---------------------------------------------------------------------------
        \43\ Guide at 37, Art. 17(1)(d).
        \44\ Id.
    ---------------------------------------------------------------------------
    Section 1518. Subsequent information
        This section follows the Model Law, except to eliminate the
    word ``same'' which is rendered unnecessary by the definition
    of ``debtor'' in section 1502 and to provide for a formal
    document to be filed with the court.\45\ Judges in several
    jurisdictions, including the United States, have reported a
    need for a requirement of complete and candid reports to the
    court of all proceedings, worldwide, involving the debtor. This
    section will ensure that such information is provided to the
    court on a timely basis. Any failure to comply with this
    section will be subject to the sanctions available to the court
    for violations of the statute. The section leaves to the rules
    the form of the required notice and related questions of notice
    to parties in interest, the time for filing, and the like.
    ---------------------------------------------------------------------------
        \45\ Id. at 39-40, para.para. 133, 134.
    ---------------------------------------------------------------------------
    Section 1519. Relief may be granted upon petition for recognition of a
            foreign proceeding
        This section generally follows article 19 of the Model
    Law.\46\ The bankruptcy court will have jurisdiction to grant
    emergency relief under rule 7065 pending a hearing on the
    petition for recognition. This section does not expand or
    reduce the scope of section 105 as determined by cases under
    section 105 nor does it modify the sweep of sections 555 to
    560. Subsection (d) precludes injunctive relief against police
    and regulatory action under section 1519, leaving section 105
    as the only avenue to such relief. Subsection (e) makes clear
    that this section contemplates injunctive relief and that such
    relief is subject to specific rules and a body of
    jurisprudence. Subsection (f) was added to complement
    amendments to the Bankruptcy Code provisions dealing with
    financial contracts.
    ---------------------------------------------------------------------------
        \46\ Id. at 40.
    ---------------------------------------------------------------------------
    Section 1520. Effects of recognition of a foreign main proceeding
        In general, this chapter sets forth all the relief that is
    available as a matter of right based upon recognition
    hereunder, although additional assistance may be provided under
    section 1507 and this chapter have no effect on any relief
    currently available under section 105. The stay created by
    article 20 of the Model Law is imported to chapter 15 from
    existing provisions of the Code. Subsection (a)(1) combines
    subsections 1(a) and (b) of article 20 of the Model Law,
    because section 362 imposes the restrictions required by those
    two subsections and additional restrictions as well.\47\
    ---------------------------------------------------------------------------
        \47\ Id. at 42, Art. 20 1(a), (b).
    ---------------------------------------------------------------------------
        Subsections (a)(2) and (4) apply the Bankruptcy Code
    sections that impose the restrictions called for by subsection
    1(c) of the Model Law. In both cases, the provisions are
    broader and more complete than those contemplated by the Model
    Law, but include all the restraints the Model Law provisions
    would impose.\48\ As the foreign proceeding may or may not
    create an ``estate'' similar to that created in cases under
    this title, the restraints are applicable to actions against
    the debtor under section 362(a) and with respect to the
    property of the debtor under the remaining sections. The only
    property covered by this section is property within the
    territorial jurisdiction of the United States as defined in
    section 1502. To achieve effects on property of the debtor
    which is not within the territorial jurisdiction of the United
    States, the foreign representative would have to commence a
    case under another chapter of this title.
    ---------------------------------------------------------------------------
        \48\ Id. at 42, 45.
    ---------------------------------------------------------------------------
        By applying sections 361 and 362, subsection (a) makes
    applicable the United States exceptions and limitations to the
    restraints imposed on creditors, debtors, and other in a case
    under this title, as stated in article 20(2) of the Model
    Law.\49\ It also introduces the concept of adequate protection
    provided in sections 362 and 363. These exceptions and
    limitations include those set forth in sections 362(b), (c) and
    (d). As one result, the court has the power to terminate the
    stay pursuant to section 362(d), for cause, including a failure
    of adequate protection.\50\
    ---------------------------------------------------------------------------
        \49\ Id. at 42, Art. 20(2); 44, para.para. 148, 150.
        \50\ Id. at 42, Art. 20(3); 44-45, para.para. 151 152.
    ---------------------------------------------------------------------------
        Subsection (a)(2), by its reference to sections 363 and 552
    adds to the powers of a foreign representative of a foreign
    main proceeding an automatic right to operate the debtor's
    business and exercise the power of a trustee under sections 363
    and 542, unless the court orders otherwise. A foreign
    representative of a foreign main proceeding may need to
    continue a business operation to maintain value and granting
    that authority automatically will eliminate the risk of delay.
    If the court is uncomfortable about this authority in a
    particular situation it can ``order otherwise'' as part of the
    order granting recognition.
        Two special exceptions to the automatic stay are embodied
    in subsections (b) and (c). To preserve a claim in certain
    foreign countries, it may be necessary to commence an action.
    Subsection (b) permits the commencement of such an action, but
    would not allow for its further prosecution. Subsection (c)
    provides that there is no stay of the commencement of a full
    United States bankruptcy case. This essentially provides an
    escape hatch through which any entity, including the foreign
    representative, can flee into a full case. The full case,
    however, will remain subject to subchapters IV and V on
    cooperation and coordination of proceedings and to section 305
    providing for stay or dismissal. Section 108 of the Bankruptcy
    Code provides the tolling protection intended by Model Law
    article 20(3), so no exception is necessary as to claims that
    might be extinguished under United States law.\51\
    ---------------------------------------------------------------------------
        \51\ Id.
    ---------------------------------------------------------------------------
    Section 1521. Relief that may be granted upon recognition of a foreign
            proceeding
        This section follows article 21 of the Model Law, with
    detailed changes to fit United States law.\52\ The exceptions
    in subsection (a)(7) relate to avoiding powers. The foreign
    representative's status as to such powers is governed by
    section 1523 below. The avoiding power in section 549 and the
    exceptions to that power are covered by section 1520(a)(2). The
    word ``adequately'' in the Model Law, articles 21(2) and 22(1),
    has been changed to ``sufficiently'' in sections 1521(b) and
    1522(a) to avoid confusion with a very specialized legal term
    in United States bankruptcy, ``adequate protection.'' \53\
    Subsection (c) is designed to limit relief to assets having
    some direct connection with a non-main proceeding, for example
    where they were part of an operating division in the
    jurisdiction of the non-main proceeding when they were
    fraudulently conveyed and then brought to the United
    States.\54\ Subsections (d), (e) and (f) are identical to those
    same subsections of section 1519. This section does not expand
    or reduce the scope of relief currently available in ancillary
    cases under sections 105 and 304 nor does it modify the sweep
    of sections 555 through 560.
    ---------------------------------------------------------------------------
        \52\ Id. at 45-46, Art. 21.
        \53\ Id. at 46, Art. 21(2); 47, Art. 22(1).
        \54\ See id. at 46-47, para.para. 158, 160.
    ---------------------------------------------------------------------------
    Section 1522. Protection of creditors and other interested persons
        This section follows article 22 of the Model Law with
    changes for United States usage and references to relevant
    Bankruptcy Code sections.\55\ It gives the bankruptcy court
    broad latitude to mold relief to circumstances, including
    appropriate responses if it is shown that the foreign
    proceeding is seriously and unjustifiably injuring United
    States creditors. For response to a showing that the conditions
    necessary to recognition did not actually exist or have ceased
    to exist, see section 1517. Concerning the change of
    ``adequately'' in the Model Law to ``sufficiently'' in this
    section, see section 1521. Subsection (d) is new and simply
    makes clear that an examiner appointed in a case under chapter
    15 shall be subject to certain duties and bonding requirements
    based on those imposed on trustees and examiners under other
    chapters of this title.
    ---------------------------------------------------------------------------
        \55\ Id. at 47.
    ---------------------------------------------------------------------------
    Section 1523. Actions to avoid acts detrimental to creditors
        This section follows article 23 of the Model Law, with
    wording to fit it within procedure under this title.\56\ It
    confers standing on a recognized foreign representative to
    assert an avoidance action but only in a pending case under
    another chapter of this title. The Model Law is not clear about
    whether it would grant standing in a recognized foreign
    proceeding if no full case were pending. This limitation
    reflects concerns raised by the United States delegation during
    the UNCITRAL debates that a simple grant of standing to bring
    avoidance actions neglects to address very difficult choice of
    law and forum issues. This limited grant of standing in section
    1523 does not create or establish any legal right of avoidance
    nor does it create or imply any legal rules with respect to the
    choice of applicable law as to the avoidance of any transfer of
    obligation.\57\ The courts will determine the nature and extent
    of any such action and what national law may be applicable to
    such action.
    ---------------------------------------------------------------------------
        \56\ Id. at 48-49.
        \57\ See id. at 49, para. 166.
    ---------------------------------------------------------------------------
    Section 1524. Intervention by a foreign representative
        The wording is the same as the Model Law, except for a few
    clarifying words.\58\ This section gives the foreign
    representative whose foreign proceeding has been recognized the
    right to intervene in United States cases, State or Federal,
    where the debtor is a party. Recognition being an act under
    Federal bankruptcy law, it must take effect in State as well as
    Federal courts. This section does not require substituting the
    foreign representative for the debtor, although that result may
    be appropriate in some circumstances.
    ---------------------------------------------------------------------------
        \58\ Id. at 49.
    ---------------------------------------------------------------------------
    Section 1525. Cooperation and direct communication between the court
            and foreign courts or foreign representatives
        The wording is almost exactly that of the Model Law.\59\
    The right of courts to communicate with other courts in
    worldwide insolvency cases is of central importance. This
    section authorizes courts to do so. This right must be
    exercised, however, with due regard to the rights of the
    parties. Guidelines for such communications are left to the
    Federal rules of bankruptcy procedure.
    ---------------------------------------------------------------------------
        \59\ Id. at 50.
    ---------------------------------------------------------------------------
    Section 1526. Cooperation and direct communication between the trustee
            and foreign courts or foreign representatives
        This section follows the Model Law almost exactly.\60\ The
    language in Model Law article 26 concerning the trustee's
    function was eliminated as unnecessary because always implied
    under United States law. The section authorizes the trustee,
    including a debtor in possession, to cooperate with other
    proceedings. Subsection (3) is not taken from the Model Law but
    is added so that any examiner appointed under this chapter will
    be designated by the United States trustee and will be bonded.
    ---------------------------------------------------------------------------
        \60\ Id. at 51.
    ---------------------------------------------------------------------------
    Section 1527. Forms of cooperation
        This section follows the Model Law exactly.\61\ United
    States bankruptcy courts have already engaged in most of the
    forms of cooperation mentioned here, but they now have explicit
    statutory authorization for acts like the approval of protocols
    of the sort used in cases.\62\
    ---------------------------------------------------------------------------
        \61\ Guide at 51, 53.
        \62\ See e.g., Gitlin v. Societe Generale, Barclays Bank (In re
    Maxwell Communication Corp.), 93 F.2d 1036 (2d Cir. 1996).
    ---------------------------------------------------------------------------
    Section 1528. Commencement of a case under title 11 after recognition
            of a foreign main proceeding
        This section follows the Model Law, with specifics of
    United States law replacing the general clause at the end to
    cover assets normally included within the jurisdiction of the
    United States courts in bankruptcy cases, except where assets
    are subject to the jurisdiction of another recognized
    proceeding.\63\ In a full bankruptcy case, the United States
    bankruptcy court generally has jurisdiction over assets outside
    the United States. Here that jurisdiction is limited where
    those assets are controlled by another recognized proceeding,
    if it is a main proceeding.
    ---------------------------------------------------------------------------
        \63\ Guide at 54-55.
    ---------------------------------------------------------------------------
        The court may use section 305 of this title to dismiss,
    stay, or limit a case as necessary to promote cooperation and
    coordination in a cross-border case. In addition, although the
    jurisdictional limitation applies only to United States
    bankruptcy cases commenced after recognition of a foreign
    proceeding, the court has ample authority under the next
    section and section 305 to exercise its discretion to dismiss,
    stay, or limit a United States case filed after a petition for
    recognition of a foreign main proceeding has been filed but
    before it has been approved, if recognition is ultimately
    granted.
    Section 1529. Coordination of a case under title 11 and a foreign
            proceeding
        This section follows the Model Law almost exactly, but
    subsection (4) adds a reference to section 305 to make it clear
    the bankruptcy court may continue to use that section, as under
    present law, to dismiss or suspend a United States case as part
    of coordination and cooperation with foreign proceedings.\64\
    This provision is consistent with United States policy to act
    ancillary to a foreign main proceeding whenever possible.
    ---------------------------------------------------------------------------
        \64\ Id. at 55-56.
    ---------------------------------------------------------------------------
    Section 1530. Coordination of more than one foreign proceeding
        This section follows exactly article 30 of the Model
    Law.\65\ It ensures that a foreign main proceeding will be
    given primacy in the United States, consistent with the overall
    approach of the United States favoring assistance to foreign
    main proceedings.
    ---------------------------------------------------------------------------
        \65\ Id. at 57.
    ---------------------------------------------------------------------------
    Section 1531. Presumption of insolvency based on recognition of a
            foreign main proceeding
        This section follows the Model Law exactly, inserting a
    reference to the standard for an involuntary case under this
    title.\66\ Where an insolvency proceeding has begun in the home
    country of the debtor, and in the absence of contrary evidence,
    the foreign representative should not have to make a new
    showing that the debtor is in the sort of financial distress
    requiring a collective judicial remedy. The word ``proof'' here
    means ``presumption.'' The presumption does not arise for any
    purpose outside this section.
    ---------------------------------------------------------------------------
        \66\ Id. at 58.
    ---------------------------------------------------------------------------
    Section 1532. Rule of payment in concurrent proceeding
        This section follows the Model Law exactly and is very
    similar to prior section 508(a), which is repealed. The Model
    Law language is somewhat clearer and broader than the
    equivalent language of prior section 508(a).\67\
    ---------------------------------------------------------------------------
        \67\ Id. at 59.
    ---------------------------------------------------------------------------
    Section 802. Other amendments to titles 11 and 28, United States Code
        Section 802(a) amends section 103 of the Bankruptcy Code to
    clarify the provisions of the Code that apply to chapter 15 and
    to specify which portions of chapter 15 apply in cases under
    other chapters of title 11. Section 802(b) amends the
    Bankruptcy Code's definitions of foreign proceeding and foreign
    representative in section 101. The new definitions are nearly
    identical to those contained in the Model Law but add to the
    phrase ``under a law relating to insolvency'' the words ``or
    debt adjustment.'' This addition emphasizes that the scope of
    the Model Law and chapter 15 is not limited to proceedings
    involving only debtors which are technically insolvent, but
    broadly includes all proceedings involving debtors in severe
    financial distress, so long as those proceedings also meet the
    other criteria of section 101(24).\68\
    ---------------------------------------------------------------------------
        \68\ Id. at 51-52, 71.
    ---------------------------------------------------------------------------
        Section 802(c) amends section 157(b)(2) of title 28 to
    provide that proceedings under chapter 15 will be core
    proceedings while other amendments to title 28 provide that the
    United States trustee's standing extends to cases under chapter
    15 and that the United States trustee's duties include acting
    in chapter 15 cases. Although the United States will continue
    to assert worldwide jurisdiction over property of a domestic or
    foreign debtor in a full bankruptcy case under chapters 7 and
    13 of this title, subject to deference to foreign proceedings
    under chapter 15 and section 305, the situation is different in
    a case commenced under chapter 15. There the United States is
    acting solely in an ancillary position, so jurisdiction over
    property is limited to that stated in chapter 15.
        Section 802(d) amends section 109 of the Bankruptcy Code to
    permit recognition of foreign proceedings involving foreign
    insurance companies and involving foreign banks which do not
    have a branch or agency in the United States (as defined in 12
    U.S.C. Sec. 3101). While a foreign bank not subject to United
    States regulation will be eligible for chapter 15 as a
    consequence of the amendment to section 109, section 303
    prohibits the commencement of a full involuntary case against
    such a foreign bank unless the bank is a debtor in a foreign
    proceeding.
        While section 304 is repealed and replaced by chapter 15,
    access to the jurisprudence which developed under section 304
    is preserved in the context of new section 1507. On deciding
    whether to grant the Additional Assistance contemplated by
    section 1507, the court must consider the same factors that had
    been imposed by former section 304. The venue provisions for
    cases ancillary to foreign proceedings have been amended to
    provide a hierarchy of choices beginning with principal place
    of business in the United States, if any. If there is no
    principal place of business in the United States, but there is
    litigation against a debtor, then the district in which the
    litigation is pending would be the appropriate venue. In any
    other case, venue must be determined with reference to the
    interests of justice and the convenience of the parties.

                  TITLE IX--FINANCIAL CONTRACT PROVISIONS \69\
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        \69\ Title IX is substantively very similar to H.R. 1161, the
    Financial Contract Netting Improvement Act of 1999, a bill that was
    introduced in the 106th Congress. Accordingly, the text explaining
    title IX is derived from the report accompanying this bill. See H.R.
    Rep. No. 106-834, Pt.1 (2000).
    ---------------------------------------------------------------------------
    Section 901. Treatment of certain agreements by conservators or
            receivers of insured depository institutions
        Subsections (a) through (f) amend the Federal Deposit
    Insurance Act's (FDIA) definitions of ``qualified financial
    contract'' (QFC), ``securities contract,'' ``commodity
    contract,'' ``forward contract,'' ``repurchase agreement'' and
    ``swap agreement'' to make them consistent with the definitions
    in the Bankruptcy Code, as amended by this Act.
        Subsection (b) amends the definition of ``securities
    contract'' to encompass options on securities and margin loans.
    The inclusion of ``margin loans'' in the definition is intended
    to encompass only those loans commonly known in the securities
    industry as ``margin loans'' and does not include other loans
    utilizing securities as collateral, however documented.
    Subsection (b) 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 (e) amends the definition of a ``repurchase
    agreement'' to codify the substance of the Federal Deposit
    Insurance Corporation's (FDIC) 1995 regulation defining
    repurchase agreement to include those on qualified foreign
    government securities.\70\ The term ``qualified foreign
    government securities'' is defined to include those that are
    direct obligations of, or fully guaranteed by, central
    governments of members of the Organization for Economic
    Cooperation and Development (OECD). Subsection (e) reflects
    developments in the repurchase agreement markets, which
    increasingly use foreign government securities as the
    underlying asset. Any risk presented by this modification is
    addressed by limiting it to those issued or guaranteed by OECD
    member States. Subsection (e), like subsection (b) for
    ``securities contracts,'' specifies that repurchase obligations
    under a participation in a commercial mortgage loan do not make
    the participation agreement a ``repurchase agreement.'' Such
    repurchase obligations embedded in participations 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.''
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        \70\ See 12 C.F.R. ' 360.5.
    ---------------------------------------------------------------------------
        Subsection (f) amends the definition of ``swap agreement''
    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,
    spread, future, or forward agreement; a debt index or debt
    swap, option, future, or forward agreement; a credit swap,
    option, future, or forward agreement; a commodity index or
    commodity swap, option, future, or forward agreement; or a
    weather swap, weather derivative, or a weather option.'' This
    amendment would achieve contractual netting across economically
    similar over-the-counter products that can be terminated and
    closed out on a mark-to-market basis.
        Traditional commercial and lending arrangements, 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.'' In addition, these definitions apply only for
    purposes of the FDIA and the Bankruptcy Code. These
    definitions, and the characterization of a certain transaction
    as a ``swap agreement,'' are not intended to effect the
    characterization, definition, or treatment of any instruments
    under any other statute, regulation, or rule including, but not
    limited to, the statutes, regulations or rules enumerated in
    subsection (f).
        Subsection (g) amends the FDIA by adding a definition for
    ``transfer,'' which is a key term used in the FDIA, to ensure
    that it is broadly construed to encompass dispositions of
    property or interests in property. The definition tracks that
    in section 101 of the Bankruptcy Code.
        Subsection (h) makes clarifying technical changes to
    conform the receivership and conservatorship provisions of the
    FDIA. This subsection (h) also clarifies that the FDIA
    expressly protects rights under security agreements,
    arrangements or other credit enhancement related to one or more
    qualified financial contracts (QFCs). An example of a security
    arrangement is a right of set off, and examples of other credit
    enhancements are letters of credit, guarantees, reimbursement
    obligations and other similar agreements.
        Subsection (i) clarifies that no provision of Federal or
    State law relating to the avoidance of preferential or
    fraudulent transfers (including the anti-preference provision
    of the National Bank Act) can be invoked to avoid a transfer
    made in connection with any QFC of an insured depository
    institution in conservatorship or receivership, absent actual
    fraudulent intent on the part of the transferee.
    Section 902. Authority of the corporation with respect to failed and
            failing institutions
        Section 203 provides that no provision of law, including
    the Federal Deposit Insurance Corporation Improvement Act
    (FDICIA), shall be construed to limit the power of the FDIC to
    transfer or to repudiate any QFC in accordance with its powers
    under the FDIA. As discussed below, there has been some
    uncertainty regarding whether or not FDICIA limits the
    authority of the FDIC to transfer or to repudiate QFCs of an
    insolvent financial institution. Section 902, as well as other
    provisions in the Act, clarify that FDICIA does not limit the
    transfer powers of the FDIC with respect to QFCs.
        In addition, section 902 denies enforcement to ``walkaway''
    clauses in QFCs. A walkaway clause is defined as a provision
    that, after calculation of a value of a party's position or an
    amount due to or from one of the parties upon termination,
    liquidation or acceleration of the QFC, either does not create
    a payment obligation of a party or extinguishes a payment
    obligation of a party in whole or in part solely because of
    such party's status as a non-defaulting party.
    Section 903. Amendments relating to transfers of qualified financial
            contracts
        Subsection (a) amends the FDIA to expand the transfer
    authority of the FDIC to permit transfers of QFCs to
    ``financial institutions'' as defined in FDICIA or in
    regulations. This provision allows the FDIC to transfer QFCs to
    a non-depository financial institution, provided the
    institution is not subject to bankruptcy or insolvency
    proceedings. The new FDIA provision specifies that when the
    FDIC transfers QFCs that are subject to the rules of a
    particular clearing organization, the transfer will not require
    the clearing organization to accept the transferee as a member
    of the organization. This provision gives the FDIC flexibility
    in resolving QFCs subject to the rules of a clearing
    organization, while preserving the ability of such
    organizations to enforce appropriate risk reducing membership
    requirements. The new FDIA provision also permits transfers to
    an eligible financial institution that is a non-U.S. person, or
    the branch or agency of a non-U.S. person if, following the
    transfer, the contractual rights of the parties would be
    enforceable substantially to the same extent as under the FDIA.
        Subsection (b) amends the notification requirements
    following a transfer of the QFCs of a failed depository
    institution to require the FDIC to notify any party to a
    transferred QFC of such transfer by 5:00 p.m. (Eastern Time) on
    the business day following the date of the appointment of the
    FDIC acting as receiver or following the date of such transfer
    by the FDIC acting as a conservator. This amendment is
    consistent with the policy statement on QFCs issued by the FDIC
    on December 12, 1989.
        Subsection (c) amends the FDIA to clarify the relationship
    between the FDIA and FDICIA. There has been some uncertainty
    whether FDICIA permits counterparties to terminate or liquidate
    a QFC before the expiration of the time period provided by the
    FDIA during which the FDIC may repudiate or transfer a QFC in a
    conservatorship or receivership. Subsection (c) provides that a
    party may not terminate a QFC based solely on the appointment
    of the FDIC as receiver until 5:00 p.m. (Eastern Time) on the
    business day following the appointment of the receiver or after
    the person has received notice of a transfer under FDIA section
    11(d)(9), or based solely on the appointment of the FDIC as
    conservator, notwithstanding the provisions of FDICIA. This
    provides the FDIC with an opportunity to undertake an orderly
    resolution of the insured depository institution. The amendment
    also prohibits the enforcement of rights of termination or
    liquidation that are based solely on the ``financial
    condition'' of the depository institution in receivership or
    conservatorship. For example, termination based on a cross-
    default provision in a QFC that is triggered upon a default
    under another contract could be stayed if such other default
    was caused by an acceleration of amounts due under that other
    contract, and such acceleration was based solely on the
    appointment of a conservator or receiver for that depository
    institution. Similarly, a provision in a QFC permitting
    termination of the QFC based solely on a downgraded credit
    rating of a party will not be enforceable in an FDIC
    receivership or conservatorship because the provision is based
    solely on the financial condition of the depository institution
    in default. However, any payment, delivery or other
    performance-based default, or breach of a representation or
    covenant putting in question the enforceability of the
    agreement, will not be deemed to be based solely on financial
    condition for purposes of this provision. The amendment is not
    intended to prevent counterparties from taking all actions
    permitted and recovering all damages authorized upon
    repudiation of any QFC by a conservator or receiver. The
    amendment allows the FDIC to meet its obligation to provide
    notice to parties to transferred QFCs by taking steps
    reasonably calculated to provide notice to such parties by the
    required time. This is consistent with the existing policy
    statement on QFCs issued by the FDIC on December 12, 1989.
        Finally, the amendment permits the FDIC to transfer QFCs of
    a failed depository institution to a bridge bank or a
    depository institution organized by the FDIC for which a
    conservator is appointed either (i) immediately upon the
    organization of such institution or (ii) at the time of a
    purchase and assumption transaction between the FDIC and the
    institution. This provision clarifies that such institutions
    are not to be considered financial institutions that are
    ineligible to receive such transfers under FDIA section
    11(e)(9). This is consistent with the existing policy statement
    on QFCs issued by the FDIC on December 12, 1989.
    Section 904. Amendments relating to disaffirmance or repudiation of
            qualified financial contracts
        Section 904 limits the disaffirmance and repudiation
    authority of the FDIC with respect to QFCs so that such
    authority is consistent with the FDIC's transfer authority
    under FDIA section 11(e)(9). This ensures that no
    disaffirmance, repudiation or transfer authority of the FDIC
    may be exercised to ``cherry-pick'' or otherwise treat
    independently all the QFCs between a depository institution in
    default and a person or any affiliate of such person. The FDIC
    has announced that its policy is not to repudiate or disaffirm
    QFCs selectively. This unified treatment is fundamental to the
    reduction of systemic risk.
    Section 905. Clarifying amendment relating to master agreements
        Section 905 states that a master agreement for one or more
    securities contracts, commodity contracts, forward contracts,
    repurchase agreements or swap agreements will be treated as a
    single QFC under the FDIA. This provision ensures that cross-
    product netting pursuant to a master agreement will be
    enforceable under the FDIA. Cross-product netting permits a
    wide variety of financial transactions between two parties to
    be netted, thereby maximizing the present and potential future
    risk-reducing benefits of the netting arrangement between the
    parties. Express recognition of the enforceability of such
    cross-product master agreements furthers the policy of
    increasing legal certainty and reducing systemic risks in the
    case of an insolvency of a large financial participant. Similar
    Bankruptcy Code clarifications to recognize cross-product
    netting both under a master agreement and in the absence of a
    master agreement are described below.
    Section 906. Federal Deposit Insurance Corporation Improvement Act of
            1991.
        Subsection (a)(1) amends the definition of ``clearing
    organization'' to include clearinghouses that are subject to
    exemptions pursuant to orders of the SEC or the CFTC.
        The FDICIA provides that a netting arrangement will be
    enforced pursuant to its terms, notwithstanding the failure of
    a party to the agreement. However, the current netting
    provisions of FDICIA limit this protection to ``financial
    institutions,'' which include depository institutions.
    Subsection (a)(2) amends the FDICIA definition of covered
    institutions to include (i) uninsured national and State member
    banks, irrespective of their eligibility for deposit insurance
    and (ii) foreign banks (including the foreign bank and its
    branches or agencies as a combined group, or only the foreign
    bank parent of a branch or agency). The Federal Reserve Board
    already has by regulation included certain foreign banks in the
    definition of a ``financial institution'' for purposes of
    FDICIA and the latter change will statutorily extend the
    protections of FDICIA to ensure that U.S. financial
    organizations participating in netting agreements with foreign
    banks are covered by the Act, thereby enhancing the safety and
    soundness of these arrangements.
        Subsection (a)(3) amends FDICIA to provide that, for
    purposes of FDICIA, two or more clearing organizations that
    enter into a netting contract are considered ``members'' of
    each other. This assures the enforceability of netting
    arrangements involving two or more clearing organizations and a
    member common to all such organizations, thus reducing systemic
    risk in the event of the failure of such a member. Under the
    current FDICIA provisions, the enforceability of such
    arrangements depends on a case-by-case determination that
    clearing organizations could be regarded as members of each
    other for purposes of FDICIA.
        Subsection (a)(4) amends the FDICIA definition of netting
    contract and the general rules applicable to netting contracts.
    The current FDICIA provisions require that the netting
    agreement must be governed by the law of the United States or a
    State to receive the protections of FDICIA. However, many of
    these agreements, particularly netting arrangements covering
    positions taken in foreign exchange dealings, are governed by
    the laws of a foreign country. This subsection broadens the
    definition of ``netting contract'' to include those agreements
    governed by foreign law, and preserves the FDICIA requirement
    that a netting contract is not invalid under or precluded by
    Federal law.
        Subsections (b) and (c) establish two exceptions to
    FDICIA's protection of the enforceability of the provisions of
    netting contracts between financial institutions and among
    clearing organization members. First, the termination
    provisions of netting contracts will not be enforceable based
    solely on (i) the appointment of a conservator for an insolvent
    depository institution under the FDIA or (ii) the appointment
    of a receiver for such institution under the FDIA, if such
    receiver transfers or repudiates QFCs in accordance with the
    FDIA and gives notice of a transfer by 5:00 p.m. on the
    business day following the appointment of a receiver. This
    change is made to confirm the FDIC's flexibility to transfer or
    repudiate the QFCs of an insolvent depository institution in
    accordance with the terms of the FDIA. This modification also
    provides important legal certainty regarding the treatment of
    QFCs under the FDIA, because the current relationship between
    the FDIA and FDICIA is unclear. The second exception provides
    that FDICIA does not override a stay order under the Securities
    Investor Protection Act (SIPA) with respect to foreclosure on
    securities (but not cash) collateral of a debtor (section 911
    makes a conforming change to SIPA). There is also an exception
    relating to insolvent commodity brokers. Subsection (a)(5) adds
    a new definition of ``payment'' to FDICIA.
        Subsections (b) and (c) also clarify that a security
    agreement or other credit enhancement related to a netting
    contract is enforceable to the same extent as the underlying
    netting contract.
        Subsection (d) adds a new section 407 to FDICIA. This new
    section provides that, notwithstanding any other law, QFCs with
    uninsured national banks or uninsured Federal branches or
    agencies that are placed in receivership or conservatorship
    will be treated in the same manner as if the contract were with
    an insured national bank or insured Federal branch for which a
    receiver or conservator was appointed. This provision will
    ensure that parties to QFCs with uninsured national banks or
    uninsured Federal branches or agencies will have the same
    rights and obligations as parties entering into the same
    agreements with insured depository institutions. The new
    section also specifically limits the powers of a receiver or
    conservator for an uninsured national bank or uninsured Federal
    branch or agency to those provisions that address QFCs in
    section 1821(e)(8), (9), (10), and (11) of title 12 of the
    United States Code.
        While the amendment would apply the same rules to uninsured
    national banks and Federal branches and agencies that apply to
    insured institutions, the provision would not change the rules
    that apply to insured institutions. Nothing in this section
    would amend the International Banking Act, the Federal Deposit
    Insurance Act, the National Bank Act, or other statutory
    provisions with respect to receiverships of insured national
    banks or Federal branches.
    Section 907. Bankruptcy Code amendments
        Subsection (a)(1) amends the Bankruptcy Code definitions of
    ``repurchase agreement'' and ``swap agreement'' to conform them
    with the amendments to the FDIA contained in subsections (e)
    and (f) of section 901. 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. Any risk presented by this modification is
    addressed by limiting it to those obligating or guaranteed by
    OECD member States. 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
    participations 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 amendments to the
    definition of ``repurchase agreement'' are not intended to
    affect the interpretation of the definition of ``securities
    contract.''
        The definition of ``swap agreement,'' in conjunction with
    the addition of ``spot foreign exchange transactions'' that was
    added to the definition in 1994, 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. For that reason, 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 transaction
    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 one 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. However, traditional
    commercial and lending arrangements, 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) 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 section. 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 setoff; 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 ``commodity
    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'' to
    encompass options on securities and margin loans. The inclusion
    of ``margin loans'' in the definition is intended to encompass
    only those loans commonly known in the securities industry as
    ``margin loans'' and does not include other loans utilizing
    securities as collateral, however documented. 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 definition of
    ``forward contract merchant'' and also adds a new definition of
    ``financial participant'' to limit the potential impact of
    insolvencies upon other major market participants. These
    definitions 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, in most cases, to entities who qualify
    under the Bankruptcy Code's counter party limitations. However,
    where the counter party has transactions with a total gross
    dollar value of at least $1 billion in notional 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 counter parties) 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 rights irrespective of its
    inability otherwise to satisfy those counter party limitations.
    This change will help prevent systemic impacts upon the markets
    from a single failure.
        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 reference to ``setoff'' in this
    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.
        Subsection (e) amends section 546 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 section of the Act also clarifies the
    limitations on a trustee's power to avoid transfers made under
    swap agreements.
        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 sections 546 and 548(d).
        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 the current
    treatment of rights under swap agreements pursuant to section
    560 of the Bankruptcy Code. With respect to sections 555, 556,
    559, 560 and 561 of the Bankruptcy Code, 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 subsections 362(b)(6), (b)(7), (b)(17) and (b)(32). For
    example, cross-product netting will be protected from the
    automatic stay under section 561 even in the absence of a
    master netting agreement. Sections 561(b)(2) and (3) limit the
    exercise of contractual rights to net or to offset obligations
    where one leg of the obligations sought to be netted relates to
    commodity contracts. Under subsection (b)(2), netting or offset
    is not permitted if the obligations are not mutual. This means,
    for example, that proprietary obligations cannot be netted or
    offset against obligations held for, or on behalf of, some
    other party. Even if the obligations are mutual, under
    subsection (b)(3) netting or offset is not permitted in a
    commodity broker bankruptcy if the party seeking to net or to
    offset has no positive net equity in the commodity account at
    the debtor. Subsections (b)(2) and (b)(3) 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 the Bankruptcy Code, which gives priority to
    customer claims in the bankruptcy of a commodity broker.
        Under this provision, 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 Section 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 counter party 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 cases and proceedings under the Bankruptcy Code) will
    apply in a chapter 9 case. Although sections 555, 556, 559, and
    560 provide that they apply in any case or 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 section 304
    proceeding ancillary to a foreign insolvency proceeding.
        Subsections (n) and (o) amend those provisions in the
    Bankruptcy Code concerning the liquidation of commodity brokers
    and stockbrokers. Subchapter III of chapter 7 of the Bankruptcy
    Code details specific rules for the liquidation of
    stockbrokers. Subchapter IV of chapter 7 of the Bankruptcy Code
    and regulations of the CFTC detail specific rules for the
    liquidation of commodity brokers. These authorities are
    designed to protect customers and customer property of an
    insolvent stockbroker or commodity broker.
        Subsections (n) and (o) clarify the rights of parties to
    commodity contracts, securities contracts, forward contracts,
    swap agreements, repurchase agreements and master netting
    agreements with an insolvent commodity broker or stockbroker.
    They ensure that non-customers will not defeat the priority
    scheme of subchapter III or IV priority by gaining access to
    assets held in segregated customer accounts. The subsections
    also clarify that the exercise of termination and netting
    rights will not otherwise affect customer property or
    distributions by the trustee of the insolvent commodity broker
    or stockbroker after the exercise of such rights.
        Subsection (p) 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, and 561 of the
    Bankruptcy Code to the types of set off excepted from section
    553(b).
    Section 908. Recordkeeping requirements
        Section 908 amends section 11(e)(8) of the FDIA to
    explicitly authorize the FDIC, in consultation with appropriate
    Federal banking agencies, to prescribe regulations on
    recordkeeping with respect to QFCs. Adequate recordkeeping for
    such transactions is essential to effective risk management and
    to the reduction of systemic risk permitted by the orderly
    resolution of depository institutions utilizing QFCs.
    Section 909. Exemptions from contemporaneous execution requirement
        Section 909 amends section 13(e)(2) of the FDIA to provide
    that an agreement for the collateralization of governmental
    deposits, bankruptcy estate funds, Federal Reserve Bank or
    Federal Home Loan Bank extensions of credit or one or more QFCs
    shall not be deemed invalid solely because such agreement was
    not entered into contemporaneously with the acquisition of the
    collateral or because of pledges, delivery or substitution of
    the collateral made in accordance with such agreement. The
    amendment codifies portions of policy statements issued by the
    FDIC regarding the application of section 13(e), which codifies
    the ``Oench Duhme'' doctrine. With respect to QFCs, this
    codification recognizes that QFCs often are subject to
    collateral and other security arrangements that may require
    posting and return of collateral on an ongoing basis based on
    the mark-to-market values of the collateralized transactions.
    The codification of only portions of the existing FDIC policy
    statements on these and related issues should not give rise to
    any negative implication regarding the continued validity of
    these policy statements.
    Section 910. Damage measure
        Section 910 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 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 QFCs in the FDIA.
    Section 911. SIPC stay
        Section 911 amends SIPA to provide that an order or decree
    issued pursuant to SIPA shall not operate as a stay of any
    right of liquidation, termination, acceleration, offset or
    netting under one or more securities contracts, commodity
    contracts, forward contracts, repurchase agreements, swap
    agreements or master netting agreements (as defined in the
    Bankruptcy Code and including rights of foreclosure on
    collateral), except that such order or decree may stay any
    right to foreclose on securities (but not cash) collateral
    pledged by the debtor or sold by the debtor under a repurchase
    agreement (a corresponding amendment to FDICIA is made by the
    Act). A creditor that was stayed in exercising rights against
    securities collateral would be entitled to post-insolvency
    interest to the extent of the collateral.
    Section 912. Asset-backed securitizations
        Section 912 amends section 541 of the Bankruptcy Code to
    provide that certain assets transferred to an eligible entity
    in connection with an asset-backed securitization generally
    will not be included within the bankruptcy estate of the
    debtor. This provision recognizes that a valid transfer of such
    assets to an ``eligible entity,'' generally eliminates the
    debtor's legal or equitable interests in those assets.
    Accordingly, subject to the avoidance powers in section 548(a),
    the transfer will be treated as a sale of those assets not
    subject to avoidance.
    Section 913. Effective date; application of amendments
        Section 913(a) provides that title IX become effective on
    the Act's date of enactment. Section 913(b) provides that the
    amendments made by the Act shall not apply with respect to
    cases commenced, or to conservator and receiver appointments
    made before the date of enactment.

                     TITLE X--PROTECTION OF FAMILY FARMERS

    Section 1001. Permanent reenactment of chapter 12
        Section 1001(a) reenacts chapter 12 of the Bankruptcy Code
    and provides that such reenactment takes effect on July 1,
    2000. Section 1001(b) makes a conforming amendment to section
    302 of the Bankruptcy, Judges, United States Trustees, and
    Family Farmer Bankruptcy Act of 1986.
    Section 1002. Debt limit increase
        Section 1002 amends section 104(b) of the Bankruptcy Code
    to provide for annual or biannual adjustments of the debt limit
    for family farmers beginning on April 1, 2004.
    Section 1003. Certain claims owed to governmental units
        Section 1003(a) amends section 1222(a) of the Bankruptcy
    Code to require a chapter 12 plan provide for payment in full
    of all claims entitled to priority under section 507, unless
    the claim is owed to a governmental unit arising from the sale
    or exchange of any farm asset. If the claim falls within this
    exception, it 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. Section 1003(b) amends section 1231(b)
    of the Bankruptcy Code to have it apply to any governmental
    unit.

                   TITLE XI--HEATH CARE AND EMPLOYEE BENEFITS

    Section 1101. Definitions
        Section 1101(a) amends section 101 of the Bankruptcy Code
    to add a definition of the term ``health care business.'' A
    health care business is defined as any public or private entity
    (without regard as to whether the entity is organized for
    profit or not for profit) that is primarily engaged in offering
    to the general public facilities and services for certain
    specified purposes. Section 1101(b) amends section 101 of the
    Bankruptcy Code to define ``patient'' and ``patient records.''
    Section 1101(c) clarifies that the amendments implemented by
    section 1101(a) are not intended to affect the interpretation
    of section 109(b) of the Bankruptcy Code concerning an entity's
    eligibility to be a chapter 7 debtor.
    Section 1102. Disposal of patient records
        Section 1102 adds a provision to chapter 3 of the
    Bankruptcy Code specifying requirements for the disposal of
    patient records in a chapter 7, 9, or 11 case of a health care
    business where the trustee lacks sufficient funds to pay for
    the storage of such records in accordance with applicable
    Federal or State law. The requirements chiefly consist of
    providing notice to the affected patients and specifying the
    method of disposal for unclaimed records. These requirements
    are intended to protect the privacy and confidentiality of a
    patient's medical records when they are in the custody of a
    health care business in bankruptcy.
    Section 1103. Administrative expense claim for costs of closing a
            health care business and other administrative expenses
        Section 1103 amends section 503(b) of the Bankruptcy Code
    to provide that the actual, necessary costs and expenses of
    closing a health care business (including the disposal of
    patient records or transferral of patients) incurred by a
    trustee, Federal agency, or a department or agency of a State
    are allowed administrative expenses.
        With respect to a nonresidential real property lease
    previously assumed under section 365 and then subsequently
    rejected, section 1103 amends section 503(b) to provide that
    the sum of all monetary obligations due (excluding those
    arising from or related to a failure to operate or penalty
    provisions) for the 2-year period following the later of the
    rejection date or date of actual turnover of the premises
    (without reduction or setoff for any reason, except for sums
    actually received or to be received from a nondebtor) are
    allowed administrative expenses under section 503(b) of the
    Bankruptcy Code. The claim for remaining sums due for the
    balance of the lease's term shall be treated as a claim under
    section 502(b)(6).
    Section 1104. Appointment of ombudsman to act as patient advocate
        Section 1104(a) adds a provision to chapter 3 of the
    Bankruptcy Code requiring the court to order the appointment of
    an ombudsman within 30 days after the commencement of a chapter
    7, 9 or 11 case by a health care provider, unless the court
    finds that such appointment is not necessary for the protection
    of patients under the specific facts of the case. Section
    1104(a) requires the ombudsman to be a disinterested person.
    Pursuant to this provision, the ombudsman is responsible for
    monitoring the quality of patient care and to represent the
    interests of the patients. Within 60 days after his or her
    appointment, the ombudsman must report to the court at a
    hearing or in writing on the quality of patient care at the
    health care business. Subsequent reports are due not less
    frequently than every 60 days thereafter. If the ombudsman
    determines that the quality of patient care is declining
    significantly or is otherwise being materially compromised, the
    ombudsman must immediately notify the court by motion or
    written report (on notice to appropriate parties in interest).
    Section 1104(a) specifies that the ombudsman must maintain any
    information he or she obtains relating to patients as
    confidential. The ombudsman may not review confidential patient
    records unless the court provides prior approval, with
    restrictions to protect the confidentiality of such records.
        Section 1104(b) amends section 330(a)(1) of the Bankruptcy
    Code to authorize the payment of reasonable compensation to an
    ombudsman.
    Section 1105. Debtor in possession; duty of trustee to transfer
            patients
        Section 1105 amends section 704 of the Bankruptcy Code to
    require a chapter 7 trustee, chapter 11 trustee, or a chapter
    11 debtor in possession to use all reasonable and best efforts
    to transfer patients from a health care business that is being
    closed to an appropriate health care business. The transferee
    health care business should be in the vicinity of the
    transferor health care business, provide the patient with
    services that are substantially similar to those provided by
    the transferor health care business, and maintain a reasonable
    quality of care.
    Section 1106. Exclusion from program participation not subject to
            automatic stay
        Section 1106 amends section 362(b) of the Bankruptcy Code
    to except from the automatic stay the exclusion by the
    Secretary of Health and Human Services of a debtor from
    participation in the Medicare program or other specified
    Federal health care programs.

                        TITLE XII--TECHNICAL AMENDMENTS

    Section 1201. Definitions
        Section 1201 amends the definitions contained in section
    101 of the Bankruptcy Code. Paragraphs (1), (2), (4), and (7)
    of section 1201 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 (3) of section 1101 makes necessary and
    conforming amendments to cross references to the newly
    redesignated definitions.
        Paragraph (5) of section 1201 concerns single asset real
    estate debtors. A single asset real estate chapter 11 case
    presents special concerns. As the name implies, the principal
    asset in this type of case consists of some form of real
    estate, such as undeveloped land. Typically, the form of
    ownership of a single asset real estate debtor is a corporation
    or limited partnership. The largest creditor in a single asset
    real estate case is typically the secured lender who advanced
    the funds to the debtor to acquire the real property. Often, a
    single asset real estate debtor resorts to filing for
    bankruptcy relief for the sole purpose of staying an impending
    foreclosure proceeding or sale commenced by the secured lender.
    Foreclosure actions are filed when the debtor lacks sufficient
    cash flow to service the debt and maintain the property. Taxing
    authorities may also have liens against the property. Based on
    the nature of its principal asset, a single asset real estate
    debtor often has few, if any, unsecured creditors. If unsecured
    creditors exist, they may have only nominal claims against the
    single asset real estate debtor. Depending on the nature and
    ownership of any business operating on the debtor's real
    property, the debtor may have few, if any, employees.
    Accordingly, there may be little interest on behalf of
    unsecured creditors in a single asset real estate case to serve
    on a creditors' committee.
        In 1994, the Bankruptcy Code was amended to accord special
    treatment for a single asset real estate debtor. It defined
    this type of debtor as a bankruptcy estate comprised of a
    single piece of real property or project, other than
    residential real property with fewer than four residential
    units. The property or project must generate substantially all
    of the debtor's gross income. A debtor that conducts
    substantial business on the property beyond that relating to
    its operation is excluded from this definition. In addition,
    the definition fixed a monetary cap. To qualify as a single
    asset real estate debtor, the debtor could not have
    noncontingent, liquidated secured debts in excess of $4
    million.\71\ Subparagraph (5)(A) amends the definition of
    ``single asset real estate'' to exclude family farmers from
    this definition. Paragraph (5)(B) amends section 101(51B) of
    the Bankruptcy Code to eliminate the $4 million debt limitation
    on single asset 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. As a result of this amendment,
    creditors in more cases will be able to obtain the expedited
    relief from the automatic stay which is made available under
    section 362(d)(3) of the Bankruptcy Code.
    ---------------------------------------------------------------------------
        \71\ See 11 U.S.C. Sec. 101(51B).
    ---------------------------------------------------------------------------
        Paragraph (6) of section 1201, together with section 1214,
    respond to a 1997 Ninth Circuit case,\72\ in which two purchase
    money lenders (without knowledge that the debtor had recently
    filed an undisclosed chapter 11 case that was subsequently
    converted to chapter 7), funded the debtor's acquisition of an
    apartment complex and recorded their purchase-money deed of
    trust immediately following recordation of the deed to the
    debtors. Specifically, it amends the definition of ``transfer''
    in section 101(54) of the Bankruptcy Code to include the
    ``creation of a lien.'' This amendment gives expression to a
    widely held understanding since the enactment of the Bankruptcy
    Reform Act of 1978,\73\ that is, a transfer includes the
    creation of a lien.
    ---------------------------------------------------------------------------
        \72\ Thompson v. Margen (In re McConville), 110 F.3d 47 (9th Cir.),
    cert. denied 522 U.S. 966 (1997). The bankruptcy trustee sought to
    avoid the lien created by the lenders' deed of trust by asserting that
    the deed was an unauthorized, postpetition transfer under section
    549(a) of the Bankruptcy Code. The lenders claimed that the voluntary
    transfer to them was a transfer of real property to good faith
    purchasers for value, which was thereby excepted it, under section
    549(c) of the Bankruptcy Code, from avoidance. The bankruptcy court
    held that the postpetition recordation of the lenders' deed of trust
    was without authorization under the Bankruptcy Code or by the court and
    was therefore avoidable under section 549(a), and that the lenders did
    not qualify under the section 549(c) exception as good faith purchasers
    of real property for value. The District Court subsequently affirmed
    the bankruptcy court's ruling granting the trustee the authority to
    avoid the lenders' lien. In re McConville, D.C. No. CV 94 03308 FMS
    (N.D. Cal.1994). On appeal, the lower court's decision in McConville
    was initially affirmed. The Ninth Circuit, however, subsequently issued
    an amended opinion, also affirming the lower court, and finally issued
    an opinion withdrawing its prior opinion and deciding the case on other
    grounds. It held that by obtaining secured credit from the lenders,
    after filing but before the appointment of a trustee, the debtors
    violated their fiduciary responsibility to their creditors.
        \73\ Pub. L. No. 95-598, 92 Stat. 2549 (1978).
    ---------------------------------------------------------------------------
    Section 1202. Adjustment of dollar amounts
        Section 1202 corrects an omission in section 104(b) of the
    Bankruptcy Code to include a reference to section 522(f)(3).
    Section 1203. Extension of time
        Section 1203 makes a technical amendment to correct a
    reference error described in amendment notes contained in the
    United States Code. As specified in the amendment note relating
    to subsection (c)(2) of section 108 of the Bankruptcy Code, the
    amendment made by section 257(b)(2)(B) of Public Law 99-554
    could not be executed as stated.
    Section 1204. Technical amendments
        Section 1204 makes technical amendments to sections
    109(b)(2) (to strike an statutory cross reference), 541(b)(2)
    (to add ``or'' to the end of this provision), and 522(b)(1) (to
    replace ``product'' with ``products'').
    Section 1205. Penalty for persons who negligently or fraudulently
            prepare bankruptcy petitions
        Section 1205 amends section 110(j)(4) of the Bankruptcy
    Code to change the reference to attorneys from the singular
    possessive to the plural possessive.
    Section 1206. Limitation on compensation of professional persons
        Section 328(a) of the Bankruptcy Code provides that a
    trustee or a creditors' and equity security holders' committee
    may, with court approval, obtain the services of 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. Section 1206 amends section 328(a) to include
    compensation ``on a fixed or percentage fee basis'' in addition
    to the other specified forms of reimbursement.
    Section 1207. Effect of conversion
        Section 1207 makes a technical correction in section
    348(f)(2) of the Bankruptcy Code to clarify that the first
    reference to property, like the subsequent reference to
    property, is a reference to property of the estate.
    Section 1208. Allowance of administrative expenses
        Section 1208 amends section 503(b)(4) of the Bankruptcy
    Code to limit 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' or equity security holders' committees are not
    recoverable, but expenses incurred for such professional
    services incurred by such committees themselves would be.
    Section 1209. Exceptions to discharge
        Section 1209 of the bill amends section 523(a) of the
    Bankruptcy Code to correct a technical error in the placement
    of paragraph (15), which was added to section 523 by section
    304(e)(1) of the Bankruptcy Reform Act of 1994. This provision
    also amends section 523(a)(9), which makes nondischargeable any
    debt resulting from death or personal injury arising from the
    debtor's unlawful operation of a motor vehicle while
    intoxicated, to add ``watercraft, or aircraft'' after ``motor
    vehicle.'' Neither additional term should be defined or
    included as a ``motor vehicle'' in section 523(a)(9) and each
    is intended to comprise unpowered as well as motor-powered
    craft. Congress previously made the policy judgment that the
    equities of persons injured by drunk drivers outweigh the
    responsible debtor's interest in a fresh start, and here
    clarifies that the policy applies not only on land but also on
    the water and in the air. Viewed from a practical standpoint,
    this provision closes a loophole that gives intoxicated
    watercraft and aircraft operators preferred treatment over
    intoxicated motor vehicle drivers and denies victims of alcohol
    and drug related boat and plane accidents the same rights
    accorded to automobile accident victims under current law.
    Finally, this section amends corrects a grammatical error in
    section 523(e).
    Section 1210. Effect of discharge
        Section 1210 makes technical amendments to correct errors
    in section 524(a)(3) of the Bankruptcy Code caused by section
    257(o)(2) of Public Law 99-554 and section 501(d)(14)(A) of
    Public Law 103-394.\74\
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        \74\ For a description of these errors, see the appropriate
    footnote and amendment notes in the United States Code.
    ---------------------------------------------------------------------------
    Section 1211. Protection against discriminatory treatment
        Section 1211 conforms a reference to its antecedent
    reference in section 525(c) of the Bankruptcy Code. 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. Section 1211 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 1212. Property of the estate
        Production payments are royalties tied to the production of
    a certain volume or value of oil or gas, determined without
    regard to production costs. They typically would be paid by an
    oil or gas operator to the owner of the underlying property on
    which the oil or gas is found. Under section 541(b)(4)(B)(ii)
    of the Bankruptcy Code, added by the Bankruptcy Reform Act of
    1994, production payments are generally excluded from the
    debtor's estate, provided they could be included only by virtue
    of section 542 of the Bankruptcy Code, which relates generally
    to the obligation of those holding property which belongs in
    the estate to turn it over to the trustee. Section 1212 adds to
    this proviso a reference to section 365 of the Bankruptcy Code,
    which authorizes the trustee to assume or reject an executory
    contract or unexpired lease. It thereby clarifies the original
    Congressional intent to generally exclude production payments
    from the debtor's estate.
    Section 1213. Preferences
        Section 547 of the Bankruptcy Code authorizes a trustee to
    avoid a preferential payment made to a creditor by a debtor
    within 90 days of filing, whether the creditor is an insider or
    an outsider. Because of the concern that a corporate insider
    (such as an officer or directors who is a creditor of his or
    her own corporation has an unfair advantage over outside
    creditors, section 547 also authorizes a trustee to avoid a
    preferential payment made to an insider creditor between 90
    days and 1 year before filing. Several recent cases, including
    DePrizio,\75\ allowed the trustee to ``reach-back'' and avoid a
    transfer to a noninsider creditor which fell within the 90-day
    to 1-year time frame if an insider benefitted from the transfer
    in some way. This had the effect of discouraging lenders from
    obtaining loan guarantees, lest transfers to the lender be
    vulnerable to recapture by reason of the debtor's insider
    relationship with the loan guarantor. Section 202 of the
    Bankruptcy Reform Act of 1994 addressed the DePrizio problem by
    inserting a new section 550(c) into the Bankruptcy Code to
    prevent avoidance or recovery from a noninsider creditor during
    the 90-day to 1-year period even though the transfer to the
    noninsider benefitted an insider creditor. The 1994 amendments,
    however, failed to make a corresponding amendment to section
    547, which deals with the avoidance of preferential transfers.
    As a result, a trustee could still utilize section 547 to avoid
    a preferential lien given to a noninsider bank, more than 90
    days but less than 1 year before bankruptcy, if the transfer
    benefitted an insider guarantor of the debtor's debt.
    Accordingly, section 1213 makes a perfecting amendment to
    section 547 to provide that if the trustee avoids a transfer
    given by the debtor to a noninsider for the benefit of an
    insider creditor between 90 days and 1 year before filing, that
    avoidance is valid only with respect to the insider creditor.
    Thus both the previous amendment to section 550 and the
    perfecting amendment to section 547 protect the noninsider from
    the avoiding powers of the trustee exercised with respect to
    transfers made during the 90-day to 1 year pre-filing period.
    ---------------------------------------------------------------------------
        \75\ Levit v. Ingersoll Rand Fin. Corp., 874 F.2d 1186 (7th Cir.
    1989); see, e.g., Ray v. City Bank and Trust Co. (In re C-L Cartage
    Co.), 899 F.2d 1490 (6th Cir. 1990); Manufacturers Hanover Leasing
    Corp. v. Lowrey (In re Robinson Bros. Drilling, Inc.), 892 F.2d 850
    (10th Cir. 1989).
    ---------------------------------------------------------------------------
    Section 1214. Postpetition transactions
        Section 1214 amends section 549(c) of the Bankruptcy Code
    to clarify its application to an interest in real property.
    This amendment should be construed in conjunction with section
    1201 of the Act.
    Section 1215. Disposition of property of the estate
        Section 1215 of the bill amends section 726(b) of the
    Bankruptcy Code to strike an erroneous reference to a
    nonexistent section.\76\
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        \76\ For a description of the error, see the appropriate footnote
    and amendment notes in the United States Code.
    ---------------------------------------------------------------------------
    Section 1216. General provisions
        Section 1216 amends section 901(a) of the Bankruptcy Code
    to correct an omission in a list of sections applicable to
    cases under chapter 9 of title 11 of the United States Code.
    Section 1217. Abandonment of railroad line
        Section 1217 amends section 1170(e)(1) of the Bankruptcy
    Code to reflect the fact that section 11347 of title 49 of the
    United States Code was repealed by section 102(a) of Public Law
    104-88 and that provisions comparable to section 11347 appear
    in section 11326(a) of title 49 of the United States Code.
    Section 1218. Contents of plan
        Section 1218 amends section 1172(c)(1) of the Bankruptcy
    Code to reflect the fact that section 11347 of title 49 of the
    United States Code was repealed by section 102(a) of Public Law
    104-88 and that provisions comparable to section 11347 appear
    in section 11326(a) of title 49 of the United States Code.
    Section 1219. Discharge under chapter 12
        Section 1219 amends section 1228 of the Bankruptcy Code,
    dealing with discharge under chapter 12, to correct erroneous
    references.
    Section 1220. Bankruptcy cases and proceedings
        Section 1220 amends section 1334(d) of title 28 of the
    United States Code to correct erroneous references.\77\
    ---------------------------------------------------------------------------
        \77\ For a description of the errors, see the appropriate footnote
    and amendment notes in the United States Code.
    ---------------------------------------------------------------------------
    Section 1221. Knowing disregard of bankruptcy law or rule
        This section amends section 156(a) of title 18 of the
    United States Code to make stylistic changes and correct a
    reference to the Bankruptcy Code.
    Section 1222. Transfers made by nonprofit charitable corporations
        Section 1222 amends section 363(d) of the Bankruptcy Code
    to restrict the authority of a trustee to use, sell, or lease
    property by a nonprofit corporation or trust. First, the use,
    sell or lease must be in accordance with applicable
    nonbankruptcy law and to the extent it is not inconsistent with
    any relief granted under certain specified provisions of
    section 362 of the Bankruptcy Code concerning the applicability
    of the automatic stay. Second, section 1222 imposes similar
    restrictions with regard to plan confirmation requirements for
    chapter 11 cases. Third, it amends section 541 of the
    Bankruptcy Code to provide that any property of a bankruptcy
    estate in which the debtor is a nonprofit corporation (as
    described in certain provisions of the Internal Revenue Code)
    may not be transferred to an entity that is not a corporation,
    but only under the same conditions that would apply if the
    debtor was not in bankruptcy. The amendments made by this
    section apply to cases pending on the date of enactment or to
    cases filed after such date. Section 1222 provides that a court
    may not confirm a plan without considering whether this
    provision would substantially affect the rights of a party in
    interest who first acquired rights with respect to the debtor
    postpetition. Nothing in this provision may be construed to
    require the court to remand or refer any proceeding, issue, or
    controversy to any other court or to require the approval of
    any other court for the transfer of property.
    Section 1223. Protection of valid purchase money security interests
        Section 1223 extends the applicable perfection period for a
    security interest in property of the debtor in section
    547(c)(3)(B) of the Bankruptcy Code from 20 to 30 days.
    Section 1224. Bankruptcy judgeships
        The substantial increase in bankruptcy case filings clearly
    creates a need for additional bankruptcy judgeships. In the
    105th Congress, the House responded to this need by passing
    H.R. 1596, which would have created additional permanent and
    temporary bankruptcy judgeships and extended an existing
    temporary position. Section 1224 generally incorporates H.R.
    1596 as it passed the House with provisions extending five
    existing temporary judgeships.
    Section 1225. Compensating trustees
        Section 1225 amends section 1326 of the Bankruptcy Code to
    provide that if a chapter 7 trustee has been allowed
    compensation as a result of the conversion or dismissal of the
    debtor's prior case pursuant to section 707(b) and some portion
    of that compensation remains unpaid, the amount of any such
    unpaid compensation must be repaid in the debtor's subsequent
    chapter 13 case. This payment must be prorated over the term of
    the plan and paid on a monthly basis. The amount of the monthly
    payment may not to exceed the greater of $25 or the amount
    payable to unsecured nonpriority creditors as provided by the
    plan, multiplied by 5 percent and the result divided by the
    number of months of the plan.
    Section 1226. Amendment to section 362 of title 11, United States Code
        Section 1226 amends section 362(b) of the Bankruptcy Code
    to except from the automatic stay the creation or perfection of
    a statutory lien for an ad valorem property tax or for a
    special tax or special assessment on real property (whether or
    not ad valorem) that is imposed by a governmental unit, if such
    tax or assessment becomes due after the filing of the petition.
    Section 1227. Judicial education
        Section 1227 requires the Director of the Federal Judicial
    Center, in consultation with the Director of the Executive
    Office for United States Trustees, to develop materials and
    conduct training as may be useful to the courts in implementing
    this Act, including the needs-based reforms under section
    707(b) (as amended by this Act) and amendments pertaining to
    reaffirmation agreements.
    Section 1228. Reclamation
        Section 1228(a) amends section 546 of the Bankruptcy Code
    to provide that the rights of a trustee under sections 544(a),
    545, 547, and 549 are subject to the right of a seller of goods
    to reclaim goods sold in the ordinary course of business to the
    debtor if (1) the debtor received these goods while insolvent,
    and (2) written demand for reclamation of the goods is made not
    later than 45 days after their receipt by the debtor or within
    20 days after the commencement of the bankruptcy case. This
    provision specifies, however, that it is subject to sections
    546(d) and 507(c) as well as the prior rights of holders of
    security interests in such goods or the proceeds thereof. If
    the seller fails to provide the notice described in this
    provision, such seller may still assert the rights specified in
    section 503(b)(7).
        Section 1228(b) amends section 503(b) to provide that the
    value of any goods received by a debtor not later than 20 days
    after the commencement of a bankruptcy case in which the goods
    have been sold to the debtor in the ordinary course of the
    debtor's business is an allowed administrative expense.
    Section 1229. Providing requested tax documents to the court
        Section 1229(a) provides that the court may not grant a
    discharge to an individual in a case under chapter 7 unless
    requested tax documents have been provided to the court.
    Section 1229(b) similarly provides that the court may not
    confirm a chapter 11 or 13 plan unless requested tax documents
    have been filed with the court. Section 1229(c) directs the
    court to destroy documents submitted in support of a bankruptcy
    claim not sooner than 3 years after the date of the conclusion
    of a bankruptcy case filed by an individual debtor under
    chapter 7, 11 or 13. In the event of a pending audit or
    enforcement action, the court may extend the time for
    destruction of such requested tax documents.
    Section 1230. Encouraging creditworthiness
        Section 1230(a) expresses the sense of the Congress that
    lenders may sometimes offer credit to consumers
    indiscriminately and that resulting consumer debt may be a
    major contributing factor leading to consumer insolvency.
        Section 1230(b) directs the Board of Governors of the
    Federal Reserve System (Board) to study certain consumer credit
    industry solicitation and credit granting practices as well as
    the effect of such practices on consumer debt and insolvency.
    The specified practices involve the solicitation and extension
    of credit on an indiscriminate basis that encourages consumers
    to accumulate additional debt and where the lender fails to
    ensure that the consumer borrower is capable of repaying the
    debt.
        Section 1230(c) requires the study described in subsection
    (b) to be prepared within 12 months from the date of the Act's
    enactment. This provision authorizes the Board to issue
    regulations requiring additional disclosures to consumers and
    permits it to undertake any other actions consistent with its
    statutory authority, which are necessary to ensure responsible
    industry practices and to prevent resulting consumer debt and
    insolvency.
    Section 1231. Property no longer subject to redemption
        Section 1231 amends section 541(b) of the Bankruptcy Code
    to provide that, under certain circumstances, an interest of
    the debtor in tangible personal property (other than
    securities, or written or printed evidences of indebtedness or
    title) that the debtor pledged or sold as collateral for a loan
    or advance of money given by a person licensed under law to
    make such loan or advance is not property of the estate.
    Subject to subchapter III of chapter 5 of the Bankruptcy Code,
    the provision applies where (a) the property is in the
    possession of the pledgee or transferee; (b) the debtor has no
    obligation to repay the money, redeem the collateral, or buy
    back the property at a stipulated price; and (c) neither the
    debtor nor the trustee have exercised any right to redeem
    provided under the contract or State law in a timely manner as
    provided under State law and section 108(b) of the Bankruptcy
    Code.
    Section 1232. Trustees
        Section 1232 establishes a series of procedural protections
    for chapter 7 and chapter 13 trustees concerning final agency
    decisions relating to trustee appointments and future case
    assignments. Section 1232(a) amends section 586(d) of title 28
    of the United States Code to allow a chapter 7 or chapter 13
    trustee to obtain judicial review of such decisions by
    commencing an action in the United States district court after
    the trustee exhausts all available administrative remedies.
    Unless the trustee elects an administrative hearing on the
    record, the trustee is deemed to have exhausted all
    administrative remedies under this provision if the agency
    fails to make a final agency decision within 90 days after the
    trustee requests an administrative remedy. Section 1232(a)
    requires the Attorney General to promulgate procedures to
    implement this provision. It further provides that the agency's
    decision must be affirmed by the district court unless it is
    unreasonable and without cause based on the administrative
    record before the agency.
        Section 1232(b) amends section 586(e) of title 28 of the
    United States Code to permit a chapter 13 trustee to obtain
    judicial review of certain final agency actions relating to
    claims for actual, necessary expenses under section 586(e). The
    trustee may commence an action in the United States district
    court where the trustee resides. The agency's decision must be
    affirmed by the district court unless it is unreasonable and
    without cause based on the administrative record before the
    agency. It directs the Attorney General to prescribe procedures
    to implement this provision.
    Section 1233. Bankruptcy forms
        Section 1233 amends section 2075 of title 28 of the United
    States Code to require the bankruptcy rules promulgated under
    this provision to prescribe a form for the statement specified
    under section 707(b)(2)(C) of the Bankruptcy Code and to
    provide general rules on the content of such statement.
    Section 1234. Expedited appeals of bankruptcy cases to courts of
            appeals
        Currently, appeals from decisions rendered by the
    bankruptcy court are either heard by the district court or a
    bankruptcy appellate panel. In addition to the time and cost
    factors attendant to the present appellate system, decisions
    rendered by a district court as an appellate court are not
    binding and lack stare decisis value.
        To address these problems, section 1234(a) amends section
    158(d) of title 28 of the United States Code to deem a
    judgment, decision, order, or decree of a bankruptcy judge to
    be a judgment, decision, order, or decree of the district court
    entered 31 days after an appeal of such judgment, decision,
    order or decree is filed with the district court, unless
    certain factors apply. These factors are (a) the district court
    issues a decision on the appeal within 30 days after such
    appeal is filed or enters an order extending the 30-day period
    for cause upon motion of a party or by the court sua sponte; or
    (b) all parties to the appeal file written consent that the
    district court may retain such appeal until it enters a
    decision. For purposes of this provision, section 1234(a)
    provides that an appeal is considered filed with the district
    court on the date on which the notice of appeal is filed,
    except in a case where a party has made an election that the
    appeal be heard by the district court. If the appellant so
    elects, then the appeal is considered filed with the district
    court on the date such election is made.
        Section 1234(a) provides that the courts of appeals shall
    have jurisdiction of appeals from (1) all final judgments,
    decisions, orders, and decrees of district courts entered under
    section 158(a); (2) all final judgments, decisions, orders, and
    decrees of bankruptcy appellate panels entered under section
    158(b); (3) all judgments, decisions, orders, and decrees of
    district courts entered under section 158(d) (as amended by
    this Act) to the extent they are reviewable by a district court
    pursuant to section 158(a). Section 1234(a) further provides
    that the court of appeals may use its discretion, in accordance
    with rules prescribed by the Supreme Court, to exercise
    jurisdiction over an appeal from an interlocutory judgment,
    decision, order, or decree under section 158(e)(3) (as added by
    this Act).
        Section 1234(b) makes technical and conforming amendments
    to implement this provision.
    Section 1235. Exemptions
        Section 1235 makes a conforming amendment to section
    522(g)(2) of the Bankruptcy Code.

                     TITLE XIII--CONSUMER CREDIT DISCLOSURE

    Section 1301. Enhanced disclosures under an open end credit plan
        Section 1301(a) amends section 127(b) of the Truth in
    Lending Act to mandate the inclusion of certain specified
    disclosures in billing statements with respect to various open
    end credit plans. In general, these statements must contain an
    example of the time it would take to repay a stated balance at
    a specified interest rate. In addition, they must warn the
    borrower that making only the minimum payment will increase the
    amount of interest that must be paid and the time it takes to
    repay the balance. Further, a toll-free telephone number must
    be provided where the borrower can obtain an estimate of the
    time it would take to repay the balance if only minimum
    payments are made. With respect to a creditor whose compliance
    with title 15 of the United States Code is enforced by the
    Federal Trade Commission (FTC), the billing statement must
    advise the borrower to contact the FTC at a toll-free telephone
    number to obtain an estimate of the time it would take to repay
    the borrower's balance. Section 1401(a) permits the creditor to
    substitute an example based on a higher interest rate. As
    necessary, the provision requires the Board of Governors of the
    Federal Reserve System (``Board''), to periodically recalculate
    by rule the interest rate and repayment periods specified in
    Section 1401(a). With respect to the toll-free telephone
    number, section 1401(a) permits a third party to establish and
    maintain it. Under certain circumstances, the toll-free number
    may connect callers to an automated device.
        For a period not to exceed 24 months from the effective
    date of the Act, the Board is required to establish and
    maintain a toll-free telephone number (or provide a toll-free
    telephone number established and maintained by a third party)
    for use by creditors that are depository institutions (as
    defined in section 3 of the Federal Deposit Insurance Act),
    including a Federal or State credit union (as defined in
    section 101 of the Federal Credit Union Act), with total assets
    not exceeding $250 million. Not later than 6 months prior to
    the expiration of the 24-month period, the Board must submit a
    report on this program to the Committee on Banking, Housing,
    and Urban Affairs of the Senate, and the Committee on Banking
    and Financial Services of the House of Representatives.
        In addition, section 1301(a) requires the Board to
    establish a detailed table illustrating the approximate number
    of months that it would take to repay an outstanding balance if
    a consumer pays only the required minimum month payments and if
    no other advances are made. The table should reflect a
    significant number of different annual percentage rates, and
    account balances, minimum payment amounts. The Board must also
    promulgate regulations providing instructional guidance
    regarding the manner in which the information contained in the
    tables should be used to respond to a request by an obligor
    under this provision. Section 1401(a) provides that the
    disclosure requirements of this provision are inapplicable to
    any charge card account where the primary purpose of which is
    to require payment of charges in full each month.
        Section 1301(b)(1) requires the Board to promulgate
    regulations implementing section 1301(a)'s amendments to
    section127. Section 1301(b)(2) specifies that the effective
    date of the amendments under subsection (a) and the regulations
    required under this provision shall not take effect until the
    later of 18 months after the date of enactment of this Act or
    12 months after the publication of final regulations by the
    Board.
        Section 1301(c) authorizes the Board to conduct a study to
    determine the types of information available to potential
    borrowers from consumer credit lending institutions regarding
    factors qualifying potential borrowers for credit, repayment
    requirements, and the consequences of default. The provision
    specifies the factors that should be considered. The findings
    of such study must be submitted to Congress and include
    recommendations for legislative initiatives, based on the
    Board's findings.
    Section 1302. Enhanced disclosure for credit extensions secured by a
            dwelling
        Section 1302(a)(1) amends section 127A(a)(13) of the Truth
    in Lending Act to require a statement in any case in which the
    extension of credit exceeds the fair market value of a dwelling
    specifying that the interest on the portion of the credit
    extension that is greater than the fair market value of the
    dwelling is not tax deductible for Federal income tax purposes.
        Section 1302(a)(2) amends section 147(b) of the Truth in
    Lending Act to require an advertisement relating to an
    extension of credit that may exceed the fair market value of a
    dwelling and such advertisement is disseminated in paper form
    to the public or through the Internet (as opposed to
    dissemination by radio or television) to include a specified
    statement. The statement must disclose that the interest on the
    portion of the credit extension that is greater than the fair
    market value of the dwelling is not tax deductible for Federal
    income tax purposes and that the consumer should consult a tax
    advisor for further information regarding the deductibility of
    interest and charges.
        With respect to non-open end credit extensions, section
    1302(b)(1) amends section 128 of the Truth in Lending Act to
    require that a consumer receive a specified statement at the
    time he or she applies for credit with respect to a consumer
    credit transaction secured by the consumer's principal dwelling
    and where the credit extension may exceed the fair market value
    of the dwelling must contain a specified statement. The
    statement must disclose that the interest on the portion of the
    credit extension that exceeds the dwelling's fair market value
    is not tax deductible for Federal income tax purposes and that
    the consumer should consult a tax advisor for further
    information regarding the deductibility of interest and
    charges.
        Section 1302(b)(2) requires certain advertisements
    disseminated in paper form to the public or through the
    Internet that relate to a consumer credit transaction secured
    by a consumer's principal dwelling where the extension of
    credit may exceed the dwelling's fair market value to contain
    specified statements. These statements advise that the interest
    on the portion of the credit extension that is greater than the
    fair market value of the dwelling is not tax deductible for
    Federal income tax purposes and that the consumer should
    consult a tax advisor for further information regarding the
    deductibility of interest and charges.
        Section 1302(c)(1) requires the Board to promulgate
    regulations implementing the amendments effectuated by section
    1402. Section 1302(c)(2) provides that the these regulations
    shall not take effect until the later of 12 months following
    the Act's enactment date or 12 months after the date of
    publication of such final regulations by the Board.
    Section 1303. Disclosures related to ``introductory rates''
        Section 1303(a) amends section 127(c) of the Truth in
    Lending Act by adding a provision add further requirements for
    applications, solicitations and related materials that are
    subject to section 127(c)(1). With respect to an application or
    solicitation to open a credit card account and all promotional
    materials accompanying such application or solicitation
    involving an ``introductory rate'' offer, such materials must
    do the following if they offer a temporary annual percentage
    rate of interest:

            (1) use the term ``introductory'' in immediate
            proximity to each listing of the temporary annual
            percentage interest rate applicable to such account;
            (2) if the annual percentage interest rate that will
            apply after the end of the temporary rate period will
            be a fixed rate, the time period in which the
            introductory period will end and the annual percentage
            rate that will apply after the end of the introductory
            period must be clearly and conspicuously stated in a
            prominent location closely proximate to the first
            listing of the temporary annual percentage rate;
            (3) if the annual percentage rate that will apply
            after the end of the temporary rate period will vary in
            accordance with an index, the time period in which the
            introductory period will end and the rate that will
            apply after that, based on an annual percentage rate
            that was in effect 60 days before the date of mailing
            of the application or solicitation must be clearly and
            conspicuously stated in a prominent location closely
            proximate to the first listing of the temporary annual
            percentage rate.

        The second and third provisions described above do not
    apply with respect to any listing of a temporary annual
    percentage rate on an envelope or other enclosure in which an
    application or solicitation to open a credit card account is
    mailed.
        With respect to an application or solicitation to open a
    credit card account for which disclosure is required pursuant
    to section 127(c)(1), section 1303(a) specifies that certain
    statements be made if the rate of interest is revocable under
    any circumstance or upon any event. The statements must be
    clearly and conspicuously appear in a prominent manner on or
    with the application or solicitation. The disclosures include a
    general description of the circumstances that may result in the
    revocation of the temporary annual percentage rate and an
    explanation of the type of interest rate that will apply upon
    revocation of the temporary rate.
        To implement this provision, section 1303(b) amends section
    127(c) to define various relevant terms and requires the Board
    to promulgate regulations. The provision does not become
    effective until the earlier of 12 months after the Act's
    enactment date or 12 months after the date of public of such
    final regulations.
    Section 1304. Internet-based credit card solicitations
        Section 1304(a) amends section 127(c) of the Truth in
    Lending Act to require any solicitation to open a credit card
    account for an open end consumer credit plan through the
    Internet or other interactive computer service to clearly and
    conspicuously include the disclosures required under section
    127(c)(1)(A) and (B). It also specifies that the disclosure
    required pursuant to section 127(c)(1)(A) be readily accessible
    to consumers in close proximity to the solicitation and be
    updated regularly to reflect current policies, terms, and fee
    amounts applicable to the credit card account. Section 1304(a)
    defines terms relevant to the Internet.
        Section 1304(b) requires the Board to promulgate
    regulations implementing this provision. It also provides that
    the amendments effectuated by section 1404 do not take effect
    until the later of 12 months after the Act's enactment date or
    12 months after the date of publication of such regulations.
    Section 1305. Disclosures related to late payment deadlines and
            penalties
        Section 1305(a) amends section 127(b) of the Truth in
    Lending Act to provide that if a late payment fee is to be
    imposed due to the obligor's failure to make payment on or
    before a required payment due date, the billing statement must
    specify the date on which that payment is due (or if different
    the earliest date on which a late payment fee may be charged)
    and the amount of the late payment fee to be imposed if payment
    is made after such date.
        Section 1305(b) requires the Board to promulgate
    regulations implementing this provision. The amendments
    effectuated by this provision and the regulations promulgated
    thereunder shall not take effect until the later of 12 months
    after the Act's enactment date or 12 months after the date of
    publication of the regulations.
    Section 1306. Prohibition on certain actions for failure to incur
            finance charges
        Section 1306(a) amends section 127 to add a provision
    prohibiting a creditor of an open end consumer credit plan from
    terminating an account prior to its expiration date solely
    because the consumer has not incurred finance charges on the
    account. The provision does not prevent the creditor from
    terminating such account for inactivity for three or more
    consecutive months.
        Section 1306(b) requires the Board to promulgate
    regulations implementing the amendments effectuated by section
    1306(a) and provides that they do not become effective until
    the later of 12 months after the Act's enactment date or 12
    months after the date of publication of such final regulations.
    Section 1307. Dual use credit card
        Section 1307(a) provides that the Board may conduct a study
    and submit a report to Congress containing its analysis of
    consumer protections under existing law to limit the liability
    of consumers for unauthorized use of a debit card or similar
    access device. The report must include recommendations for
    legislative initiatives, if any, based on its findings.
        Section 1307(b) provides that the Board, in preparing its
    report, may include analysis of section 909 of the Electronic
    Fund Transfer Act to the extent this provision is in effect at
    the time of the report and the implementing regulations. In
    addition, the analysis may pertain to whether any voluntary
    industry rules have enhanced or may enhance the level of
    protection afforded consumers in connection with such
    unauthorized use liability and whether amendments to the
    Electronic Fund Transfer Act or implementing regulations are
    necessary to further address adequate protection for consumers
    concerning unauthorized use liability.
    Section 1308. Study of bankruptcy impact of credit extended to
            dependent students
        Section 1308 directs the Board of Governors of the Federal
    Reserve to study the impact that the extension of credit to
    dependents (defined under the Internal Revenue Code of 1986)
    who are enrolled in postsecondary educational institutions has
    on the rate of bankruptcy cases filed. The report must be
    submitted to the Senate and House of Representatives no later
    than 1 year from the Act's enactment date.
    Section 1309. Clarification of clear and conspicuous
        Section 1309(a) requires the Board (in consultation with
    other Federal banking agencies, the National Credit Union
    Administration Board, and the Federal Trade Commission) to
    promulgate regulations not later than 6 months after the Act's
    enactment date to provide guidance on the meaning of the term
    ``clear and conspicuous'' as it is used in section
    127(b)(11)(A), (B) and (C) and section 127(c)(6)(A)(ii) and
    (iii) of the Truth in Lending Act.
        Section 1309(b) provides that regulations promulgated under
    section 1309(a) shall include examples of clear and conspicuous
    model disclosures for the purposes of disclosures required
    under the Truth in Lending Act provisions set forth therein.
        Section 1309(c) requires the Board, in promulgating
    regulations under this provision, to ensure that the clear and
    conspicuous standard required for disclosures made under the
    Truth in Lending Act provisions set forth in section 1309(a)
    can be implemented in a manner that results in disclosures
    which are reasonably understandable and designed to call
    attention to the nature and significance of the information in
    the notice.
    Section 1310. Enforcement of certain foreign judgements barred
        Section 1310(a) provides that notwithstanding any other
    provision of law or contract, a court within the United States
    shall not recognize or enforce any judgment rendered in a
    foreign court if, by clear and convincing evidence, the court
    in which recognition or enforcement of the judgment is sought
    determines that the judgment gives effect to any purported
    right or interest derived, directly or indirectly, from any
    fraudulent misrepresentation and fraudulent omission that
    occurred in the United States during the period beginning on
    January 1, 1975, and ending on December 31, 1993.
        Section 1310(b) provides that section 1310(a) shall not
    prevent recognition or enforcement of a judgment rendered in a
    foreign court if the foreign tribunal rendering judgment giving
    effect to the right or interest concerned determines that no
    fraudulent misrepresentation or fraudulent omission described
    in section 1310(a) occurred.

          TITLE XIV. GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS

    Section 1401. Effective date; application of amendments
        Section 1401(a) states that the Act shall take effect 180
    days after the date of enactment, unless otherwise specified in
    this Act.
        Section 1401(b) provides that the amendments made by this
    Act shall not apply with respect to cases commenced under the
    Bankruptcy Code before the Act's effective date, unless other
    specified in this Act.

             Changes in Existing Law Made by the Bill, as Reported

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

                          TITLE 11, UNITED STATES CODE

                              TITLE 11--BANKRUPTCY

    Chap.                                                               Sec.

          General Provisions.............................................101
         * * * * * * *
          Ancillary and Other Cross-Border Cases........................1501

                         CHAPTER 1--GENERAL PROVISIONS

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

    Sec. 101. Definitions

        [In this title--] In this title the following definitions
    shall apply:
                (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 agreement[;].
                (3) The term ``assisted person'' means any person
            whose debts consist primarily of consumer debts and
            whose non-exempt assets are less than $150,000.
                (4) The term ``attorney'' means attorney,
            professional law association, corporation, or
            partnership, authorized under applicable law to
            practice law[;].
                (4A) The term ``bankruptcy assistance'' means any
            goods or services sold or otherwise provided to an
            assisted person with the express or implied purpose of
            providing information, advice, counsel, document
            preparation, or filing, or attendance at a creditors'
            meeting or appearing in a proceeding on behalf of
            another or providing legal representation with respect
            to a case or proceeding under this title.
                (5) The term ``claim'' means--
                        (A) * * *
                        (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) 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) The term ``community claim'' means claim that
            arose 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) The term ``consumer debt'' means debt incurred
            by an individual primarily for a personal, family, or
            household purpose[;].
                (9) The term ``corporation''--
                        (A) * * *
                        (B) does not include limited
                    partnership[;].
                (10) The term ``creditor'' means--
                        (A) * * *

               *       *       *       *       *       *       *

                        (C) entity that has a community claim[;].
                (10A) 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 6-month
                    period preceding the date of determination; and
                        (B) includes any amount paid by any entity
                    other than the debtor (or, in a joint case, the
                    debtor and the debtor's spouse), on a regular
                    basis to the household expenses of the debtor
                    or the debtor's dependents (and, in a joint
                    case, the debtor's spouse if not otherwise a
                    dependent), but excludes benefits received
                    under the Social Security Act and payments to
                    victims of war crimes or crimes against
                    humanity on account of their status as victims
                    of such crimes.
                (11) The term ``custodian'' means--
                        (A) * * *

               *       *       *       *       *       *       *

                        (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;]
                (12A) The term ``debt relief agency'' means any
            person who provides any bankruptcy assistance to an
            assisted person in return for the payment of money or
            other valuable consideration, or who is a bankruptcy
            petition preparer under section 110, but does not
            include--
                        (A) any person that is an officer,
                    director, employee or agent of that person;
                        (B) a nonprofit organization which is
                    exempt from taxation under section 501(c)(3) of
                    the Internal Revenue Code of 1986;
                        (C) a creditor of the person, to the extent
                    that the creditor is assisting the person to
                    restructure any debt owed by the person to the
                    creditor;
                        (D) a depository institution (as defined in
                    section 3 of the Federal Deposit Insurance Act)
                    or any Federal credit union or State credit
                    union (as those terms are defined in section
                    101 of the Federal Credit Union Act), or any
                    affiliate or subsidiary of such a depository
                    institution or credit union; or
                        (E) an author, publisher, distributor, or
                    seller of works subject to copyright protection
                    under title 17, when acting in such capacity.
                (13) The term ``debtor'' means person or
            municipality concerning which a case under this title
            has been commenced[;].
                (13A) The term ``debtor's principal residence''--
                        (A) means a residential structure,
                    including incidental property, without regard
                    to whether that structure is attached to real
                    property; and
                        (B) includes an individual condominium or
                    cooperative unit, a mobile or manufactured
                    home, or trailer.
                [(14) ``disinterested person'' means person that--
                        [(A) is not a creditor, an equity security
                    holder, or an insider;
                        [(B) is not and was not an investment
                    banker for any outstanding security of the
                    debtor;
                        [(C) has not been, within three years
                    before the date of the filing of the petition,
                    an investment banker for a security of the
                    debtor, or an attorney for such an investment
                    banker in connection with the offer, sale, or
                    issuance of a security of the debtor;
                        [(D) is not and was not, within two years
                    before the date of the filing of the petition,
                    a director, officer, or employee of the debtor
                    or of an investment banker specified in
                    subparagraph (B) or (C) of this paragraph; and
                        [(E) does not have an interest materially
                    adverse to the interest of the estate or of any
                    class of creditors or equity security holders,
                    by reason of any direct or indirect
                    relationship to, connection with, or interest
                    in, the debtor or an investment banker
                    specified in subparagraph (B) or (C) of this
                    paragraph, or for any other reason;]
                (14) 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.
                (14A) The term ``domestic support obligation''
            means a debt that accrues before or after the entry of
            an order for relief under this title, including
            interest that accrues on that debt as provided under
            applicable nonbankruptcy law notwithstanding any other
            provision of this title, that is--
                        (A) owed to or recoverable by--
                                (i) a spouse, former spouse, or
                            child of the debtor or such child's
                            parent, legal guardian, or responsible
                            relative; or
                                (ii) a governmental unit;
                        (B) in the nature of alimony, maintenance,
                    or support (including assistance provided by a
                    governmental unit) of such spouse, former
                    spouse, or child of the debtor or such child's
                    parent, without regard to whether such debt is
                    expressly so designated;
                        (C) established or subject to establishment
                    before 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, legal guardian, or
                    responsible relative of the child for the
                    purpose of collecting the debt.
                (15) The term ``entity'' includes person, estate,
            trust, governmental unit, and United States trustee[;].
                (16) 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) The term ``equity security holder'' means
            holder of an equity security of the debtor[;].
                (18) The term ``family farmer'' means--
                        (A) * * *
                        (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) * * *

               *       *       *       *       *       *       *

                                (iii) if such corporation issues
                            stock, such stock is not publicly
                            traded[;].
                (19) 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) 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
            immediately preceding the taxable year of such person
            during which the case under this title concerning such
            person was commenced from a farming operation owned or
            operated by such person[;].
                (21) 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) 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) 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) The term the term ``financial institution''--
                        (A) * * *
                        (B) includes any person described in
                    subparagraph (A) which operates, or operates
                    as, a multilateral clearing organization
                    pursuant to section 409 of the Federal Deposit
                    Insurance Corporation Improvement Act of
                    1991[;].
                (22A) The term ``financial participant'' means an
            entity that, at the time it enters into a securities
            contract, commodity contract, or forward contract, or
            at the time of the filing of the petition, has one or
            more agreements or transactions described in paragraph
            (1), (2), (3), (4), (5), or (6) of section 561(a) with
            the debtor or any other entity (other than an
            affiliate) of a total gross dollar value of not less
            than $1,000,000,000 in notional or actual principal
            amount outstanding on any day during the previous 15-
            month period, or has gross mark-to-market positions of
            not less than $100,000,000 (aggregated across
            counterparties) in one or more such agreements or
            transactions with the debtor or any other entity (other
            than an affiliate) on any day during the previous 15-
            month period.
                [(23) ``foreign proceeding'' means proceeding,
            whether judicial or administrative and whether or not
            under bankruptcy law, in a foreign country in which the
            debtor's domicile, residence, principal place of
            business, or principal assets were located at the
            commencement of such proceeding, for the purpose of
            liquidating an estate, adjusting debts by composition,
            extension, or discharge, or effecting a reorganization;
                [(24) ``foreign representative'' means duly
            selected trustee, administrator, or other
            representative of an estate in a foreign proceeding;]
                (23) The term ``foreign proceeding'' means a
            collective judicial or administrative proceeding in a
            foreign country, including an interim proceeding, under
            a law relating to insolvency or adjustment of debt in
            which proceeding the assets and affairs of the debtor
            are subject to control or supervision by a foreign
            court, for the purpose of reorganization or
            liquidation.
                (24) 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) 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, or product or
                    byproduct thereof, with a maturity date 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) any combination of agreements or
                    transactions referred to in subparagraphs (A)
                    and (C);
                        (C) any option to enter into an agreement
                    or transaction referred to in subparagraph (A)
                    or (B);
                        (D) a master agreement that provides for an
                    agreement or transaction referred to in
                    subparagraph (A), (B), or (C), together with
                    all supplements to any such master agreement,
                    without regard to whether such master agreement
                    provides for an agreement or transaction that
                    is not a forward contract under this paragraph,
                    except that such master agreement shall be
                    considered to be a forward contract under this
                    paragraph only with respect to each agreement
                    or transaction under such master agreement that
                    is referred to in subparagraph (A), (B), or
                    (C); or
                        (E) any security agreement or arrangement,
                    or other credit enhancement related to any
                    agreement or transaction referred to in
                    subparagraph (A), (B), (C), or (D), but not to
                    exceed the actual value of such contract 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;]
                (26) 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 which is
            presently or in the future becomes the subject of
            dealing in the forward contract trade.
                (27) 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[;].
                (27A) The term ``health care business''--
                        (A) means any public or private entity
                    (without regard to whether that entity is
                    organized for profit or not for profit) that is
                    primarily engaged in offering to the general
                    public facilities and services for--
                                (i) the diagnosis or treatment of
                            injury, deformity, or disease; and
                                (ii) surgical, drug treatment,
                            psychiatric, or obstetric care; and
                        (B) includes--
                                (i) any--
                                        (I) general or specialized
                                    hospital;
                                        (II) ancillary ambulatory,
                                    emergency, or surgical
                                    treatment facility;
                                        (III) hospice;
                                        (IV) home health agency;
                                    and
                                        (V) other health care
                                    institution that is similar to
                                    an entity referred to in
                                    subclause (I), (II), (III), or
                                    (IV); and
                                (ii) any long-term care facility,
                            including any--
                                        (I) skilled nursing
                                    facility;
                                        (II) intermediate care
                                    facility;
                                        (III) assisted living
                                    facility;
                                        (IV) home for the aged;
                                        (V) domiciliary care
                                    facility; and
                                        (VI) health care
                                    institution that is related to
                                    a facility referred to in
                                    subclause (I), (II), (III),
                                    (IV), or (V), if that
                                    institution is primarily
                                    engaged in offering room,
                                    board, laundry, or personal
                                    assistance with activities of
                                    daily living and incidentals to
                                    activities of daily living.
                (27B) The term ``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 ``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) The term ``indenture trustee'' means trustee
            under an indenture[;].
                (30) 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) The term ``insider'' includes--
                        (A) * * *

               *       *       *       *       *       *       *

                        (F) managing agent of the debtor[;].
                (32) 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) 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) The term ``insured credit union'' has the
            meaning given it in section 101(7) of the Federal
            Credit Union Act[;].
                (35) The term ``insured depository institution''--
                        (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 (23) and (35) of this
                    subsection)[;].
                (35A) The term ``intellectual property'' means--
                        (A) * * *

               *       *       *       *       *       *       *

                        (F) mask work protected under chapter 9 of
                    title 17;
            to the extent protected by applicable nonbankruptcy
            law[; and].
                (36) The term ``judicial lien'' means lien obtained
            by judgment, levy, sequestration, or other legal or
            equitable process or proceeding[;].
                (37) The term ``lien'' means charge against or
            interest in property to secure payment of a debt or
            performance of an obligation[;].
                (38) 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].
                (38A) 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 one or more contracts that are
                    described in any one or more of paragraphs (1)
                    through (5) of section 561(a), or any security
                    agreement or arrangement or other credit
                    enhancement related to one or more of the
                    foregoing; and
                        (B) if the agreement contains provisions
                    relating to agreements or transactions that are
                    not contracts described in paragraphs (1)
                    through (5) of section 561(a), shall be deemed
                    to be a master netting agreement only with
                    respect to those agreements or transactions
                    that are described in any one or more of
                    paragraphs (1) through (5) of section 561(a);
                (38B) 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) The term ``mask work'' has the meaning given
            it in section 901(a)(2) of title 17.
                (40) The term ``municipality'' means political
            subdivision or public agency or instrumentality of a
            State[;].
                (40A) The term ``patient'' means any person who
            obtains or receives services from a health care
            business.
                (40B) The term ``patient records'' means any
            written document relating to a patient or a record
            recorded in a magnetic, optical, or other form of
            electronic medium.
                (41) 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 pension benefit
                            plan that is a governmental plan, as
                            defined in section 414(d) of the
                            Internal Revenue Code of 1986; or
                                (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) 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) The term ``production payment'' means a term
            overriding royalty satisfiable in cash or in kind--
                        (A) contingent on the production of a
                    liquid or gaseous hydrocarbon from particular
                    real property; and
                        (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) The term ``purchaser'' means transferee of a
            voluntary transfer, and includes immediate or mediate
            transferee of such a transferee[;].
                (44) 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) The term ``relative'' means individual 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) The term ``repo participant'' means an entity
            that, [on any day during the period beginning 90 days
            before the date of] at any time before 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;]
                (47) The term ``repurchase agreement'' (which
            definition also applies to a reverse repurchase
            agreement)--
                        (A) means--
                                (i) an agreement, including related
                            terms, which provides for the transfer
                            of one or more certificates of deposit,
                            mortgage related securities (as defined
                            in section 3 of the Securities Exchange
                            Act of 1934), mortgage loans, interests
                            in mortgage related securities or
                            mortgage loans, eligible bankers'
                            acceptances, qualified foreign
                            government securities (defined as a
                            security that is a direct obligation
                            of, or that is fully guaranteed by, the
                            central government of a member of the
                            Organization for Economic Cooperation
                            and Development), or securities that
                            are direct obligations of, or that are
                            fully guaranteed by, the United States
                            or any agency of the United States
                            against the transfer of funds by the
                            transferee of such certificates of
                            deposit, eligible bankers' acceptances,
                            securities, loans, or interests, with a
                            simultaneous agreement by such
                            transferee to transfer to the
                            transferor thereof certificates of
                            deposit, eligible bankers' acceptance,
                            securities, loans, or interests of the
                            kind described in this clause, at a
                            date certain not later than 1 year
                            after such transfer or on demand,
                            against the transfer of funds;
                                (ii) any combination of agreements
                            or transactions referred to in clauses
                            (i) and (iii);
                                (iii) an option to enter into an
                            agreement or transaction referred to in
                            clause (i) or (ii);
                                (iv) a master agreement that
                            provides for an agreement or
                            transaction referred to in clause (i),
                            (ii), or (iii), together with all
                            supplements to any such master
                            agreement, without regard to whether
                            such master agreement provides for an
                            agreement or transaction that is not a
                            repurchase agreement under this
                            paragraph, except that such master
                            agreement shall be considered to be a
                            repurchase agreement under this
                            paragraph only with respect to each
                            agreement or transaction under the
                            master agreement that is referred to in
                            clause (i), (ii), or (iii); or
                                (v) any security agreement or
                            arrangement or other credit enhancement
                            related to any agreement or transaction
                            referred to in clause (i), (ii), (iii),
                            or (iv), but not to exceed the actual
                            value of such contract on the date of
                            the filing of the petition; and
                        (B) does not include a repurchase
                    obligation under a participation in a
                    commercial mortgage loan.
                (48) 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 confined 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[;].
                (48A) 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) The term ``security''--
                        (A) * * *

               *       *       *       *       *       *       *

                        (B) does not include--
                                (i) * * *

               *       *       *       *       *       *       *

                                (vii) debt or evidence of
                            indebtedness for goods sold and
                            delivered or services rendered[;].
                (50) The term ``security agreement'' means
            agreement that creates or provides for a security
            interest[;].
                (51) The term ``security interest'' means lien
            created by an agreement[;].
                (51A) 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 trade[;].
                (51B) 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;]
                (51C) The term ``small business case'' means a case
            filed under chapter 11 of this title in which the
            debtor is a small business debtor.
                (51D) The term ``small business debtor''--
                        (A) subject to subparagraph (B), means a
                    person engaged in commercial or business
                    activities (including any affiliate of such
                    person that is also a debtor under this title
                    and excluding a person whose primary activity
                    is the business of owning or operating real
                    property or activities incidental thereto) that
                    has aggregate noncontingent, liquidated secured
                    and unsecured debts as of the date of the
                    petition or the order for relief in an amount
                    not more than $3,000,000 (excluding debts owed
                    to 1 or more affiliates or insiders) for a case
                    in which the United States trustee has not
                    appointed under section 1102(a)(1) a committee
                    of unsecured creditors or where the court has
                    determined that the committee of unsecured
                    creditors is not sufficiently active and
                    representative to provide effective oversight
                    of the debtor; and
                        (B) does not include any member of a group
                    of affiliated debtors that has aggregate
                    noncontingent liquidated secured and unsecured
                    debts in an amount greater than $3,000,000
                    (excluding debt owed to 1 or more affiliates or
                    insiders).
                (52) 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) 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) The term ``stockbroker'' means person--
                        (A) * * *
                        (B) that is engaged in the business of
                    effecting transactions in securities--
                                (i) * * *
                                (ii) with 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;]
                (53B) The term ``swap agreement''--
                        (A) means--
                                (i) any agreement, including the
                            terms and conditions incorporated by
                            reference in such agreement, which is
                            an interest rate swap, option, future,
                            or forward agreement, including--
                                        (I) 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;
                                        (VII) a commodity index or
                                    a commodity swap, option,
                                    future, or forward agreement;
                                    or
                                        (VIII) a weather swap,
                                    weather derivative, or weather
                                    option;
                                (ii) any agreement or transaction
                            similar to any other agreement or
                            transaction referred to in this
                            paragraph that--
                                        (I) is presently, or in the
                                    future becomes, regularly
                                    entered into in the swap market
                                    (including terms and conditions
                                    incorporated by reference
                                    therein); and
                                        (II) is a forward, swap,
                                    future, or option on one or
                                    more rates, currencies,
                                    commodities, equity securities,
                                    or other equity instruments,
                                    debt securities or other debt
                                    instruments, or economic
                                    indices or measures of economic
                                    risk or value;
                                (iii) any combination of agreements
                            or transactions referred to in this
                            subparagraph;
                                (iv) any option to enter into an
                            agreement or transaction referred to in
                            this subparagraph;
                                (v) a master agreement that
                            provides for an agreement or
                            transaction referred to in clause (i),
                            (ii), (iii), or (iv), together with all
                            supplements to any such master
                            agreement, and without regard to
                            whether the master agreement contains
                            an agreement or transaction that is not
                            a swap agreement under this paragraph,
                            except that the master agreement shall
                            be considered to be a swap agreement
                            under this paragraph only with respect
                            to each agreement or transaction under
                            the master agreement that is referred
                            to in clause (i), (ii), (iii), or (iv);
                            or
                                (vi) any security agreement or
                            arrangement or other credit enhancement
                            related to any agreements or
                            transactions referred to in clause (i)
                            through (v), but not to exceed the
                            actual value of such contract on the
                            date of the filing of the petition; and
                        (B) is applicable for purposes of this
                    title only, and shall not be construed or
                    applied so as to challenge or affect the
                    characterization, definition, or treatment of
                    any swap agreement under any other statute,
                    regulation, or rule, including the Securities
                    Act of 1933, the Securities Exchange Act of
                    1934, the Public Utility Holding Company Act of
                    1935, the Trust Indenture Act of 1939, the
                    Investment Company Act of 1940, the Investment
                    Advisers Act of 1940, the Securities Investor
                    Protection Act of 1970, the Commodity Exchange
                    Act, and the regulations prescribed by the
                    Securities and Exchange Commission or the
                    Commodity Futures Trading Commission.
                (53C) The term ``swap participant'' means an entity
            that, at any time before the filing of the petition,
            has an outstanding swap a greement with the debtor[;].
                (56A) 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[;].
                (53D) 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) ``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;]
                (54) The term ``transfer'' means--
                        (A) the creation of a lien;
                        (B) the retention of title as a security
                    interest;
                        (C) the foreclosure of a debtor's equity of
                    redemption; or
                        (D) each mode, direct or indirect, absolute
                    or conditional, voluntary or involuntary, of
                    disposing of or parting with--
                                (i) property; or
                                (ii) an interest in property.
        (54A) The term the term ``uninsured State member bank''
    means a State member bank (as defined in section 3 of the
    Federal Deposit Insurance Act) the deposits of which are not
    insured by the Federal Deposit Insurance Corporation[; and].
                (55) 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[;].

               *       *       *       *       *       *       *

    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, 362(l), 555 through 557, and 559 through 562
    apply in a case under chapter 15.

               *       *       *       *       *       *       *

        (j) Chapter 15 applies only in a case under such chapter,
    except that--
                (1) sections 1505, 1513, and 1514 apply in all
            cases under this title; and
                (2) section 1509 applies whether or not a case
            under this title is pending.

    Sec. 104. Adjustment of dollar amounts

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

               *       *       *       *       *       *       *

        (2) Not later than March 1, 1998, and at each 3-year
    interval ending on March 1 thereafter, the Judicial Conference
    of the United States shall publish in the Federal Register the
    dollar amounts that will become effective on such April 1 under
    sections 109(e), 303(b), 507(a), 522(d), 522(f)(3), and
    523(a)(2)(C) of this title.

               *       *       *       *       *       *       *

        (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, 2004.

    Sec. 105. Power of court

        (a)  * * *

               *       *       *       *       *       *       *

        (d) The court, on its own motion or on the request of a
    party in interest[, may]--
                [(1) hold a status conference regarding any case or
            proceeding under this title after notice to the parties
            in interest; and]
                (1) shall hold such status conferences as are
            necessary to further the expeditious and economical
            resolution of the case; and

               *       *       *       *       *       *       *

    Sec. 108. Extension of time

        (a) * * *

               *       *       *       *       *       *       *

        (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) * * *
                (2) 30 days after notice of the termination or
            expiration of the stay under section 362, [922, 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)  * * *
        (b) A person may be a debtor under chapter 7 of this title
    only if such person is not--
                (1)  * * *
                (2) a domestic insurance company, bank, savings
            bank, cooperative bank, savings and loan association,
            building and loan association, homestead association, a
            small business investment company licensed by the Small
            Business Administration under [subsection (c) or (d)
            of] section 301 of the Small Business Investment Act of
            1958, credit union, or industrial bank or similar
            institution which is an insured bank as defined in
            section 3(h) of the Federal Deposit Insurance Act; or
                [(3) a foreign insurance company, bank, savings
            bank, cooperative bank, savings and loan association,
            building and loan association, homestead association,
            or credit union, engaged in such business in the United
            States.]
                (3)(A) a foreign insurance company, engaged in such
            business in the United States; or
                (B) a foreign bank, savings bank, cooperative bank,
            savings and loan association, building and loan
            association, or credit union, that has a branch or
            agency (as defined in section 1(b) of the International
            Banking Act of 1978 (12 U.S.C. 3101) in the United
            States.

               *       *       *       *       *       *       *

        (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 budget and credit counseling agency
    described in section 111(a) an individual or group briefing
    (including a briefing conducted by telephone or on the
    Internet) that outlined the opportunities for available credit
    counseling and assisted 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 bankruptcy administrator of the bankruptcy court of
    that district determines that the approved nonprofit budget and
    credit counseling agencies for that district are not reasonably
    able to provide adequate services to the additional individuals
    who would otherwise seek credit counseling from that agency 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. Notwithstanding the preceding sentence, a nonprofit
    budget and credit counseling service may be disapproved by the
    United States trustee or bankruptcy administrator at any time.
        (3)(A) Subject to subparagraph (B), the requirements of
    paragraph (1) shall not apply with respect to a debtor who
    submits to the court a certification that--
                (i) describes exigent circumstances that merit a
            waiver of the requirements of paragraph (1);
                (ii) states that the debtor requested credit
            counseling services from an approved nonprofit budget
            and credit counseling agency, but was unable to obtain
            the services referred to in paragraph (1) during the 5-
            day period beginning on the date on which the debtor
            made that request; and
                (iii) is satisfactory to the court.
        (B) With respect to a debtor, an exemption under
    subparagraph (A) shall cease to apply to that debtor on the
    date on which the debtor meets the requirements of paragraph
    (1), but in no case may the exemption apply to that debtor
    after the date that is 30 days after the debtor files a
    petition, except that the court, for cause, may order an
    additional 15 days.

    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] the attorney for the debtor or an employee of
            such attorney under the direct supervision of such
            attorney, who 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) * * *
        [(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).]
        (2)(A) A bankruptcy petition preparer may not offer a
    potential bankruptcy debtor any legal advice, including any
    legal advice described in subparagraph (B).
        (B) The legal advice referred to in subparagraph (A)
    includes advising the debtor--
                (i) whether--
                        (I) to file a petition under this title; or
                        (II) commencing a case under chapter 7, 11,
                    12, or 13 is appropriate;
                (ii) whether the debtor's debts will be 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 any 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 (1).]
        [(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.
        [(1)] (2) Within 10 days after the date of the filing of a
    petition, a bankruptcy petition preparer shall file 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) 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, the
    bankruptcy administrator, 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)(1) If a bankruptcy petition preparer violates this
    section or commits any act that the court finds to be
    fraudulent, unfair, or deceptive, on motion of the debtor,
    trustee, United States trustee, or bankruptcy administrator,
    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--
                (A) * * *

               *       *       *       *       *       *       *

        (j)(1)  * * *
        (2)(A) In an action under paragraph (1), if 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 that 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 would not be sufficient to prevent such person's
    interference with the proper administration of this title, [or]
    has not paid a penalty imposed under this section, or failed to
    disgorge all fees ordered by the court 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, the United States trustee, or the bankruptcy
    administrator.
        [(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.

               *       *       *       *       *       *       *

        (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, the United States
    trustee, or the bankruptcy administrator may file a motion for
    an order imposing a fine on the bankruptcy petition preparer
    for each violation of this section.
        (4)(A) Fines imposed under this subsection in judicial
    districts served by United States trustees shall be paid to the
    United States trustee, who shall deposit an amount equal to
    such fines in a special account of the United States Trustee
    System Fund referred to in section 586(e)(2) of title 28.
    Amounts deposited under this subparagraph shall be available to
    fund the enforcement of this section on a national basis.
        (B) Fines imposed under this subsection in judicial
    districts served by bankruptcy administrators shall be
    deposited as offsetting receipts to the fund established under
    section 1931 of title 28, and shall remain available until
    expended to reimburse any appropriation for the amount paid out
    of such appropriation for expenses of the operation and
    maintenance of the courts of the United States.

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

        (a) The clerk of each district shall maintain a publicly
    available list of--
                (1) credit counseling agencies that provide 1 or
            more programs described in section 109(h) currently
            approved by the United States trustee or the bankruptcy
            administrator for the district, as applicable; and
                (2) instructional courses concerning personal
            financial management currently approved by the United
            States trustee or the bankruptcy administrator for the
            district, as applicable.
        (b) The United States trustee or bankruptcy administrator
    shall only approve a credit counseling agency or instructional
    course concerning personal financial management as follows:
                (1) The United States trustee or bankruptcy
            administrator shall have thoroughly reviewed the
            qualifications of the credit counseling agency or of
            the provider of the instructional course under the
            standards set forth in this section, and the programs
            or instructional courses which will be offered by such
            agency or provider, and may require an agency or
            provider of an instructional course which has sought
            approval to provide information with respect to such
            review.
                (2) The United States trustee or bankruptcy
            administrator shall have determined that the credit
            counseling agency or course of instruction fully
            satisfies the applicable standards set forth in this
            section.
                (3) When an agency or course of instruction is
            initially approved, such approval shall be for a
            probationary period not to exceed 6 months. An agency
            or course of instruction is initially approved if it
            did not appear on the approved list for the district
            under subsection (a) immediately prior to approval.
                (4) At the conclusion of the probationary period
            under paragraph (3), the United States trustee or
            bankruptcy administrator may only approve for an
            additional 1-year period, and for successive 1-year
            periods thereafter, any agency or course of instruction
            which has demonstrated during the probationary or
            subsequent period that such agency or course of
            instruction--
                        (A) has met the standards set forth under
                    this section during such period; and
                        (B) can satisfy such standards in the
                    future.
                (5) Not later than 30 days after any final decision
            under paragraph (4), that occurs either after the
            expiration of the initial probationary period, or after
            any 2-year period thereafter, an interested person may
            seek judicial review of such decision in the
            appropriate United States District Court.
        (c)(1) The United States trustee or bankruptcy
    administrator shall only approve a credit counseling agency
    that demonstrates that it will provide qualified counselors,
    maintain adequate provision for safekeeping and payment of
    client funds, provide adequate counseling with respect to
    client credit problems, and deal responsibly and effectively
    with other matters as relate to the quality, effectiveness, and
    financial security of such programs.
        (2) To be approved by the United States trustee or
    bankruptcy administrator, a credit counseling agency shall, at
    a minimum--
                (A) be a nonprofit budget and credit counseling
            agency, the majority of the board of directors of
            which--
                        (i) are not employed by the agency; and
                        (ii) will not directly or indirectly
                    benefit financially from the outcome of a
                    credit counseling session;
                (B) if a fee is charged for counseling services,
            charge a reasonable fee, and provide services without
            regard to ability to pay the fee;
                (C) provide for safekeeping and payment of client
            funds, including an annual audit of the trust accounts
            and appropriate employee bonding;
                (D) provide full disclosures to clients, including
            funding sources, counselor qualifications, possible
            impact on credit reports, and any costs of such program
            that will be paid by the debtor and how such costs will
            be paid;
                (E) provide adequate counseling with respect to
            client credit problems that includes an analysis of
            their current situation, what brought them to that
            financial status, and how they can develop a plan to
            handle the problem without incurring negative
            amortization of their debts;
                (F) provide trained counselors who receive no
            commissions or bonuses based on the counseling session
            outcome, and who have adequate experience, and have
            been adequately trained to provide counseling services
            to individuals in financial difficulty, including the
            matters described in subparagraph (E);
                (G) demonstrate adequate experience and background
            in providing credit counseling; and
                (H) have adequate financial resources to provide
            continuing support services for budgeting plans over
            the life of any repayment plan.
        (d) The United States trustee or bankruptcy administrator
    shall only approve an instructional course concerning personal
    financial management--
                (1) for an initial probationary period under
            subsection (b)(3) if the course will provide at a
            minimum--
                        (A) trained personnel with adequate
                    experience and training in providing effective
                    instruction and services;
                        (B) learning materials and teaching
                    methodologies designed to assist debtors in
                    understanding personal financial management and
                    that are consistent with stated objectives
                    directly related to the goals of such course of
                    instruction;
                        (C) adequate facilities situated in
                    reasonably convenient locations at which such
                    course of instruction is offered, except that
                    such facilities may include the provision of
                    such course of instruction or program by
                    telephone or through the Internet, if the
                    course of instruction or program is effective;
                    and
                        (D) the preparation and retention of
                    reasonable records (which shall include the
                    debtor's bankruptcy case number) to permit
                    evaluation of the effectiveness of such course
                    of instruction or program, including any
                    evaluation of satisfaction of course of
                    instruction or program requirements for each
                    debtor attending such course of instruction or
                    program, which shall be available for
                    inspection and evaluation by the Executive
                    Office for United States Trustees, the United
                    States trustee, bankruptcy administrator, or
                    chief bankruptcy judge for the district in
                    which such course of instruction or program is
                    offered; and
                (2) for any 1-year period if the provider thereof
            has demonstrated that the course meets the standards of
            paragraph (1) and, in addition--
                        (A) has been effective in assisting a
                    substantial number of debtors to understand
                    personal financial management; and
                        (B) is otherwise likely to increase
                    substantially debtor understanding of personal
                    financial management.
        (e) The District Court may, at any time, investigate the
    qualifications of a credit counseling agency referred to in
    subsection (a), and request production of documents to ensure
    the integrity and effectiveness of such credit counseling
    agencies. The District Court may, at any time, remove from the
    approved list under subsection (a) a credit counseling agency
    upon finding such agency does not meet the qualifications of
    subsection (b).
        (f) The United States trustee or bankruptcy administrator
    shall notify the clerk that a credit counseling agency or an
    instructional course is no longer approved, in which case the
    clerk shall remove it from the list maintained under subsection
    (a).
        (g)(1) No credit counseling service may provide to a credit
    reporting agency information concerning whether an individual
    debtor has received or sought instruction concerning personal
    financial management from the credit counseling service.
        (2) A credit counseling service that willfully or
    negligently fails to comply with any requirement under this
    title with respect to a debtor shall be liable for damages in
    an amount equal to the sum of--
                (A) any actual damages sustained by the debtor as a
            result of the violation; and
                (B) any court costs or reasonable attorneys' fees
            (as determined by the court) incurred in an action to
            recover those damages.

               *       *       *       *       *       *       *

                         CHAPTER 3--CASE ADMINISTRATION

                      SUBCHAPTER I--COMMENCEMENT OF A CASE

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

                             SUBCHAPTER II--OFFICERS

    321.  Eligibility to serve as trustee.
         * * * * * * *
    332.  Appointment of ombudsman.
         * * * * * * *

                         SUBCHAPTER III--ADMINISTRATION

    341.  Meetings of creditors and equity security holders.
         * * * * * * *
    351.  Disposal of patient records.

               *       *       *       *       *       *       *

                      SUBCHAPTER I--COMMENCEMENT OF A CASE

    Sec. 301. Voluntary cases

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

               *       *       *       *       *       *       *

    Sec. 303. Involuntary cases

        (a) * * *

               *       *       *       *       *       *       *

        [(k) Notwithstanding subsection (a) of this section, an
    involuntary case may be commenced against a foreign bank that
    is not engaged in such business in the United States only under
    chapter 7 of this title and only if a foreign proceeding
    concerning such bank is pending.]

    [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 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. 305. Abstention

        (a) The court, after notice and a hearing, may dismiss a
    case under this title, or may suspend all proceedings in a case
    under this title, at any time if--
                [(2)(A) there is pending a foreign proceeding; and
                [(B) the factors specified in section 304(c) of
            this title warrant such dismissal or suspension.]
                (2)(A) a petition under section 1515 of this title
            for recognition of a foreign proceeding has been
            granted; and
                (B) the purposes of chapter 15 of this title would
            be best served by such dismissal or suspension.

               *       *       *       *       *       *       *

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

    Sec. 306. Limited appearance

        An appearance in a bankruptcy court by a foreign
    representative in connection with a petition or request under
    section 303[, 304,] or 305 of this title does not submit such
    foreign representative to the jurisdiction of any court in the
    United States for any other purpose, but the bankruptcy court
    may condition any order under section 303[, 304,] or 305 of
    this title on compliance by such foreign representative with
    the orders of such bankruptcy court.

               *       *       *       *       *       *       *

    Sec. 308. Debtor reporting requirements

        (a) For purposes of this section, the term
    ``profitability'' means, with respect to a debtor, the amount
    of money that the debtor has earned or lost during current and
    recent fiscal periods.
        (b) A small business debtor shall file periodic financial
    and other reports containing information including--
                (1) the debtor's profitability;
                (2) reasonable approximations of the debtor's
            projected cash receipts and cash disbursements over a
            reasonable period;
                (3) comparisons of actual cash receipts and
            disbursements with projections in prior reports;
                (4)(A) whether the debtor is--
                        (i) in compliance in all material respects
                    with postpetition requirements imposed by this
                    title and the Federal Rules of Bankruptcy
                    Procedure; and
                        (ii) timely filing tax returns and other
                    required government filings and paying taxes
                    and other administrative claims when due;
                (B) if the debtor is not in compliance with the
            requirements referred to in subparagraph (A)(i) or
            filing tax returns and other required government
            filings and making the payments referred to in
            subparagraph (A)(ii), what the failures are and how, at
            what cost, and when the debtor intends to remedy such
            failures; and
                (C) such other matters as are in the best interests
            of the debtor and creditors, and in the public interest
            in fair and efficient procedures under chapter 11 of
            this title.

               *       *       *       *       *       *       *

                            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) After notice to the parties in interest and the
    United States Trustee and a hearing, and subject to sections
    326, 328, and 329, the court may award to a trustee, an
    examiner, an ombudsman appointed under section 331, or a
    professional person employed under section 327 or 1103--
                (A) reasonable compensation for actual, necessary
            services rendered by the trustee, examiner, ombudsman,
            professional person, or attorney and by any
            paraprofessional person employed by any such person;
            and

               *       *       *       *       *       *       *

        (3)[(A) In] 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) * * *

               *       *       *       *       *       *       *

                (D) 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]
                        (E) with respect to a professional person,
                    whether the person is board certified or
                    otherwise has demonstrated skill and experience
                    in the bankruptcy field; and
                [(E)] (F) whether the compensation is reasonable
            based on the customary compensation charged by
            comparably skilled practitioners in cases other than
            cases under this title.

               *       *       *       *       *       *       *

                (7) In determining the amount of reasonable
            compensation to be awarded to a trustee, the court
            shall treat such compensation as a commission, based on
            section 326 of this title.

               *       *       *       *       *       *       *

    Sec. 332. Appointment of ombudsman

        (a) In General.--
                (1) Authority to appoint.--Not later than 30 days
            after a case is commenced by a health care business
            under chapter 7, 9, or 11, the court shall order the
            appointment of an ombudsman to monitor the quality of
            patient care to represent the interests of the patients
            of the health care business, unless the court finds
            that the appointment of the ombudsman is not necessary
            for the protection of patients under the specific facts
            of the case.
                (2) Qualifications.--If the court orders the
            appointment of an ombudsman, the United States trustee
            shall appoint 1 disinterested person, other than the
            United States trustee, to serve as an ombudsman,
            including a person who is serving as a State Long-Term
            Care Ombudsman appointed under title III or VII of the
            Older Americans Act of 1965 (42 U.S.C. 3021 et seq.,
            3058 et seq.).
        (b) Duties.--An ombudsman appointed under subsection (a)
    shall--
                (1) monitor the quality of patient care, to the
            extent necessary under the circumstances, including
            interviewing patients and physicians;
                (2) not later than 60 days after the date of
            appointment, and not less frequently than every 60 days
            thereafter, report to the court, at a hearing or in
            writing, regarding the quality of patient care at the
            health care business involved; and
                (3) if the ombudsman determines that the quality of
            patient care is declining significantly or is otherwise
            being materially compromised, notify the court by
            motion or written report, with notice to appropriate
            parties in interest, immediately upon making that
            determination.
        (c) Confidentiality.--An ombudsman shall maintain any
    information obtained by the ombudsman under this section that
    relates to patients (including information relating to patient
    records) as confidential information. The ombudsman may not
    review confidential patient records, unless the court provides
    prior approval, with restrictions on the ombudsman to protect
    the confidentiality of patient records.

               *       *       *       *       *       *       *

                         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 1 creditor) shall be permitted to appear at and
    participate in the meeting of creditors in a case under chapter
    7 or 13, either alone or in conjunction with an attorney for
    the creditor. Nothing in this subsection shall be construed to
    require any creditor to be represented by an attorney at any
    meeting of creditors.

               *       *       *       *       *       *       *

        (e) Notwithstanding subsections (a) and (b), the court, on
    the request of a party in interest and after notice and a
    hearing, for cause may order that the United States trustee not
    convene a meeting of creditors or equity security holders if
    the debtor has filed a plan as to which the debtor solicited
    acceptances prior to the commencement of the case.

               *       *       *       *       *       *       *

    Sec. 342. Notice

        (a)  * * *
        [(b) Prior to the commencement of a case under this title
    by an individual whose debts are primarily consumer debts, the
    clerk shall give written notice to such individual that
    indicates each chapter of this title under which such
    individual may proceed.]
        (b) Before the commencement of a case under this title by
    an individual whose debts are primarily consumer debts, the
    clerk shall give to such individual written notice containing--
                (1) a brief description of--
                        (A) chapters 7, 11, 12, and 13 and the
                    general purpose, benefits, and costs of
                    proceeding under each of those chapters; and
                        (B) the types of services available from
                    credit counseling agencies; and
                (2) statements specifying that--
                        (A) a person who knowingly and fraudulently
                    conceals assets or makes a false oath or
                    statement under penalty of perjury in
                    connection with a bankruptcy case shall be
                    subject to fine, imprisonment, or both; and
                        (B) all information supplied by a debtor in
                    connection with a bankruptcy case is subject to
                    examination by the Attorney General.
        (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].
                (2) If, within the 90 days prior to the date of the
            filing of a petition in a voluntary case, the creditor
            supplied the debtor in at least 2 communications sent
            to the debtor with the current account number of the
            debtor and the address at which the creditor wishes to
            receive correspondence, then the debtor shall send any
            notice required under this title to the address
            provided by the creditor and such notice shall include
            the account number. In the event the creditor would be
            in violation of applicable nonbankruptcy law by sending
            any such communication within such 90-day period and if
            the creditor supplied the debtor in the last 2
            communications with the current account number of the
            debtor and the address at which the creditor wishes to
            receive correspondence, then the debtor shall send any
            notice required under this title to the address
            provided by the creditor and such notice shall include
            the account number.
        (d) In an individual case under chapter 7 in which the
    presumption of abuse is triggered under section 707(b), the
    clerk shall give written notice to all creditors not later than
    10 days after the date of the filing of the petition that the
    presumption of abuse has been triggered.
        (e) 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.
        (f) 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
    (e) with respect to a particular case.
        (g)(1) 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. 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(k) 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.

               *       *       *       *       *       *       *

    [Sec. 346. Special tax provisions

        [(a) Except to the extent otherwise provided in this
    section, subsections (b), (c), (d), (e), (g), (h), (i), and (j)
    of this section apply notwithstanding any State or local law
    imposing a tax, but subject to the Internal Revenue Code of
    1986.
        [(b)(1) In a case under chapter 7, 12, or 11 of this title
    concerning an individual, any income of the estate may be taxed
    under a State or local law imposing a tax on or measured by
    income only to the estate, and may not be taxed to such
    individual. Except as provided in section 728 of this title, if
    such individual is a partner in a partnership, any gain or loss
    resulting from a distribution of property from such
    partnership, or any distributive share of income, gain, loss,
    deduction, or credit of such individual that is distributed, or
    considered distributed, from such partnership, after the
    commencement of the case is gain, loss, income, deduction, or
    credit, as the case may be, of the estate.
        [(2) Except as otherwise provided in this section and in
    section 728 of this title, any income of the estate in such a
    case, and any State or local tax on or measured by such income,
    shall be computed in the same manner as the income and the tax
    of an estate.
        [(3) The estate in such a case shall use the same
    accounting method as the debtor used immediately before the
    commencement of the case.
        [(c)(1) The commencement of a case under this title
    concerning a corporation or a partnership does not effect a
    change in the status of such corporation or partnership for the
    purposes of any State or local law imposing a tax on or
    measured by income. Except as otherwise provided in this
    section and in section 728 of this title, any income of the
    estate in such case may be taxed only as though such case had
    not been commenced.
        [(2) In such a case, except as provided in section 728 of
    this title, the trustee shall make any tax return otherwise
    required by State or local law to be filed by or on behalf of
    such corporation or partnership in the same manner and form as
    such corporation or partnership, as the case may be, is
    required to make such return.
        [(d) In a case under chapter 13 of this title, any income
    of the estate or the debtor may be taxed under a State or local
    law imposing a tax on or measured by income only to the debtor,
    and may not be taxed to the estate.
        [(e) A claim allowed under section 502(f) or 503 of this
    title, other than a claim for a tax that is not otherwise
    deductible or a capital expenditure that is not otherwise
    deductible, is deductible by the entity to which income of the
    estate is taxed unless such claim was deducted by another
    entity, and a deduction for such a claim is deemed to be a
    deduction attributable to a business.
        [(f) The trustee shall withhold from any payment of claims
    for wages, salaries, commissions, dividends, interest, or other
    payments, or collect, any amount required to be withheld or
    collected under applicable State or local tax law, and shall
    pay such withheld or collected amount to the appropriate
    governmental unit at the time and in the manner required by
    such tax law, and with the same priority as the claim from
    which such amount was withheld was paid.
        [(g)(1) Neither gain nor loss shall be recognized on a
    transfer--
                [(A) by operation of law, of property to the
            estate;
                [(B) other than a sale, of property from the estate
            to the debtor; or
                [(C) in a case under chapter 11 or 12 of 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.
        [(2) The transferee of a transfer of a kind specified in
    this subsection shall take the property transferred with the
    same character, and with the transferor's basis, as adjusted
    under subsection (j)(5) of this section, and holding period.
        [(h) Notwithstanding sections 728(a) and 1146(a) of this
    title, for the purpose of determining the number of taxable
    periods during which the debtor or the estate may use a loss
    carryover or a loss carryback, the taxable period of the debtor
    during which the case is commenced is deemed not to have been
    terminated by such commencement.
        [(i)(1) In a case under chapter 7, 12, or 11 of this title
    concerning an individual, the estate shall succeed to the
    debtor's tax attributes, including--
                [(A) any investment credit carryover;
                [(B) any recovery exclusion;
                [(C) any loss carryover;
                [(D) any foreign tax credit carryover;
                [(E) any capital loss carryover; and
                [(F) any claim of right.
        [(2) After such a case is closed or dismissed, the debtor
    shall succeed to any tax attribute to which the estate
    succeeded under paragraph (1) of this subsection but that was
    not utilized by the estate. The debtor may utilize such tax
    attributes as though any applicable time limitations on such
    utilization by the debtor were suspended during the time during
    which the case was pending.
        [(3) In such a case, the estate may carry back any loss of
    the estate to a taxable period of the debtor that ended before
    the order for relief under such chapter the same as the debtor
    could have carried back such loss had the debtor incurred such
    loss and the case under this title had not been commenced, but
    the debtor may not carry back any loss of the debtor from a
    taxable period that ends after such order to any taxable period
    of the debtor that ended before such order until after the case
    is closed.
        [(j)(1) Except as otherwise provided in this subsection,
    income is not realized by the estate, the debtor, or a
    successor to the debtor by reason of forgiveness or discharge
    of indebtedness in a case under this title.
        [(2) For the purposes of any State or local law imposing a
    tax on or measured by income, a deduction with respect to a
    liability may not be allowed for any taxable period during or
    after which such liability is forgiven or discharged under this
    title. In this paragraph, ``a deduction with respect to a
    liability'' includes a capital loss incurred on the disposition
    of a capital asset with respect to a liability that was
    incurred in connection with the acquisition of such asset.
        [(3) Except as provided in paragraph (4) of this
    subsection, for the purpose of any State or local law imposing
    a tax on or measured by income, any net operating loss of an
    individual or corporate debtor, including a net operating loss
    carryover to such debtor, shall be reduced by the amount of
    indebtedness forgiven or discharged in a case under this title,
    except to the extent that such forgiveness or discharge
    resulted in a disallowance under paragraph (2) of this
    subsection.
        [(4) A reduction of a net operating loss or a net operating
    loss carryover under paragraph (3) of this subsection or of
    basis under paragraph (5) of this subsection is not required to
    the extent that the indebtedness of an individual or corporate
    debtor forgiven or discharged--
                [(A) consisted of items of a deductible nature that
            were not deducted by such debtor; or
                [(B) resulted in an expired net operating loss
            carryover or other deduction that--
                        [(i) did not offset income for any taxable
                    period; and
                        [(ii) did not contribute to a net operating
                    loss in or a net operating loss carryover to
                    the taxable period during or after which such
                    indebtedness was discharged.
        [(5) For the purposes of a State or local law imposing a
    tax on or measured by income, the basis of the debtor's
    property or of property transferred to an entity required to
    use the debtor's basis in whole or in part shall be reduced by
    the lesser of--
                [(A)(i) the amount by which the indebtedness of the
            debtor has been forgiven or discharged in a case under
            this title; minus
                [(ii) the total amount of adjustments made under
            paragraphs (2) and (3) of this subsection; and
                [(B) the amount by which the total basis of the
            debtor's assets that were property of the estate before
            such forgiveness or discharge exceeds the debtor's
            total liabilities that were liabilities both before and
            after such forgiveness or discharge.
        [(6) Notwithstanding paragraph (5) of this subsection,
    basis is not required to be reduced to the extent that the
    debtor elects to treat as taxable income, of the taxable period
    in which indebtedness is forgiven or discharged, the amount of
    indebtedness forgiven or discharged that otherwise would be
    applied in reduction of basis under paragraph (5) of this
    subsection.
        [(7) For the purposes of this subsection, indebtedness with
    respect to which an equity security, other than an interest of
    a limited partner in a limited partnership, is issued to the
    creditor to whom such indebtedness was owed, or that is
    forgiven as a contribution to capital by an equity security
    holder other than a limited partner in the debtor, is not
    forgiven or discharged in a case under this title--
                [(A) to any extent that such indebtedness did not
            consist of items of a deductible nature; or
                [(B) if the issuance of such equity security has
            the same consequences under a law imposing a tax on or
            measured by income to such creditor as a payment in
            cash to such creditor in an amount equal to the fair
            market value of such equity security, then to the
            lesser of--
                        [(i) the extent that such issuance has the
                    same such consequences; and
                        [(ii) the extent of such fair market
                    value.]

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

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

               *       *       *       *       *       *       *

    Sec. 348. Effect of conversion

        (a)  * * *

               *       *       *       *       *       *       *

        (f)(1) Except as provided in paragraph (2), when a case
    under chapter 13 of this title is converted to a case under
    another chapter under this title--
                (A) property of the estate in the converted case
            shall consist of property of the estate, as of the date
            of filing of the petition, that remains in the
            possession of or is under the control of the debtor on
            the date of conversion; [and]
                (B) valuations of property and of allowed secured
            claims in the chapter 13 case shall apply [in the
            converted case, with allowed secured claims] only in a
            case converted to a case under chapter 11 or 12, but
            not in a case converted to a case under chapter 7, with
            allowed secured claims in cases under chapters 11 and
            12 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.

               *       *       *       *       *       *       *

    Sec. 351. Disposal of patient records

        If a health care business commences a case under chapter 7,
    9, or 11, and the trustee does not have a sufficient amount of
    funds to pay for the storage of patient records in the manner
    required under applicable Federal or State law, the following
    requirements shall apply:
                (1) The trustee shall--
                        (A) promptly publish notice, in 1 or more
                    appropriate newspapers, that if patient records
                    are not claimed by the patient or an insurance
                    provider (if applicable law permits the
                    insurance provider to make that claim) by the
                    date that is 365 days after the date of that
                    notification, the trustee will destroy the
                    patient records; and
                        (B) during the first 180 days of the 365-
                    day period described in subparagraph (A),
                    promptly attempt to notify directly each
                    patient that is the subject of the patient
                    records and appropriate insurance carrier
                    concerning the patient records by mailing to
                    the last known address of that patient, or a
                    family member or contact person for that
                    patient, and to the appropriate insurance
                    carrier an appropriate notice regarding the
                    claiming or disposing of patient records.
                (2) If, after providing the notification under
            paragraph (1), patient records are not claimed during
            the 365-day period described under that paragraph, the
            trustee shall mail, by certified mail, at the end of
            such 365-day period a written request to each
            appropriate Federal agency to request permission from
            that agency to deposit the patient records with that
            agency, except that no Federal agency is required to
            accept patient records under this paragraph.
                (3) If, following the 365-day period described in
            paragraph (2) and after providing the notification
            under paragraph (1), patient records are not claimed by
            a patient or insurance provider, or request is not
            granted by a Federal agency to deposit such records
            with that agency, the trustee shall destroy those
            records by--
                        (A) if the records are written, shredding
                    or burning the records; or
                        (B) if the records are magnetic, optical,
                    or other electronic records, by otherwise
                    destroying those records so that those records
                    cannot be retrieved.

                     SUBCHAPTER IV--ADMINISTRATIVE POWERS

               *       *       *       *       *       *       *

    Sec. 362. Automatic stay

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

               *       *       *       *       *       *       *

                (8) the commencement or continuation of a
            proceeding before the United States Tax Court
            concerning [the debtor] a corporate debtor's tax
            liability for a taxable period the bankruptcy court may
            determine or concerning an individual debtor's tax
            liability for a taxable period ending before the order
            for relief under this title.
        (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)  * * *
                [(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 or continuation of
                    a civil action or proceeding--
                                (i) for the establishment of
                            paternity;
                                (ii) for the establishment or
                            modification of an order for domestic
                            support obligations;
                                (iii) concerning child custody or
                            visitation;
                                (iv) for the dissolution of a
                            marriage, except to the extent that
                            such proceeding seeks to determine the
                            division of property that is property
                            of the estate; or
                                (v) regarding domestic violence;
                        (B) the collection of a domestic support
                    obligation from property that is not property
                    of the estate;
                        (C) with respect to the withholding of
                    income that is property of the estate or
                    property of the debtor for payment of a
                    domestic support obligation under a judicial or
                    administrative order;
                        (D) 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));
                        (E) the reporting of overdue support owed
                    by a parent to any consumer reporting agency as
                    specified in section 466(a)(7) of the Social
                    Security Act (42 U.S.C. 666(a)(7));
                        (F) the interception of tax refunds, as
                    specified in sections 464 and 466(a)(3) of the
                    Social Security Act (42 U.S.C. 664 and
                    666(a)(3)) or under an analogous State law; or
                        (G) the enforcement of medical obligations
                    as specified under title IV of the Social
                    Security Act (42 U.S.C. 601 et seq.);

               *       *       *       *       *       *       *

                (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;

               *       *       *       *       *       *       *

                [(17) under subsection (a) of this section, of the
            setoff by a swap participant, of any mutual debt and
            claim under or in connection with any swap agreement
            that constitutes the setoff of a claim against the
            debtor for any payment due from the debtor under or in
            connection with any swap agreement against any payment
            due to the debtor from the swap participant under or in
            connection with any swap agreement or against cash,
            securities, or other property of the debtor held by or
            due from such swap participant to guarantee, secure or
            settle any swap agreement; or
                [(18) under subsection (a) of the creation or
            perfection of a statutory lien for an ad valorem
            property tax imposed by the District of Columbia, or a
            political subdivision of a State, if such tax comes due
            after the filing of the petition.]
                (17) under subsection (a), of the setoff by a swap
            participant of a mutual debt and claim under or in
            connection with one or more swap agreements that
            constitutes the setoff of a claim against the debtor
            for any payment or other transfer of property due from
            the debtor under or in connection with any swap
            agreement against any payment due to the debtor from
            the swap participant under or in connection with any
            swap agreement or against cash, securities, or other
            property held by, pledged to, and under the control of,
            or due from such swap participant to margin, guarantee,
            secure, or settle any swap agreement;
                (18) under subsection (a) of the creation or
            perfection of a statutory lien for an ad valorem
            property tax, or a special tax or special assessment on
            real property whether or not ad valorem, imposed by a
            governmental unit, if such tax or assessment comes due
            after the filing of the petition;
                (19) under subsection (a), of withholding of income
            from a debtor's wages and collection of amounts
            withheld, under the debtor's agreement authorizing that
            withholding and collection for the benefit of a
            pension, profit-sharing, stock bonus, or other plan
            established under section 401, 403, 408, 408A, 414,
            457, or 501(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
                    chapter 84 of title 5, that satisfies the
                    requirements of section 8433(g) of such title;
                (20) 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;
                (21) under subsection (a), of any act to enforce
            any lien against or security interest in real
            property--
                        (A) if the debtor is ineligible under
                    section 109(g) to be a debtor in a 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;
                (22) 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;
                (23) 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;
                (24) under subsection (a)(3), of eviction actions
            based on endangerment to property or person or the use
            of illegal drugs;
                (25) under subsection (a) of any transfer that is
            not avoidable under section 544 and that is not
            avoidable under section 549;
                (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 under
            applicable nonbankruptcy law 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, except that in any
            case in which the setoff of an income tax refund is not
            permitted under applicable nonbankruptcy law because of
            a pending action to determine the amount or legality of
            a tax liability, the governmental unit may hold the
            refund pending the resolution of the action, unless the
            court, upon motion of the trustee and after notice and
            hearing, grants the taxing authority adequate
            protection (within the meaning of section 361) for the
            secured claim of that authority in the setoff under
            section 506(a);
                (28) under subsection (a), of the setoff by a
            master netting agreement participant of a mutual debt
            and claim under or in connection with one or more
            master netting agreements or any contract or agreement
            subject to such agreements that constitutes the setoff
            of a claim against the debtor for any payment or other
            transfer of property due from the debtor under or in
            connection with such agreements or any contract or
            agreement subject to such agreements against any
            payment due to the debtor from such master netting
            agreement participant under or in connection with such
            agreements or any contract or agreement subject to such
            agreements or against cash, securities, or other
            property held by, pledged to, 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 that such participant is
            eligible to exercise such offset rights under paragraph
            (6), (7), or (17) for each individual contract covered
            by the master netting agreement in issue; or
                (29) under subsection (a), of the exclusion by the
            Secretary of Health and Human Services of the debtor
            from participation in the medicare program or any other
            Federal health care program (as defined in section
            1128B(f) of the Social Security Act (42 U.S.C. 1320a-
            7b(f)) pursuant to title XI of such Act (42 U.S.C. 1301
            et seq.) or title XVIII of such Act (42 U.S.C. 1395 et
            seq.).
    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 (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.
        (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) * * *

               *       *       *       *       *       *       *

                        (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 shall 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
                                            negligence shall not be
                                            a substantial excuse
                                            unless the dismissal
                                            was caused by the
                                            negligence of the
                                            debtor's attorney);
                                                (bb) provide
                                            adequate protection as
                                            ordered by the court;
                                            or
                                                (cc) perform the
                                            terms of a plan
                                            confirmed by the court;
                                            or
                                        (III) there has not been a
                                    substantial change in the
                                    financial or personal affairs
                                    of the debtor since the
                                    dismissal of the next most
                                    previous case under chapter 7,
                                    11, or 13 or any other reason
                                    to conclude that the later case
                                    will be concluded--
                                                (aa) if a case
                                            under chapter 7, with a
                                            discharge; or
                                                (bb) if a case
                                            under chapter 11 or 13,
                                            with a confirmed plan
                                            which will be fully
                                            performed; and
                                (ii) as to any creditor that
                            commenced an action under subsection
                            (d) in a previous case in which the
                            individual was a debtor if, as of the
                            date of dismissal of such case, that
                            action was still pending or had been
                            resolved by terminating, conditioning,
                            or limiting the stay as to actions of
                            such creditor; and
                (4)(A)(i) if a single or joint case is filed by or
            against 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 of the next most previous
                            case under this title, or any other
                            reason to conclude that the later case
                            will not be concluded, if a case under
                            chapter 7, with a discharge, and if a
                            case under chapter 11 or 13, with a
                            confirmed plan that will be fully
                            performed; or
                        (ii) as to any creditor that commenced an
                    action under subsection (d) in a previous case
                    in which the individual was a debtor if, as of
                    the date of dismissal of such case, such action
                    was still pending or had been resolved by
                    terminating, conditioning, or limiting the stay
                    as to 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)  * * *
                (2) with respect to a stay of an act against
            property under subsection (a) of this section, if--
                        (A) the debtor does not have an equity in
                    such property; and
                        (B) such property is not necessary to an
                    effective reorganization; [or]
                (3) with respect to a stay of an act against single
            asset real estate under subsection (a), by a creditor
            whose claim is secured by an interest in such real
            estate, unless, not later than the date that is 90 days
            after the entry of the order for relief (or such later
            date as the court may determine for cause by order
            entered within that 90-day period) or 30 days after the
            court determines that the debtor is subject to this
            paragraph, whichever is later--
                        (A) the debtor has filed a plan of
                    reorganization that has a reasonable
                    possibility of being confirmed within a
                    reasonable time; or
                        [(B) the debtor has commenced monthly
                    payments to each creditor whose claim is
                    secured by such real estate (other than a claim
                    secured by a judgment lien or by an unmatured
                    statutory lien), which payments are in an
                    amount equal to interest at a current fair
                    market rate on the value of the creditor's
                    interest in the real estate.]
                        (B) the debtor has commenced monthly
                    payments 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 the date of entry of such
    order by the court, except that a debtor in a subsequent case
    may move for relief from such order based upon changed
    circumstances or for good cause shown, after notice and a
    hearing. Any Federal, State, or local governmental unit that
    accepts notices of interests or liens in real property shall
    accept any certified copy of an order described in this
    subsection for indexing and recording.
        (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.

               *       *       *       *       *       *       *

        (h)(1) In an individual case under chapter 7, 11, or 13,
    the stay provided by subsection (a) is terminated with respect
    to personal property of the estate or of the debtor securing in
    whole or in part a claim, or subject to an unexpired lease, and
    such personal property shall no longer be property of the
    estate if the debtor fails within the applicable time set by
    section 521(a)(2) of this title--
                (A) to file timely any statement of intention
            required under section 521(a)(2) of this title with
            respect to that property or to indicate in that
            statement that the debtor will either surrender the
            property or retain it and, if retaining it, either
            redeem the property pursuant to section 722 of this
            title, reaffirm the debt it secures pursuant to section
            524(c) of this title, or assume the unexpired lease
            pursuant to section 365(p) of this title if the trustee
            does not do so, as applicable; and
                (B) to take timely the action specified in that
            statement of intention, as it may be amended before
            expiration of the period for taking action, unless the
            statement of intention specifies reaffirmation and the
            creditor refuses to reaffirm on the original contract
            terms.
        (2) Paragraph (1) does not apply if the court determines,
    on the motion of the trustee filed before the expiration of the
    applicable time set by section 521(a)(2), after notice and a
    hearing, that such property is of consequential value or
    benefit to the estate, and orders appropriate adequate
    protection of the creditor's interest, and orders the debtor to
    deliver any collateral in the debtor's possession to the
    trustee. If the court does not so determine, the stay provided
    by subsection (a) shall terminate upon the conclusion of the
    proceeding on the motion.
        (i) If a case commenced under chapter 7, 11, or 13 is
    dismissed due to the creation of a debt repayment plan, for
    purposes of subsection (c)(3), any subsequent case commenced by
    the debtor under any such chapter shall not be presumed to be
    filed not in good faith.
        (j) On request of a party in interest, the court shall
    issue an order under subsection (c) confirming that the
    automatic stay has been terminated.
        [(h) An] (k)(1) Except as provided in paragraph (2), an
    individual injured by any willful violation of a stay provided
    by this section shall recover actual damages, including costs
    and attorneys' fees, and, in appropriate circumstances, may
    recover punitive damages.
        (2) If such violation is based on an action taken by an
    entity in the good faith belief that subsection (h) applies to
    the debtor, the recovery under paragraph (1) of this subsection
    against such entity shall be limited to actual damages.
        (l)(1) Except as provided in paragraph (2) of this
    subsection, the provisions of subsection (a) do not apply in a
    case in which the debtor--
                (A) is a debtor in a small business case pending at
            the time the petition is filed;
                (B) was a debtor in a small business case that was
            dismissed for any reason by an order that became final
            in the 2-year period ending on the date of the order
            for relief entered with respect to the petition;
                (C) was a debtor in a small business case in which
            a plan was confirmed in the 2-year period ending on the
            date of the order for relief entered with respect to
            the petition; or
                (D) is an entity that has succeeded to
            substantially all of the assets or business of a small
            business debtor described in subparagraph (A), (B), or
            (C).
        (2) This subsection does not apply--
                (A) to an involuntary case involving no collusion
            by the debtor with creditors; or
                (B) to the filing of a petition if--
                        (i) the debtor proves by a preponderance of
                    the evidence that the filing of that petition
                    resulted from circumstances beyond the control
                    of the debtor not foreseeable at the time the
                    case then pending was filed; and
                        (ii) it is more likely than not that the
                    court will confirm a feasible plan, but not a
                    liquidating plan, within a reasonable period of
                    time.
        (l) Limitation.--The exercise of rights not subject to the
    stay arising under subsection (a) pursuant to paragraph (6),
    (7), (17), or (28) of subsection (b) shall not be stayed by any
    order of a court or administrative agency in any proceeding
    under this title.

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

        (a)  * * *

               *       *       *       *       *       *       *

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

               *       *       *       *       *       *       *

    Sec. 365. Executory contracts and unexpired leases

        (a)  * * *
        (b)(1) If there has been a default in an executory contract
    or unexpired lease of the debtor, the trustee may not assume
    such contract or lease unless, at the time of assumption of
    such contract or lease, the trustee--
                (A) cures, or provides adequate assurance that the
            trustee will promptly cure, such default[;] other than
            a default that is a breach of a provision relating to
            the satisfaction of any provision (other than a penalty
            rate or penalty provision) relating to a default
            arising from any failure to perform nonmonetary
            obligations under an unexpired lease of real property,
            if it is impossible for the trustee to cure such
            default by performing nonmonetary acts at and after the
            time of assumption, except that if such default arises
            from a failure to operate in accordance with a
            nonresidential real property lease, then such default
            shall be cured by performance at and after the time of
            assumption in accordance with such lease, and pecuniary
            losses resulting from such default shall be compensated
            in accordance with the provisions of paragraph (b)(l);

               *       *       *       *       *       *       *

        (2) Paragraph (1) of this subsection does not apply to a
    default that is a breach of a provision relating to--
                (A)  * * *

               *       *       *       *       *       *       *

                (D) the satisfaction of any penalty rate or penalty
            provision relating to a default arising from any
            failure by the debtor to perform nonmonetary
            obligations under the executory contract or unexpired
            lease.

               *       *       *       *       *       *       *

        (c) The trustee may not assume or assign any executory
    contract or unexpired lease of the debtor, whether or not such
    contract or lease prohibits or restricts assignment of rights
    or delegation of duties, if--
                (1) * * *
                (2) such contract is a contract to make a loan, or
            extend other debt financing or financial
            accommodations, to or for the benefit of the debtor, or
            to issue a security of the debtor; or
                (3) such lease is of nonresidential real property
            and has been terminated under applicable nonbankruptcy
            law prior to the order for relief[; or].
                [(4) such lease is of nonresidential real property
            under which the debtor is the lessee of an aircraft
            terminal or aircraft gate at an airport at which the
            debtor is the lessee under one or more additional
            nonresidential leases of an aircraft terminal or
            aircraft gate and the trustee, in connection with such
            assumption or assignment, does not assume all such
            leases or does not assume and assign all of such leases
            to the same person, except that the trustee may assume
            or assign less than all of such leases with the airport
            operator's written consent.]
        (d)(1) * * *

               *       *       *       *       *       *       *

        [(4) Notwithstanding paragraphs (1) and (2), in a case
    under any chapter of this title, if the trustee does not assume
    or reject an unexpired lease of nonresidential real property
    under which the debtor is the lessee within 60 days after the
    date of the order for relief, or within such additional time as
    the court, for cause, within such 60-day period, fixes, then
    such lease is deemed rejected, and the trustee shall
    immediately surrender such nonresidential real property to the
    lessor.]
        (4)(A) Subject to subparagraph (B), in any case under any
    chapter of this title, an unexpired lease of nonresidential
    real property under which the debtor is the lessee shall be
    deemed rejected, and the trustee shall immediately surrender
    that nonresidential real property to the lessor, if the trustee
    does not assume or reject the unexpired lease by the earlier
    of--
                (i) the date that is 120 days after the date of the
            order for relief; or
                (ii) the date of the entry of an order confirming a
            plan.
        (B)(i) The court may extend the period determined under
    subparagraph (A), prior to the expiration of the 120-day
    period, for 90 days upon motion of the trustee or lessor for
    cause.
        (ii) If the court grants an extension under clause (i), the
    court may grant a subsequent extension only upon prior written
    consent of the lessor in each instance.
        [(5) Notwithstanding paragraphs (1) and (4) of this
    subsection, 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 an
    affected air carrier that is the lessee of an aircraft terminal
    or aircraft gate before the occurrence of a termination event,
    then (unless the court orders the trustee to assume such
    unexpired leases within 5 days after the termination event), at
    the option of the airport operator, such lease is deemed
    rejected 5 days after the occurrence of a termination event and
    the trustee shall immediately surrender possession of the
    premises to the airport operator; except that the lease shall
    not be deemed to be rejected unless the airport operator first
    waives the right to damages related to the rejection. In the
    event that the lease is deemed to be rejected under this
    paragraph, the airport operator shall provide the affected air
    carrier adequate opportunity after the surrender of the
    premises to remove the fixtures and equipment installed by the
    affected air carrier.
        [(6) For the purpose of paragraph (5) of this subsection
    and paragraph (f)(1) of this section, the occurrence of a
    termination event means, with respect to a debtor which is an
    affected air carrier that is the lessee of an aircraft terminal
    or aircraft gate--
                [(A) the entry under section 301 or 302 of this
            title of an order for relief under chapter 7 of this
            title;
                [(B) the conversion of a case under any chapter of
            this title to a case under chapter 7 of this title; or
                [(C) the granting of relief from the stay provided
            under section 362(a) of this title with respect to
            aircraft, aircraft engines, propellers, appliances, or
            spare parts, as defined in section 40102(a) of title
            49, except for property of the debtor found by the
            court not to be necessary to an effective
            reorganization.
        [(7) Any order entered by the court pursuant to paragraph
    (4) extending the period within which the trustee of an
    affected air carrier must assume or reject an unexpired lease
    of nonresidential real property shall be without prejudice to--
                [(A) the right of the trustee to seek further
            extensions within such additional time period granted
            by the court pursuant to paragraph (4); and
                [(B) the right of any lessor or any other party in
            interest to request, at any time, a shortening or
            termination of the period within which the trustee must
            assume or reject an unexpired lease of nonresidential
            real property.
        [(8) The burden of proof for establishing cause for an
    extension by an affected air carrier under paragraph (4) or the
    maintenance of a previously granted extension under paragraph
    (7)(A) and (B) shall at all times remain with the trustee.
        [(9) For purposes of determining cause under paragraph (7)
    with respect to an unexpired lease of nonresidential real
    property between the debtor that is an affected air carrier and
    an airport operator under which such debtor is the lessee of an
    airport terminal or an airport gate, the court shall consider,
    among other relevant factors, whether substantial harm will
    result to the airport operator or airline passengers as a
    result of the extension or the maintenance of a previously
    granted extension. In making the determination of substantial
    harm, the court shall consider, among other relevant factors,
    the level of actual use of the terminals or gates which are the
    subject of the lease, the public interest in actual use of such
    terminals or gates, the existence of competing demands for the
    use of such terminals or gates, the effect of the court's
    extension or termination of the period of time to assume or
    reject the lease on such debtor's ability to successfully
    reorganize under chapter 11 of this title, and whether the
    trustee of the affected air carrier is capable of continuing to
    comply with its obligations under section 365(d)(3) of this
    title.]
        [(10)] (5) The trustee shall timely perform all of the
    obligations of the debtor, except those specified in section
    365(b)(2), first arising from or after 60 days after the order
    for relief in a case under chapter 11 of this title under an
    unexpired lease of personal property (other than personal
    property leased to an individual primarily for personal,
    family, or household purposes), until such lease is assumed or
    rejected notwithstanding section 503(b)(1) of this title,
    unless the court, after notice and a hearing and based on the
    equities of the case, orders otherwise with respect to the
    obligations or timely performance thereof. This subsection
    shall not be deemed to affect the trustee's obligations under
    the provisions of subsection (b) or (f). Acceptance of any such
    performance does not constitute waiver or relinquishment of the
    lessor's rights under such lease or under this title.

               *       *       *       *       *       *       *

        (f)(1) Except as provided in [subsection] subsections (b)
    and (c) of this section, notwithstanding a provision in an
    executory contract or unexpired lease of the debtor, or in
    applicable law, that prohibits, restricts, or conditions the
    assignment of such contract or lease, the trustee may assign
    such contract or lease under paragraph (2) of this subsection[;
    except that the trustee may not assign an unexpired lease of
    nonresidential real property under which the debtor is an
    affected air carrier that is the lessee of an aircraft terminal
    or aircraft gate if there has occurred a termination event.].

               *       *       *       *       *       *       *

        (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, not later than 30 days after notice is provided
    under subparagraph (A), the debtor notifies the lessor in
    writing that the lease is assumed, the liability under the
    lease will be assumed by the debtor and not by the estate.
        (C) The stay under section 362 and the injunction under
    section 524(a)(2) shall not be violated by notification of the
    debtor and negotiation of cure under this subsection.
        (3) In a case under chapter 11 in which the debtor is an
    individual and in a case under chapter 13, if the debtor is the
    lessee with respect to personal property and the lease is not
    assumed in the plan confirmed by the court, the lease is deemed
    rejected as of the conclusion of the hearing on confirmation.
    If the lease is rejected, the stay under section 362 and any
    stay under section 1301 is automatically terminated with
    respect to the property subject to the lease.

    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.

               *       *       *       *       *       *       *

        (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 30-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.
         * * * * * * *
    511.  Rate of interest on tax claims.

                   SUBCHAPTER II--DEBTOR'S DUTIES AND BENEFITS

    521.  Debtor's duties.
         * * * * * * *
    526.  Debt relief enforcement.
    527.  Disclosures.
    528.  Debtor's bill of rights.

                           SUBCHAPTER III--THE ESTATE

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

                       SUBCHAPTER I--CREDITORS AND CLAIMS

    Sec. 501. Filing of proofs of claims or interests

        (a) * * *

               *       *       *       *       *       *       *

        (e) A claim arising from the liability of a debtor for fuel
    use tax assessed consistent with the requirements of section
    31705 of title 49 may be filed by the base jurisdiction
    designated pursuant to the International Fuel Tax Agreement
    and, if so filed, shall be allowed as a single claim.

    Sec. 502. Allowance of claims or interests

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

               *       *       *       *       *       *       *

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

               *       *       *       *       *       *       *

        (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 562 of this title shall be allowed under subsection
    (a), (b), or (c), or disallowed under subsection (d) or (e), as
    if such claim had arisen before the date of the filing of the
    petition.

               *       *       *       *       *       *       *

        (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 described in section 111
            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 prior to expiration of the 60-day period specified
            in paragraph (1)(B)(i).

    Sec. 503. Allowance of administrative expenses

        (a)  * * *
        (b) After notice and a hearing, there shall be allowed
    administrative expenses, other than claims allowed under
    section 502(f) of this title, including--
                (1)(A) * * *
                (B) any tax--
                        (i) incurred by the estate, whether secured
                    or unsecured, including property taxes for
                    which liability is in rem, 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 an expense described in
            subparagraph (B) or (C), as a condition of its being an
            allowed administrative expense;

               *       *       *       *       *       *       *

                (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;
                (5) reasonable compensation for services rendered
            by an indenture trustee in making a substantial
            contribution in a case under chapter 9 or 11 of this
            title, 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]
                (6) the fees and mileage payable under chapter 119
            of title 28[.];
                (7) with respect to a nonresidential real property
            lease previously assumed under section 365, and
            subsequently rejected, a sum equal to all monetary
            obligations due, excluding those arising from or
            relating to a failure to operate or penalty provisions,
            for the period of 2 years following the later of the
            rejection date or the date of actual turnover of the
            premises, without reduction or setoff for any reason
            whatsoever except for sums actually received or to be
            received from a nondebtor, and the claim for remaining
            sums due for the balance of the term of the lease shall
            be a claim under section 502(b)(6);
                (8) the actual, necessary costs and expenses of
            closing a health care business incurred by a trustee or
            by a Federal agency (as that term is defined in section
            551(1) of title 5) or a department or agency of a State
            or political subdivision thereof, including any cost or
            expense incurred--
                        (A) in disposing of patient records in
                    accordance with section 351; or
                        (B) in connection with transferring
                    patients from the health care business that is
                    in the process of being closed to another
                    health care business;
                (9) with respect to a nonresidential real property
            lease previously assumed under section 365, and
            subsequently rejected, a sum equal to all monetary
            obligations due, excluding those arising from or
            related to a failure to operate or penalty provisions,
            for the period of 2 years following the later of the
            rejection date or date of actual turnover of the
            premises, without reduction or setoff for any reason
            whatsoever except for sums actually received or to be
            received from a nondebtor, and the claim for remaining
            sums due for the balance of the term of the lease shall
            be a claim under section 502(b)(6); and
                (10) the value of any goods received by the debtor
            not later than 20 days after the date of commencement
            of a case under this title in which the goods have been
            sold to the debtor in the ordinary course of such
            debtor's business.

               *       *       *       *       *       *       *

    Sec. 504. Sharing of compensation

        (a)  * * *

               *       *       *       *       *       *       *

        (c) This section shall not apply with respect to sharing,
    or agreeing to share, compensation with a bona fide public
    service attorney referral program that operates in accordance
    with non-Federal law regulating attorney referral services and
    with rules of professional responsibility applicable to
    attorney acceptance of referrals.

    Sec. 505. Determination of tax liability

        (a)(1)  * * *
        (2) The court may not so determine--
                (A) the amount or legality of a tax, fine, penalty,
            or addition to tax if such amount or legality was
            contested before and adjudicated by a judicial or
            administrative tribunal of competent jurisdiction
            before the commencement of the case under this title;
            [or]
                (B) any right of the estate to a tax refund, before
            the earlier of--
                        (i) 120 days after the trustee properly
                    requests such refund from the governmental unit
                    from which such refund is claimed; or
                        (ii) a determination by such governmental
                    unit of such request[.]; or
                (C) the amount or legality of any amount arising in
            connection with an ad valorem tax on real or personal
            property of the estate, if the applicable period for
            contesting or redetermining that amount under any law
            (other than a bankruptcy law) has expired.
        (b)(1)(A) The clerk of each district shall maintain a
    listing under which a Federal, State, or local governmental
    unit responsible for the collection of taxes within the
    district may--
                (i) designate an address for service of requests
            under this subsection; and
                (ii) describe where further information concerning
            additional requirements for filing such requests may be
            found.
        (B) If a governmental unit referred to in subparagraph (A)
    does not designate an address and provide that address to the
    clerk under that subparagraph, any request made under this
    subsection may be served at the address for the filing of a tax
    return or protest with the appropriate taxing authority of that
    governmental unit.
        [(b)] (2) 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 at the address and in the manner
    designated in paragraph (1). Unless such return is fraudulent,
    or contains a material misrepresentation, the estate, the
    trustee, the debtor, and any successor to the debtor are
    discharged from any liability for such tax--
                [(1)] (A) upon payment of the tax shown on such
            return, if--
                        [(A)] (i) such governmental unit does not
                    notify the trustee, within 60 days after such
                    request, that such return has been selected for
                    examination; or
                        [(B)] (ii) such governmental unit does not
                    complete such an examination and notify the
                    trustee of any tax due, within 180 days after
                    such request or within such additional time as
                    the court, for cause, permits;
                [(2)] (B) upon payment of the tax determined by the
            court, after notice and a hearing, after completion by
            such governmental unit of such examination; or
                [(3)] (C) upon payment of the tax determined by
            such governmental unit to be due.

               *       *       *       *       *       *       *

    Sec. 506. Determination of secured status

        (a)(1) An allowed claim of a creditor secured by a lien on
    property in which the estate has an interest, or that is
    subject to setoff under section 553 of this title, is a secured
    claim to the extent of the value of such creditor's interest in
    the estate's interest in such property, or to the extent of the
    amount subject to setoff, as the case may be, and is an
    unsecured claim to the extent that the value of such creditor's
    interest or the amount so subject to setoff is less than the
    amount of such allowed claim. Such value shall be determined in
    light of the purpose of the valuation and of the proposed
    disposition or use of such property, and in conjunction with
    any hearing on such disposition or use or on a plan affecting
    such creditor's interest.
        (2) In the case of an individual debtor under chapters 7
    and 13, such value with respect to personal property securing
    an allowed claim shall be determined based on the replacement
    value of such property as of the date of filing the petition
    without deduction for costs of sale or marketing. With respect
    to property acquired for personal, family, or household
    purpose, replacement value shall mean the price a retail
    merchant would charge for property of that kind considering the
    age and condition of the property at the time value is
    determined.
        (b) To the extent that an allowed secured claim is secured
    by property the value of which, after any recovery under
    subsection (c) of this section, is greater than the amount of
    such claim, there shall be allowed to the holder of such claim,
    interest on such claim, and any reasonable fees, costs, or
    charges provided for under the agreement or State statute under
    which such claim arose.
        (c) The trustee may recover from property securing an
    allowed secured claim the reasonable, necessary costs and
    expenses of preserving, or disposing of, such property to the
    extent of any benefit to the holder of such claim, including
    the payment of all ad valorem property taxes with respect to
    the property.

               *       *       *       *       *       *       *

    Sec. 507. Priorities

        (a) The following expenses and claims have priority in the
    following order:
                (1) First:
                        (A) Allowed unsecured claims for domestic
                    support obligations that, as of the date of the
                    filing of the petition, are owed to or
                    recoverable by a spouse, former spouse, or
                    child of the debtor, or the parent, legal
                    guardian, or responsible relative of such
                    child, without regard to whether the claim is
                    filed by such person or is filed by a
                    governmental unit on behalf of that person, on
                    the condition that funds received under this
                    paragraph by a governmental unit under this
                    title after the date of filing of the petition
                    shall be applied and distributed in accordance
                    with applicable nonbankruptcy law.
                        (B) Subject to claims under subparagraph
                    (A), allowed unsecured claims for domestic
                    support obligations that, as of the date the
                    petition was filed are assigned by a spouse,
                    former spouse, child of the debtor, or such
                    child's parent, legal guardian, or responsible
                    relative to a governmental unit (unless such
                    obligation is assigned voluntarily by the
                    spouse, former spouse, child, parent, legal
                    guardian, or responsible relative of the child
                    for the purpose of collecting the debt) or are
                    owed directly to or recoverable by a government
                    unit under applicable nonbankruptcy law, on the
                    condition that funds received under this
                    paragraph by a governmental unit under this
                    title after the date of filing of the petition
                    be applied and distributed in accordance with
                    applicable nonbankruptcy law.
                [(1) First] (2) Second, administrative expenses
            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 $4,000 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--
                        (A) wages, salaries, or commissions,
                    including vacation, severance, and sick leave
                    pay earned by an individual; or
                        (B) sales commissions earned by an
                    individual or by a corporation with only 1
                    employee, acting as an independent contractor
                    in the sale of goods or services for the debtor
                    in the ordinary course of the debtor's business
                    if, and only if, during the 12 months preceding
                    that date, at least 75 percent of the amount
                    that the individual or corporation earned by
                    acting as an independent contractor in the sale
                    of goods or services was earned from the
                    debtor[;].
                [(4) Fourth] (5) Fifth, allowed unsecured claims
            for contributions to an employee benefit plan--
                        (A) * * *

               *       *       *       *       *       *       *

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

               *       *       *       *       *       *       *

                [(6) Sixth] (7) Seventh, allowed unsecured claims
            of individuals, to the extent of $1,800 for each such
            individual, arising from the deposit, before the
            commencement of the case, of money in connection with
            the purchase, lease, or rental of 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 for a taxable year ending on or before
                    the date of filing of the petition--
                                (i) * * *
                                [(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; and
                                        (II) any time during which
                                    a stay of proceedings against
                                    collections was in effect in a
                                    prior case under this title
                                    during that 240-day period;
                                    plus 90 days.

               *       *       *       *       *       *       *

                        (B) a property tax [assessed] incurred
                    before the commencement of the case and last
                    payable without penalty after one year before
                    the date of the filing of the petition;

               *       *       *       *       *       *       *

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

               *       *       *       *       *       *       *

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

               *       *       *       *       *       *       *

    Sec. 508. Effect of distribution other than under this title

        [(a) If a creditor receives, in a foreign proceeding,
    payment of, or a transfer of property on account of, a claim
    that is allowed under this title, such creditor may not receive
    any payment under this title on account of such claim until
    each of the other holders of claims on account of which such
    holders are entitled to share equally with such creditor under
    this title has received payment under this title equal in value
    to the consideration received by such creditor in such foreign
    proceeding.]
        [(b)] If a creditor of a partnership debtor receives, from
    a general partner that is not a debtor in a case under chapter
    7 of this title, payment of, or a transfer of property on
    account of, a claim that is allowed under this title and that
    is not secured by a lien on property of such partner, such
    creditor may not receive any payment under this title on
    account of such claim until each of the other holders of claims
    on account of which such holders are entitled to share equally
    with such creditor under this title has received payment under
    this title equal in value to the consideration received by such
    creditor from such general partner.

               *       *       *       *       *       *       *

    Sec. 511. Rate of interest on tax claims

        (a) If any provision of this title requires the payment of
    interest on a tax claim or on an administrative expense tax, or
    the payment of interest to enable a creditor to receive the
    present value of the allowed amount of a tax claim, the rate of
    interest shall be the rate determined under applicable
    nonbankruptcy law.
        (b) In the case of taxes paid under a confirmed plan under
    this title, the rate of interest shall be determined as of the
    calendar month in which the plan is confirmed.

                  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 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;
                                (v) a statement of the amount of
                            monthly net income, itemized to show
                            how the amount is calculated; and
                                (vi) a statement disclosing any
                            reasonably anticipated increase in
                            income or expenditures over the 12-
                            month period following the date of
                            filing;
                (2) if an individual debtor's schedule of assets
            and liabilities includes [consumer] debts which are
            secured by property of the estate--
                        (A)  * * *
                        (B) within [forty-five days after the
                    filing of a notice of intent under this
                    section] 30 days after the first date set for
                    the meeting of creditors under section 341(a)
                    of this title, or within such additional time
                    as the court, for cause, within such [forty-
                    five day] 30-day period fixes, the debtor shall
                    perform his intention with respect to such
                    property, as specified by subparagraph (A) of
                    this paragraph; and
                        (C) nothing in subparagraphs (A) and (B) of
                    this paragraph shall alter the debtor's or the
                    trustee's rights with regard to such property
                    under this title, except as provided in section
                    362(h) of this title;
                (3) if a trustee is serving in the case or an
            auditor appointed under section 586(f) 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(f) 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
                (6) in an individual case under chapter 7 of this
            title, not retain possession of personal property as to
            which a creditor has an allowed claim for the purchase
            price secured in whole or in part by an interest in
            that personal property unless, in the case of an
            individual debtor, the debtor, not later than 45 days
            after the first meeting of creditors under section
            341(a), either--
                        (A) enters into an agreement with the
                    creditor pursuant to section 524(c) of this
                    title with respect to the claim secured by such
                    property; or
                        (B) redeems such property from the security
                    interest pursuant to section 722 of this title.
    If the debtor fails to so act within the 45-day period referred
    to in paragraph (6), the stay under section 362(a) of this
    title is terminated with respect to the personal property of
    the estate or of the debtor which is affected, such property
    shall no longer be property of the estate, and the creditor may
    take whatever action as to such property as is permitted by
    applicable nonbankruptcy law, unless the court determines on
    the motion of the trustee brought before the expiration of such
    45-day period, and after notice and a hearing, that such
    property is of consequential value or benefit to the estate,
    orders appropriate adequate protection of the creditor's
    interest, and orders the debtor to deliver any collateral in
    the debtor's possession to the trustee.
        (b) In addition to the requirements under subsection (a),
    an individual debtor shall file with the court--
                (1) a certificate from the approved nonprofit
            budget and credit counseling agency that provided the
            debtor services under section 109(h) describing the
            services provided to the debtor; and
                (2) a copy of the debt repayment plan, if any,
            developed under section 109(h) through the approved
            nonprofit budget and credit counseling agency referred
            to in paragraph (1).
        (c) In addition to meeting the requirements under
    subsection (a), a debtor shall file with the court a record of
    any interest that a debtor has in an education individual
    retirement account (as defined in section 530(b)(1) of the
    Internal Revenue Code of 1986) or under a qualified State
    tuition program (as defined in section 529(b)(1) of such Code).
        (d) If the debtor fails timely to take the action specified
    in subsection (a)(6) of this section, or in paragraphs (1) and
    (2) of section 362(h) of this title, with respect to property
    which a lessor or bailor owns and has leased, rented, or bailed
    to the debtor or as to which a creditor holds a security
    interest not otherwise voidable under section 522(f), 544, 545,
    547, 548, or 549 of this title, nothing in this title shall
    prevent or limit the operation of a provision in the underlying
    lease or agreement which has the effect of placing the debtor
    in default under such lease or agreement by reason of the
    occurrence, pendency, or existence of a proceeding under this
    title or the insolvency of the debtor. Nothing in this
    subsection shall be deemed to justify limiting such a provision
    in any other circumstance.
        (e)(1) At any time, a creditor, in the case of an
    individual under chapter 7 or 13, may file with the court
    notice that the creditor requests the petition, schedules, and
    a statement of affairs filed by the debtor in the case, and the
    court shall make those documents available to the creditor who
    requests those documents.
        (2)(A) The debtor shall provide either a tax return or
    transcript at the election of the debtor, for the latest
    taxable period prior to filing for which a tax return has been
    or should have been filed, to the trustee, not later than 7
    days before the date first set for the first meeting of
    creditors, or the case shall be dismissed, unless the debtor
    demonstrates that the failure to file a return as required is
    due to circumstances beyond the control of the debtor.
        (B) If a creditor has requested a tax return or transcript
    referred to in subparagraph (A), the debtor shall provide such
    tax return or transcript to the requesting creditor at the time
    the debtor provides the tax return or transcript to the
    trustee, or the case shall be dismissed, unless the debtor
    demonstrates that the debtor is unable to provide such
    information due to circumstances beyond the control of the
    debtor.
        (3)(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 request such plan--
                (i) at a reasonable cost; and
                (ii) not later than 5 days after such request.
        (f) An individual debtor in a case under chapter 7, 11, or
    13 shall file with the court at the request of any party in
    interest--
                (1) at the time filed with the taxing authority,
            all tax returns required under applicable law,
            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 required under applicable law,
            including any schedules or attachments, that were not
            filed with the taxing authority when the schedules
            under subsection (a)(1) were filed with respect to the
            period that is 3 years before the order of relief;
                (3) any amendments to any of the tax returns,
            including schedules or attachments, described in
            paragraph (1) or (2); and
                (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.
        (g)(1) A statement referred to in subsection (f)(4) shall
    disclose--
                (A) the amount and sources of income of the debtor;
                (B) the identity of any 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 subsection (e)(2)(A) and
    subsection (f) shall be available to the United States trustee,
    any bankruptcy administrator, any trustee, and any party in
    interest for inspection and copying, subject to the
    requirements of subsection (h).
        (h)(1) Not later than 180 days after the date of enactment
    of the Bankruptcy Abuse Prevention and Consumer Protection Act
    of 2001, 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 and 180 days after the date of
    enactment of the Bankruptcy Abuse Prevention and Consumer
    Protection Act of 2001, the Director of the Administrative
    Office of the United States Courts shall prepare and submit to
    Congress a report that--
                (A) assesses the effectiveness of the procedures
            under paragraph (1); 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.
        (i) 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.
        (j)(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.
        (k)(1) Notwithstanding any other provision of this title,
    if the debtor fails to file a tax return that becomes due after
    the commencement of the case or to properly obtain an extension
    of the due date for filing such return, the taxing authority
    may request that the court enter an order converting or
    dismissing the case.
        (2) If the debtor does not file the required return or
    obtain the extension referred to in paragraph (1) within 90
    days after a request is filed by the taxing authority under
    that paragraph, the court shall convert or dismiss the case,
    whichever is in the best interests of creditors and the estate.

    Sec. 522. Exemptions

        (a)  * * *
        (b)(1) Notwithstanding section 541 of this title, an
    individual debtor may exempt from property of the estate the
    property listed in either paragraph [(1)] (2) or, in the
    alternative, paragraph [(2)] (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)] (2) and the other
    debtor elect to exempt property listed in paragraph [(2)] (3)
    of this subsection. If the parties cannot agree on the
    alternative to be elected, they shall be deemed to elect
    paragraph [(1)] (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)] (3) Property listed in this paragraph is--
                (A) subject to subsections (o) and (p), 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] or if the debtor's domicile has not been
            located at a single State for such 730-day period, the
            place in which the debtor's domicile was located for
            180 days immediately preceding the 730-day period or
            for a longer portion of such 180-day period than in any
            other place; [and]
                (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 under
            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
            under such section 7805, those funds are exempt from
            the estate if the debtor demonstrates that--
                        (i) no prior determination to the contrary
                    has been made by a court or the Internal
                    Revenue Service; and
                        (ii)(I) the retirement fund is in
                    substantial compliance with the applicable
                    requirements of the Internal Revenue Code of
                    1986; or
                        (II) the retirement fund fails to be in
                    substantial compliance with the applicable
                    requirements of the Internal Revenue Code of
                    1986 and the debtor is not materially
                    responsible for that failure.
                (C) A direct transfer of retirement funds from 1
            fund or account that is exempt from taxation under
            section 401, 403, 408, 408A, 414, 457, or 501(a) of the
            Internal Revenue Code of 1986, under section 401(a)(31)
            of the Internal Revenue Code of 1986, or otherwise,
            shall not cease to qualify for exemption under
            paragraph (3)(C) or subsection (d)(12) by reason of
            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 specified in paragraph (1) or
            (5) of section 523(a) (in which case, notwithstanding
            any provision of applicable nonbankruptcy law to the
            contrary, such property shall be liable for a debt of a
            kind specified in section 523(a)(5));

               *       *       *       *       *       *       *

        (d) The following property may be exempted under subsection
    [(b)(1)] (b)(2) of this section:
                (1)  * * *

               *       *       *       *       *       *       *

        (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[--
                        [(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] of a kind
                            that is specified in section 523(a)(5);
                            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 the toys and
            hobby equipment of minor dependent children and wedding
            rings) 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
            dependents of the debtor);
                (ii) electronic entertainment equipment (except 1
            television, 1 radio, and 1 VCR);
                (iii) items acquired as antiques;
                (iv) jewelry (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.
        (g) Notwithstanding sections 550 and 551 of this title, the
    debtor may exempt under subsection (b) of this section property
    that the trustee recovers under section 510(c)(2), 542, 543,
    550, 551, or 553 of this title, to the extent that the debtor
    could have exempted such property under subsection (b) of this
    section if such property had not been transferred, if--
                (1)  * * *
                (2) the debtor could have avoided such transfer
            under subsection [(f)(2)] (f)(1)(B) of this section.

               *       *       *       *       *       *       *

        (n) For assets in individual retirement accounts described
    in section 408 or 408A of the Internal Revenue Code of 1986,
    other than a simplified employee pension under section 408(k)
    of that Code or a simple retirement account under section
    408(p) of that Code, the aggregate value of such assets
    exempted under this section, without regard to amounts
    attributable to rollover contributions under section 402(c),
    402(e)(6), 403(a)(4), 403(a)(5), and 403(b)(8) of the Internal
    Revenue Code of 1986, and earnings thereon, shall not exceed
    $1,000,000 (which amount shall be adjusted as provided in
    section 104 of this title) in a case filed by an individual
    debtor, except that such amount may be increased if the
    interests of justice so require.
        (o) For purposes of subsection (b)(3)(A), and
    notwithstanding subsection (a), the value of an interest in--
                (1) real or personal property that the debtor or a
            dependent of the debtor uses as a residence;
                (2) a cooperative that owns property that the
            debtor or a dependent of the debtor uses as a
            residence; or
                (3) a burial plot for the debtor or a dependent of
            the debtor;
    shall be reduced to the extent that such value is attributable
    to any portion of any property that the debtor disposed of in
    the 7-year period ending on the date of the filing of the
    petition with the intent to hinder, delay, or defraud a
    creditor and that the debtor could not exempt, or that portion
    that the debtor could not exempt, under subsection (b), if on
    such date the debtor had held the property so disposed of.
        (p)(1) Except as provided in paragraph (2) of this
    subsection and sections 544 and 548 of this title, as a result
    of electing under subsection (b)(3)(A) to exempt property under
    State or local law, a debtor may not exempt any amount of
    interest that was acquired by the debtor during the 2-year
    period preceding the filing of the petition which exceeds in
    the aggregate $100,000 in value in--
                (A) real or personal property that the debtor or a
            dependent of the debtor uses as a residence;
                (B) a cooperative that owns property that the
            debtor or a dependent of the debtor uses as a
            residence; or
                (C) a burial plot for the debtor or a dependent of
            the debtor.
        (2)(A) The limitation under paragraph (1) shall not apply
    to an exemption claimed under subsection (b)(3)(A) by a family
    farmer for the principal residence of that farmer.
        (B) For purposes of paragraph (1), any amount of such
    interest does not include any interest transferred from a
    debtor's previous principal residence (which was acquired prior
    to the beginning of the 2-year period) into the debtor's
    current principal residence, where the debtor's previous and
    current residences are located in the same State.

    Sec. 523. Exceptions to discharge

        (a) A discharge under section 727, 1141, 1228(a), 1228(b),
    or 1328(b) of this title does not discharge an individual
    debtor from any debt--
                (1) for a tax or a customs duty--
                        (A)  * * *
                        (B) with respect to which a return, or
                    equivalent report or notice, if required--
                                (i) was not filed or given; or
                                (ii) was filed or given after the
                            date on which such return, report, or
                            notice was last due, under applicable
                            law or under any extension, and after
                            two years before the date of the filing
                            of the petition; or

               *       *       *       *       *       *       *

                (2) for money, property, services, or an extension,
            renewal, or refinancing of credit, to the extent
            obtained by--
                        (A)  * * *

               *       *       *       *       *       *       *

                        [(C) for purposes of subparagraph (A) of
                    this paragraph, consumer debts owed to a single
                    creditor and aggregating more than $1,000 for
                    ``luxury goods or services'' incurred by an
                    individual debtor on or within 60 days before
                    the order for relief under this title, or cash
                    advances aggregating more than $1,000 that are
                    extensions of consumer credit under an open end
                    credit plan obtained by an individual debtor on
                    or within 60 days before the order for relief
                    under this title, are presumed to be
                    nondischargeable; ``luxury goods or services''
                    do not include goods or services reasonably
                    acquired for the support or maintenance of the
                    debtor or a dependent of the debtor; an
                    extension of consumer credit under an open end
                    credit plan is to be defined for purposes of
                    this subparagraph as it is defined in the
                    Consumer Credit Protection Act;]
                (C)(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 extent that--
                        [(A) such debt is assigned to another
                    entity, voluntarily, by operation of law, or
                    otherwise (other than debts assigned pursuant
                    to section 408(a)(3) of the Social Security
                    Act, or any such debt which has been assigned
                    to the Federal Government or to a State or any
                    political subdivision of such State); or
                        [(B) such debt includes a liability
                    designated as alimony, maintenance, or support,
                    unless such liability is actually in the nature
                    of alimony, maintenance, or support;]
                (5) for a domestic support obligation;

               *       *       *       *       *       *       *

                [(8) for an educational benefit overpayment or loan
            made, insured or guaranteed by a governmental unit, or
            made under any program funded in whole or in part by a
            governmental unit or nonprofit institution, or for an
            obligation to repay funds received as an educational
            benefit, scholarship or stipend, unless excepting such
            debt from discharge under this paragraph will impose an
            undue hardship on the debtor and the debtor's
            dependents;]
                (8) unless excepting such debt from discharge under
            this paragraph would impose an undue hardship on the
            debtor and the debtor's dependents, for--
                        (A)(i) an educational benefit overpayment
                    or loan made, insured, or guaranteed by a
                    governmental unit, or made under any program
                    funded in whole or in part by a governmental
                    unit or nonprofit institution; or
                        (ii) an obligation to repay funds received
                    as an educational benefit, scholarship, or
                    stipend; or
                        (B) any other educational loan that is a
                    qualified education loan, as that term is
                    defined in section 221(e)(1) of the Internal
                    Revenue Code of 1986, incurred by an individual
                    debtor;
                (9) for death or personal injury caused by the
            debtor's no, 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;

               *       *       *       *       *       *       *

                (14A) incurred to pay a tax to a governmental unit,
            other than the United States, that would be
            nondischargeable under paragraph (1);
                (15) not of the kind described in paragraph (5)
            that is incurred by the debtor in the course of a
            divorce or separation or in connection with a
            separation agreement, divorce decree or other order of
            a court of record, a determination made in accordance
            with State or territorial law by a governmental unit
            unless--
                        (A) the debtor does not have the ability to
                    pay such debt from income or property of the
                    debtor not reasonably necessary to be expended
                    for the maintenance or support of the debtor or
                    a dependent of the debtor and, if the debtor is
                    engaged in a business, for the payment of
                    expenditures necessary for the continuation,
                    preservation, and operation of such business;
                    or
                        (B) discharging such debt would result in a
                    benefit to the debtor that outweighs the
                    detrimental consequences to a spouse, former
                    spouse, or child of the debtor;
                (16) for a fee or assessment that becomes due and
            payable after the order for relief to a membership
            association with respect to the debtor's interest in a
            [dwelling] unit that has condominium [ownership or]
            ownership, in a share of a cooperative [housing]
            corporation, [but only if such fee or assessment is
            payable for a period during which--
                        [(A) the debtor physically occupied a
                    dwelling unit in the condominium or cooperative
                    project; or
                        [(B) the debtor rented the dwelling unit to
                    a tenant and received payments from the tenant
                    for such period] or a lot in a homeowners
                    association, for as long as the debtor or the
                    trustee has a legal, equitable, or possessory
                    ownership interest in such unit, such
                    corporation, or such lot,,
            but nothing in this paragraph shall except from
            discharge the debt of a debtor for a membership
            association fee or assessment for a period arising
            before entry of the order for relief in a pending or
            subsequent bankruptcy case;
                (17) for a fee imposed [by a court] on a prisoner
            by any court for the filing of a case, motion,
            complaint, or appeal, or for other costs and expenses
            assessed with respect to such filing, regardless of an
            assertion of poverty by the debtor under [section
            1915(b) or (f)] subsection (b) or (f)(2) of section
            1915 of title 28 (or a similar non-Federal law), or the
            debtor's status as a prisoner, as defined in section
            1915(h) of title 28 (or a similar non-Federal law); or
                [(18) owed under State law 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.).]
                (18) owed to a pension, profit-sharing, stock
            bonus, or other plan established under section 401,
            403, 408, 408A, 414, 457, or 501(c) of the Internal
            Revenue Code of 1986, under--
                        (A) a loan permitted under section
                    408(b)(1) of the Employee Retirement Income
                    Security Act of 1974, or subject to section
                    72(p) of the Internal Revenue Code of 1986; or
                        (B) a loan from the thrift savings plan
                    described in subchapter III of chapter 84 of
                    title 5, that satisfies the requirements of
                    section 8433(g) of such title.
            Nothing in paragraph (18) 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.
    For purposes of this subsection, the term ``return'' means a
    return that satisfies the requirements of applicable
    nonbankruptcy law (including applicable filing requirements).
    Such term includes a return prepared pursuant to section
    6020(a) of the Internal Revenue Code of 1986, or similar State
    or local law, or a written stipulation to a judgment or a final
    order entered by a nonbankruptcy tribunal, but does not include
    a return made pursuant to section 6020(b) of the Internal
    Revenue Code of 1986, or a similar State or local law.

               *       *       *       *       *       *       *

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

               *       *       *       *       *       *       *

        (e) Any institution-affiliated party of [a] 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).
                [(15) not of the kind described in paragraph (5)
            that is incurred by the debtor in the course of a
            divorce or separation or in connection with a
            separation agreement, divorce decree or other order of
            a court of record, a determination made in accordance
            with State or territorial law by a governmental unit
            unless--
                        [(A) the debtor does not have the ability
                    to pay such debt from income or property of the
                    debtor not reasonably necessary to be expended
                    for the maintenance or support of the debtor or
                    a dependent of the debtor and, if the debtor is
                    engaged in a business, for the payment of
                    expenditures necessary for the continuation,
                    preservation, and operation of such business;
                    or
                        [(B) discharging such debt would result in
                    a benefit to the debtor that outweighs the
                    detrimental consequences to a spouse, former
                    spouse, or child of the debtor;]

    Sec. 524. Effect of discharge

        (a) A discharge in a case under this title--
                (1)  * * *

               *       *       *       *       *       *       *

                (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), or 1328(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--
                (1)  * * *
                [(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;]
                (2) the debtor received the disclosures described
            in subsection (k) at or before the time at which the
            debtor signed the agreement;

               *       *       *       *       *       *       *

        (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), unless the plan is dismissed, in default, or the
    creditor has not received payments required to be made under
    the plan in the manner required by the plan (including
    crediting the amounts required under the plan), shall
    constitute a violation of an injunction under subsection (a)(2)
    if the act of the creditor to collect and failure to credit
    payments in the manner required by the plan caused material
    injury to the debtor.
        (j) Subsection (a)(2) does not operate as an injunction
    against an act by a creditor that is the holder of a secured
    claim, if--
                (1) such creditor retains a security interest in
            real property that is the principal residence of the
            debtor;
                (2) such act is in the ordinary course of business
            between the creditor and the debtor; and
                (3) such act is limited to seeking or obtaining
            periodic payments associated with a valid security
            interest in lieu of pursuit of in rem relief to enforce
            the lien.
        (k)(1) The disclosures required under subsection (c)(2)
    shall consist of the disclosure statement described in
    paragraph (3), completed as required in that paragraph,
    together with the agreement, statement, declaration, motion and
    order described, respectively, in paragraphs (4) through (8),
    and shall be the only disclosures required in connection with
    the reaffirmation.
        (2) Disclosures made under paragraph (1) shall be made
    clearly and conspicuously and in writing. The terms ``Amount
    Reaffirmed'' and ``Annual Percentage Rate'' shall be disclosed
    more conspicuously than other terms, data or information
    provided in connection with this disclosure, except that the
    phrases ``Before agreeing to reaffirm a debt, review these
    important disclosures'' and ``Summary of Reaffirmation
    Agreement'' may be equally conspicuous. Disclosures may be made
    in a different order and may use terminology different from
    that set forth in paragraphs (2) through (8), except that the
    terms ``Amount Reaffirmed'' and ``Annual Percentage Rate'' must
    be used where indicated.
        (3) The disclosure statement required under this paragraph
    shall consist of the following:
                (A) The statement: ``Part A: Before agreeing to
            reaffirm a debt, review these important disclosures:'';
                (B) Under the heading ``Summary of Reaffirmation
            Agreement'', the statement: ``This Summary is made
            pursuant to the requirements of the Bankruptcy Code'';
                (C) The ``Amount Reaffirmed'', using that term,
            which shall be--
                        (i) the total amount which the debtor
                    agrees to reaffirm, and
                        (ii) the total of any other fees or cost
                    accrued as of the date of the disclosure
                    statement.
                (D) In conjunction with the disclosure of the
            ``Amount Reaffirmed'', the statements--
                        (i) ``The amount of debt you have agreed to
                    reaffirm''; and
                        (ii) ``Your credit agreement may obligate
                    you to pay additional amounts which may come
                    due after the date of this disclosure. Consult
                    your credit agreement.''.
                (E) The ``Annual Percentage Rate'', using that
            term, which shall be disclosed as--
                        (i) if, at the time the petition is filed,
                    the debt is open end credit as defined under
                    the Truth in Lending Act (15 U.S.C. 1601 et
                    seq.), then--
                                (I) the annual percentage rate
                            determined under paragraphs (5) and (6)
                            of section 127(b) of the Truth in
                            Lending Act (15 U.S.C. 1637(b)(5) and
                            (6)), as applicable, as disclosed to
                            the debtor in the most recent periodic
                            statement prior to the agreement or, if
                            no such periodic statement has been
                            provided the debtor during the prior 6
                            months, the annual percentage rate as
                            it would have been so disclosed at the
                            time the disclosure statement is given
                            the debtor, or to the extent this
                            annual percentage rate is not readily
                            available or not applicable, then
                                (II) the simple interest rate
                            applicable to the amount reaffirmed as
                            of the date the disclosure statement is
                            given to the debtor, or if different
                            simple interest rates apply to
                            different balances, the simple interest
                            rate applicable to each such balance,
                            identifying the amount of each such
                            balance included in the amount
                            reaffirmed, or
                                (III) if the entity making the
                            disclosure elects, to disclose the
                            annual percentage rate under subclause
                            (I) and the simple interest rate under
                            subclause (II);
                        (ii) if, at the time the petition is filed,
                    the debt is closed end credit as defined under
                    the Truth in Lending Act (15 U.S.C. 1601 et
                    seq.), then--
                                (I) the annual percentage rate
                            under section 128(a)(4) of the Truth in
                            Lending Act (15 U.S.C. 1638(a)(4)), as
                            disclosed to the debtor in the most
                            recent disclosure statement given the
                            debtor prior to the reaffirmation
                            agreement with respect to the debt, or,
                            if no such disclosure statement was
                            provided the debtor, the annual
                            percentage rate as it would have been
                            so disclosed at the time the disclosure
                            statement is given the debtor, or to
                            the extent this annual percentage rate
                            is not readily available or not
                            applicable, then
                                (II) the simple interest rate
                            applicable to the amount reaffirmed as
                            of the date the disclosure statement is
                            given the debtor, or if different
                            simple interest rates apply to
                            different balances, the simple interest
                            rate applicable to each such balance,
                            identifying the amount of such balance
                            included in the amount reaffirmed, or
                                (III) if the entity making the
                            disclosure elects, to disclose the
                            annual percentage rate under (I) and
                            the simple interest rate under (II).
                (F) If the underlying debt transaction was
            disclosed as a variable rate transaction on the most
            recent disclosure given under the Truth in Lending Act
            (15 U.S.C. 1601 et seq.), by stating ``The interest
            rate on your loan may be a variable interest rate which
            changes from time to time, so that the annual
            percentage rate disclosed here may be higher or
            lower.''.
                (G) If the debt is secured by a security interest
            which has not been waived in whole or in part or
            determined to be void by a final order of the court at
            the time of the disclosure, by disclosing that a
            security interest or lien in goods or property is
            asserted over some or all of the obligations you are
            reaffirming and listing the items and their original
            purchase price that are subject to the asserted
            security interest, or if not a purchase-money security
            interest then listing by items or types and the
            original amount of the loan.
                (H) At the election of the creditor, a statement of
            the repayment schedule using 1 or a combination of the
            following--
                        (i) by making the statement: ``Your first
                    payment in the amount of $______ is due on
                    ______ but the future payment amount may be
                    different. Consult your reaffirmation or credit
                    agreement, as applicable.'', and stating the
                    amount of the first payment and the due date of
                    that payment in the places provided;
                        (ii) by making the statement: ``Your
                    payment schedule will be:'', and describing the
                    repayment schedule with the number, amount and
                    due dates or period of payments scheduled to
                    repay the obligations reaffirmed to the extent
                    then known by the disclosing party; or
                        (iii) by describing the debtor's repayment
                    obligations with reasonable specificity to the
                    extent then known by the disclosing party.
                (I) The following statement: ``Note: When this
            disclosure refers to what a creditor `may' do, it does
            not use the word `may' to give the creditor specific
            permission. The word `may' is used to tell you what
            might occur if the law permits the creditor to take the
            action. If you have questions about your reaffirmation
            or what the law requires, talk to the attorney who
            helped you negotiate this agreement. If you don't have
            an attorney helping you, the judge will explain the
            effect of your reaffirmation when the reaffirmation
            hearing is held.''.
                (J)(i) The following additional statements:
        ``Reaffirming a debt is a serious financial decision. The
    law requires you to take certain steps to make sure the
    decision is in your best interest. If these steps are not
    completed, the reaffirmation agreement is not effective, even
    though you have signed it.
                ``1. Read the disclosures in this Part A carefully.
            Consider the decision to reaffirm carefully. Then, if
            you want to reaffirm, sign the reaffirmation agreement
            in Part B (or you may use a separate agreement you and
            your creditor agree on).
                ``2. Complete and sign Part D and be sure you can
            afford to make the payments you are agreeing to make
            and have received a copy of the disclosure statement
            and a completed and signed reaffirmation agreement.
                ``3. If you were represented by an attorney during
            the negotiation of the reaffirmation agreement, the
            attorney must have signed the certification in Part C.
                ``4. If you were not represented by an attorney
            during the negotiation of the reaffirmation agreement,
            you must have completed and signed Part E.
                ``5. The original of this disclosure must be filed
            with the court by you or your creditor. If a separate
            reaffirmation agreement (other than the one in Part B)
            has been signed, it must be attached.
                ``6. If you were represented by an attorney during
            the negotiation of the reaffirmation agreement, your
            reaffirmation agreement becomes effective upon filing
            with the court unless the reaffirmation is presumed to
            be an undue hardship as explained in Part D.
                ``7. If you were not represented by an attorney
            during the negotiation of the reaffirmation agreement,
            it will not be effective unless the court approves it.
            The court will notify you of the hearing on your
            reaffirmation agreement. You must attend this hearing
            in bankruptcy court where the judge will review your
            agreement. The bankruptcy court must approve the
            agreement as consistent with your best interests,
            except that no court approval is required if the
            agreement is for a consumer debt secured by a mortgage,
            deed of trust, security deed or other lien on your real
            property, like your home.
        ``Your right to rescind a reaffirmation. You may rescind
    (cancel) your reaffirmation at any time before the bankruptcy
    court enters a discharge order or within 60 days after the
    agreement is filed with the court, whichever is longer. To
    rescind or cancel, you must notify the creditor that the
    agreement is canceled.
        ``What are your obligations if you reaffirm the debt? A
    reaffirmed debt remains your personal legal obligation. It is
    not discharged in your bankruptcy. That means that if you
    default on your reaffirmed debt after your bankruptcy is over,
    your creditor may be able to take your property or your wages.
    Otherwise, your obligations will be determined by the
    reaffirmation agreement which may have changed the terms of the
    original agreement. For example, if you are reaffirming an open
    end credit agreement, the creditor may be permitted by that
    agreement or applicable law to change the terms of the
    agreement in the future under certain conditions.
        ``Are you required to enter into a reaffirmation agreement
    by any law? No, you are not required to reaffirm a debt by any
    law. Only agree to reaffirm a debt if it is in your best
    interest. Be sure you can afford the payments you agree to
    make.
        ``What if your creditor has a security interest or lien?
    Your bankruptcy discharge does not eliminate any lien on your
    property. A `lien' is often referred to as a security interest,
    deed of trust, mortgage or security deed. Even if you do not
    reaffirm and your personal liability on the debt is discharged,
    because of the lien your creditor may still have the right to
    take the security property if you do not pay the debt or
    default on it. If the lien is on an item of personal property
    that is exempt under your State's law or that the trustee has
    abandoned, you may be able to redeem the item rather than
    reaffirm the debt. To redeem, you make a single payment to the
    creditor equal to the current value of the security property,
    as agreed by the parties or determined by the court.''.
                (ii) In the case of a reaffirmation under
            subsection (m)(2), numbered paragraph 6 in the
            disclosures required by clause (i) of this subparagraph
            shall read as follows:
                ``6. If you were represented by an attorney during
            the negotiation of the reaffirmation agreement, your
            reaffirmation agreement becomes effective upon filing
            with the court.''.
        (4) The form of reaffirmation agreement required under this
    paragraph shall consist of the following:
        ``Part B: Reaffirmation Agreement. I/we agree to reaffirm
    the obligations arising under the credit agreement described
    below.
        ``Brief description of credit agreement:
        ``Description of any changes to the credit agreement made
    as part of this reaffirmation agreement:
        ``Signature:                    Date:
        ``Borrower:
        ``Co-borrower, if also reaffirming:
        ``Accepted by creditor:
        ``Date of creditor acceptance:''.
        (5)(A) The declaration shall consist of the following:
        ``Part C: Certification by Debtor's Attorney (If Any).
        ``I hereby certify that (1) this agreement represents a
    fully informed and voluntary agreement by the debtor(s); (2)
    this agreement does not impose an undue hardship on the debtor
    or any dependent of the debtor; and (3) I have fully advised
    the debtor of the legal effect and consequences of this
    agreement and any default under this agreement.
        ``Signature of Debtor's Attorney:      Date:''.
        (B) In the case of reaffirmations in which a presumption of
    undue hardship has been established, the certification shall
    state that in the opinion of the attorney, the debtor is able
    to make the payment.
        (C) In the case of a reaffirmation agreement under
    subsection (m)(2), subparagraph (B) is not applicable.
        (6)(A) The statement in support of reaffirmation agreement,
    which the debtor shall sign and date prior to filing with the
    court, shall consist of the following:
        ``Part D: Debtor's Statement in Support of Reaffirmation
    Agreement.
        ``1. I believe this agreement will not impose an undue
    hardship on my dependents or me. I can afford to make the
    payments on the reaffirmed debt because my monthly income (take
    home pay plus any other income received) is $______, and my
    actual current monthly expenses including monthly payments on
    post-bankruptcy debt and other reaffirmation agreements total
    $______, leaving $______ to make the required payments on this
    reaffirmed debt. I understand that if my income less my monthly
    expenses does not leave enough to make the payments, this
    reaffirmation agreement is presumed to be an undue hardship on
    me and must be reviewed by the court. However, this presumption
    may be overcome if I explain to the satisfaction of the court
    how I can afford to make the payments here: ______.
        ``2. I received a copy of the Reaffirmation Disclosure
    Statement in Part A and a completed and signed reaffirmation
    agreement.''.
        (B) Where the debtor is represented by counsel and is
    reaffirming a debt owed to a creditor defined in section
    19(b)(1)(A)(iv) of the Federal Reserve Act (12 U.S.C.
    461(b)(1)(A)(iv)), the statement of support of the
    reaffirmation agreement, which the debtor shall sign and date
    prior to filing with the court, shall consist of the following:
        ``I believe this agreement is in my financial interest. I
    can afford to make the payments on the reaffirmed debt. I
    received a copy of the Reaffirmation Disclosure Statement in
    Part A and a completed and signed reaffirmation agreement.''
        (7) The motion, which may be used if approval of the
    agreement by the court is required in order for it to be
    effective and shall be signed and dated by the moving party,
    shall consist of the following:
        ``Part E: Motion for Court Approval (To be completed only
    where debtor is not represented by an attorney.). I (we), the
    debtor, affirm the following to be true and correct:
        ``I am not represented by an attorney in connection with
    this reaffirmation agreement.
        ``I believe this agreement is in my best interest based on
    the income and expenses I have disclosed in my Statement in
    Support of this reaffirmation agreement above, and because
    (provide any additional relevant reasons the court should
    consider):
        ``Therefore, I ask the court for an order approving this
    reaffirmation agreement.''.
        (8) The court order, which may be used to approve a
    reaffirmation, shall consist of the following:
        ``Court Order: The court grants the debtor's motion and
    approves the reaffirmation agreement described above.''.
        (9) Subsection (a)(2) does not operate as an injunction
    against an act by a creditor that is the holder of a secured
    claim, if--
                (A) such creditor retains a security interest in
            real property that is the debtor's principal residence;
                (B) such act is in the ordinary course of business
            between the creditor and the debtor; and
                (C) such act is limited to seeking or obtaining
            periodic payments associated with a valid security
            interest in lieu of pursuit of in rem relief to enforce
            the lien.
        (l) Notwithstanding any other provision of this title:
                (1) A creditor may accept payments from a debtor
            before and after the filing of a reaffirmation
            agreement with the court.
                (2) A creditor may accept payments from a debtor
            under a reaffirmation agreement which the creditor
            believes in good faith to be effective.
                (3) The requirements of subsections (c)(2) and (k)
            shall be satisfied if disclosures required under those
            subsections are given in good faith.
        (m)(1) Until 60 days after a reaffirmation agreement is
    filed with the court (or such additional period as the court,
    after notice and hearing and for cause, orders before the
    expiration of such period), it shall be presumed that the
    reaffirmation agreement is an undue hardship on the debtor if
    the debtor's monthly income less the debtor's monthly expenses
    as shown on the debtor's completed and signed statement in
    support of the reaffirmation agreement required under
    subsection (k)(6)(A) is less than the scheduled payments on the
    reaffirmed debt. This presumption shall be reviewed by the
    court. The presumption may be rebutted in writing by the debtor
    if the statement includes an explanation which identifies
    additional sources of funds to make the payments as agreed upon
    under the terms of the reaffirmation agreement. If the
    presumption is not rebutted to the satisfaction of the court,
    the court may disapprove the agreement. No agreement shall be
    disapproved without notice and hearing to the debtor and
    creditor and such hearing shall be concluded before the entry
    of the debtor's discharge.
        (2) This subsection does not apply to reaffirmation
    agreements where the creditor is a credit union, as defined in
    section 19(b)(1)(A)(iv) of the Federal Reserve Act (12 U.S.C.
    461(b)(1)(A)(iv)).

    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.

    Sec. 526. Restrictions on debt relief agencies

        (a) A debt relief agency shall not--
                (1) fail to perform any service that such agency
            informed an assisted person or prospective assisted
            person it would provide in connection with a case or
            proceeding under this title;
                (2) make any statement, or counsel or advise any
            assisted person or prospective assisted person to make
            a statement in a document filed in a case or proceeding
            under this title, that is untrue and misleading, or
            that upon the exercise of reasonable care, should have
            been known by such agency to be untrue or misleading;
                (3) misrepresent to any assisted person or
            prospective assisted person, directly or indirectly,
            affirmatively or by material omission, with respect
            to--
                        (i) the services that such agency will
                    provide to such person; or
                        (ii) the benefits and risks that may result
                    if such person becomes a debtor in a case under
                    this title; or
                (4) advise an assisted person or prospective
            assisted person to incur more debt in contemplation of
            such person filing a case under this title or to pay an
            attorney or bankruptcy petition preparer fee or charge
            for services performed as part of preparing for or
            representing a debtor in a case under this title.
        (b) Any waiver by any assisted person of any protection or
    right provided under this section shall not be enforceable
    against the debtor by any Federal or State court or any other
    person, but may be enforced against a debt relief agency.
        (c)(1) Any contract for bankruptcy assistance between a
    debt relief agency and an assisted person that does not comply
    with the material requirements of this section, section 527, or
    section 528 shall be void and may not be enforced by any
    Federal or State court or by any other person, other than such
    assisted person.
        (2) Any debt relief agency shall be liable to an assisted
    person in the amount of any fees or charges in connection with
    providing bankruptcy assistance to such person that such debt
    relief agency has received, for actual damages, and for
    reasonable attorneys' fees and costs if such agency is found,
    after notice and hearing, to have--
                (A) intentionally or negligently failed to comply
            with any provision of this section, section 527, or
            section 528 with respect to a case or proceeding under
            this title for such assisted person;
                (B) provided bankruptcy assistance to an assisted
            person in a case or proceeding under this title that is
            dismissed or converted to a case under another chapter
            of this title because of such agency's intentional or
            negligent failure to file any required document
            including those specified in section 521; or
                (C) intentionally or negligently disregarded the
            material requirements of this title or the Federal
            Rules of Bankruptcy Procedure applicable to such
            agency.
        (3) In addition to such other remedies as are provided
    under State law, whenever the chief law enforcement officer of
    a State, or an official or agency designated by a State, has
    reason to believe that any person has violated or is violating
    this section, the State--
                (A) may bring an action to enjoin such violation;
                (B) may bring an action on behalf of its residents
            to recover the actual damages of assisted persons
            arising from such violation, including any liability
            under paragraph (2); and
                (C) in the case of any successful action under
            subparagraph (A) or (B), shall be awarded the costs of
            the action and reasonable attorney fees as determined
            by the court.
        (4) The United States District Court for any district
    located in the State shall have concurrent jurisdiction of any
    action under subparagraph (A) or (B) of paragraph (3).
        (5) Notwithstanding any other provision of Federal law and
    in addition to any other remedy provided under Federal or State
    law, if the court, on its own motion or on motion of the United
    States trustee or the debtor, finds that a person intentionally
    violated this section, or engaged in a clear and consistent
    pattern or practice of violating this section, the court may--
                (A) enjoin the violation of such section; or
                (B) impose an appropriate civil penalty against
            such person.
        (d) No provision of this section, section 527, or section
    528 shall--
                (1) annul, alter, affect, or exempt any person
            subject to such sections from complying with any law of
            any State except to the extent that such law is
            inconsistent with those sections, and then only to the
            extent of the inconsistency; or
                (2) be deemed to limit or curtail the authority or
            ability--
                        (A) of a State or subdivision or
                    instrumentality thereof, to determine and
                    enforce qualifications for the practice of law
                    under the laws of that State; or
                        (B) of a Federal court to determine and
                    enforce the qualifications for the practice of
                    law before that court.

    Sec. 527. Disclosures

        (a) A debt relief agency providing bankruptcy assistance to
    an assisted person shall provide--
                (1) the written notice required under section
            342(b)(1) of this title; and
                (2) to the extent not covered in the written notice
            described in paragraph (1), and not later than 3
            business days after the first date on which a debt
            relief agency first offers to provide any bankruptcy
            assistance services to an assisted person, a clear and
            conspicuous written notice advising assisted persons
            that--
                        (A) all information that the assisted
                    person is required to provide with a petition
                    and thereafter during a case under this title
                    is required to be complete, accurate, and
                    truthful;
                        (B) all assets and all liabilities are
                    required to be completely and accurately
                    disclosed in the documents filed to commence
                    the case, and the replacement value of each
                    asset as defined in section 506 of this title
                    must be stated in those documents where
                    requested after reasonable inquiry to establish
                    such value;
                        (C) current monthly income, the amounts
                    specified in section 707(b)(2), and, in a case
                    under chapter 13, disposable income (determined
                    in accordance with section 707(b)(2)), are
                    required to be stated after reasonable inquiry;
                    and
                        (D) information that an assisted person
                    provides during their case may be audited
                    pursuant to this title, and that failure to
                    provide such information may result in
                    dismissal of the proceeding under this title or
                    other sanction including, in some instances,
                    criminal sanctions.
        (b) A debt relief agency providing bankruptcy assistance to
    an assisted person shall provide each assisted person at the
    same time as the notices required under subsection (a)(1) with
    the following statement, to the extent applicable, or one
    substantially similar. The statement shall be clear and
    conspicuous and shall be in a single document separate from
    other documents or notices provided to the assisted person:
        ``IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE
    SERVICES FROM AN ATTORNEY OR BANKRUPTCY PETITION PREPARER.
        ``If you decide to seek bankruptcy relief, you can
    represent yourself, you can hire an attorney to represent you,
    or you can get help in some localities from a bankruptcy
    petition preparer who is not an attorney. THE LAW REQUIRES AN
    ATTORNEY OR BANKRUPTCY PETITION PREPARER TO GIVE YOU A WRITTEN
    CONTRACT SPECIFYING WHAT THE ATTORNEY OR BANKRUPTCY PETITION
    PREPARER WILL DO FOR YOU AND HOW MUCH IT WILL COST. Ask to see
    the contract before you hire anyone.
        ``The following information helps you understand what must
    be done in a routine bankruptcy case to help you evaluate how
    much service you need. Although bankruptcy can be complex, many
    cases are routine.
        ``Before filing a bankruptcy case, either you or your
    attorney should analyze your eligibility for different forms of
    debt relief made available by the Bankruptcy Code and which
    form of relief is most likely to be beneficial for you. Be sure
    you understand the relief you can obtain and its limitations.
    To file a bankruptcy case, documents called a Petition,
    Schedules and Statement of Financial Affairs, as well as in
    some cases a Statement of Intention need to be prepared
    correctly and filed with the bankruptcy court. You will have to
    pay a filing fee to the bankruptcy court. Once your case
    starts, you will have to attend the required first meeting of
    creditors where you may be questioned by a court official
    called a `trustee' and by creditors.
        ``If you choose to file a chapter 7 case, you may be asked
    by a creditor to reaffirm a debt. You may want help deciding
    whether to do so and a creditor is not permitted to coerce you
    into reaffirming your debts.
        ``If you choose to file a chapter 13 case in which you
    repay your creditors what you can afford over 3 to 5 years, you
    may also want help with preparing your chapter 13 plan and with
    the confirmation hearing on your plan which will be before a
    bankruptcy judge.
        ``If you select another type of relief under the Bankruptcy
    Code other than chapter 7 or chapter 13, you will want to find
    out what needs to be done from someone familiar with that type
    of relief.
        ``Your bankruptcy case may also involve litigation. You are
    generally permitted to represent yourself in litigation in
    bankruptcy court, but only attorneys, not bankruptcy petition
    preparers, can give you legal advice.''.
        (c) Except to the extent the debt relief agency provides
    the required information itself after reasonably diligent
    inquiry of the assisted person or others so as to obtain such
    information reasonably accurately for inclusion on the
    petition, schedules or statement of financial affairs, a debt
    relief agency providing bankruptcy assistance to an assisted
    person, to the extent permitted by nonbankruptcy law, shall
    provide each assisted person at the time required for the
    notice required under subsection (a)(1) reasonably sufficient
    information (which shall be provided in a clear and conspicuous
    writing) to the assisted person on how to provide all the
    information the assisted person is required to provide under
    this title pursuant to section 521, including--
                (1) how to value assets at replacement value,
            determine current monthly income, the amounts specified
            in section 707(b)(2)) and, in a chapter 13 case, how to
            determine disposable income in accordance with section
            707(b)(2) and related calculations;
                (2) how to complete the list of creditors,
            including how to determine what amount is owed and what
            address for the creditor should be shown; and
                (3) how to determine what property is exempt and
            how to value exempt property at replacement value as
            defined in section 506 of this title.
        (d) A debt relief agency shall maintain a copy of the
    notices required under subsection (a) of this section for 2
    years after the date on which the notice is given the assisted
    person.

    Sec. 528. Requirements for debt relief agencies

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

                           SUBCHAPTER III--THE ESTATE

    Sec. 541. Property of the estate

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

               *       *       *       *       *       *       *

                (4) any interest of the debtor in liquid or gaseous
            hydrocarbons to the extent that--
                        (A) * * *
                        (B)(i) 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) funds placed in an education individual
            retirement account (as defined in section 530(b)(1) of
            the Internal Revenue Code of 1986) not later than 365
            days before the date of filing of the petition, but--
                        (A) only if the designated beneficiary of
                    such account was a son, daughter, stepson,
                    stepdaughter, grandchild, or step-grandchild of
                    the debtor for the taxable year for which funds
                    were placed in such account;
                        (B) only to the extent that such funds--
                                (i) are not pledged or promised to
                            any entity in connection with any
                            extension of credit; and
                                (ii) are not excess contributions
                            (as described in section 4973(e) of the
                            Internal Revenue Code of 1986); and
                        (C) in the case of funds placed in all such
                    accounts having the same designated beneficiary
                    not earlier than 720 days nor later than 365
                    days before such date, only so much of such
                    funds as does not exceed $5,000;
                (6) funds used to purchase a tuition credit or
            certificate or contributed to an account in accordance
            with section 529(b)(1)(A) of the Internal Revenue Code
            of 1986 under a qualified State tuition program (as
            defined in section 529(b)(1) of such Code) not later
            than 365 days before the date of filing of the
            petition, but--
                        (A) only if the designated beneficiary of
                    the amounts paid or contributed to such tuition
                    program was a son, daughter, stepson,
                    stepdaughter, grandchild, or step-grandchild of
                    the debtor for the taxable year for which funds
                    were paid or contributed;
                        (B) with respect to the aggregate amount
                    paid or contributed to such program having the
                    same designated beneficiary, only so much of
                    such amount as does not exceed the total
                    contributions permitted under section 529(b)(7)
                    of such Code with respect to such beneficiary,
                    as adjusted beginning on the date of the filing
                    of the petition by the annual increase or
                    decrease (rounded to the nearest tenth of 1
                    percent) in the education expenditure category
                    of the Consumer Price Index prepared by the
                    Department of Labor; and
                        (C) in the case of funds paid or
                    contributed to such program having the same
                    designated beneficiary not earlier than 720
                    days nor later than 365 days before such date,
                    only so much of such funds as does not exceed
                    $5,000;
                (7) any amount--
                        (A) withheld by an employer from the wages
                    of employees for payment as contributions to--
                                (i) an employee benefit plan
                            subject to title I of the Employee
                            Retirement Income Security Act of 1974
                            (29 U.S.C. 1001 et seq.) or under an
                            employee benefit plan which is a
                            governmental plan under section 414(d)
                            of the Internal Revenue Code of 1986, a
                            deferred compensation plan under
                            section 457 of the Internal Revenue
                            Code of 1986, or a tax-deferred annuity
                            under section 403(b) of the Internal
                            Revenue Code of 1986, except that
                            amount shall not constitute disposable
                            income, as defined in section
                            1325(b)(2) of this title; or
                                (ii) a health insurance plan
                            regulated by State law whether or not
                            subject to such title; or
                        (B) received by the employer from employees
                    for payment as contributions to--
                                (i) an employee benefit plan
                            subject to title I of the Employee
                            Retirement Income Security Act of 1974
                            (29 U.S.C. 1001 et seq.) or under an
                            employee benefit plan which is a
                            governmental plan under section 414(d)
                            of the Internal Revenue Code of 1986, a
                            deferred compensation plan under
                            section 457 of the Internal Revenue
                            Code of 1986, or a tax-deferred annuity
                            under section 403(b) of the Internal
                            Revenue Code of 1986, except that
                            amount shall not constitute disposable
                            income, as defined in section
                            1325(b)(2) of this title; or
                                (ii) a health insurance plan
                            regulated by State law whether or not
                            subject to such title;
                (8) any eligible asset (or proceeds thereof), to
            the extent that such eligible asset was transferred by
            the debtor, before the date of commencement of the
            case, to an eligible entity in connection with an
            asset-backed securitization, except to the extent such
            asset (or proceeds or value thereof) may be recovered
            by the trustee under section 550 by virtue of avoidance
            under section 548(a);
                (9) subject to subchapter III of chapter 5, any
            interest of the debtor in property where the debtor
            pledged or sold tangible personal property (other than
            securities or written or printed evidences of
            indebtedness or title) as collateral for a loan or
            advance of money given by a person licensed under law
            to make such loans or advances, where--
                        (A) the tangible personal property is in
                    the possession of the pledgee or transferee;
                        (B) the debtor has no obligation to repay
                    the money, redeem the collateral, or buy back
                    the property at a stipulated price; and
                        (C) neither the debtor nor the trustee have
                    exercised any right to redeem provided under
                    the contract or State law, in a timely manner
                    as provided under State law and section 108(b)
                    of this title; or
                [(5)] (10) any interest in cash or cash equivalents
            that constitute proceeds of a sale by the debtor of a
            money order that is made--
                        (A) * * *

               *       *       *       *       *       *       *

        (e) In determining whether any of the relationships
    specified in paragraph (5)(A) or (6)(A) of subsection (b)
    exists, a legally adopted child of an individual (and a child
    who is a member of an individual's household, if placed with
    such individual by an authorized placement agency for legal
    adoption by such individual), or a foster child of an
    individual (if such child has as the child's principal place of
    abode the home of the debtor and is a member of the debtor's
    household) shall be treated as a child of such individual by
    blood.
        (f) For purposes of this section--
                (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, including, without limitation, all
            securities issued by governmental units, at least one
            class or tranche of which was rated investment grade by
            one or more nationally recognized securities rating
            organizations, when the securities were initially
            issued by an issuer;
                (2) the term ``eligible asset'' means--
                        (A) financial assets (including interests
                    therein and proceeds thereof), either fixed or
                    revolving, whether or not the same are in
                    existence as of the date of the transfer,
                    including residential and commercial mortgage
                    loans, consumer receivables, trade receivables,
                    assets of governmental units, including payment
                    obligations relating to taxes, receipts, fines,
                    tickets, and other sources of revenue, and
                    lease receivables, that, by their terms,
                    convert into cash within a finite time period,
                    plus any residual interest in property subject
                    to receivables included in such financial
                    assets plus any rights or other assets designed
                    to assure the servicing or timely distribution
                    of proceeds to security holders;
                        (B) cash; and
                        (C) securities, including without
                    limitation, all securities issued by
                    governmental units;
                (3) the term ``eligible entity'' means--
                        (A) an issuer; or
                        (B) a trust, corporation, partnership,
                    governmental unit, limited liability company
                    (including a single member limited liability
                    company), or other entity engaged exclusively
                    in the business of acquiring and transferring
                    eligible assets directly or indirectly to an
                    issuer and taking actions ancillary thereto;
                (4) the term ``issuer'' means a trust, corporation,
            partnership, or other entity engaged exclusively in the
            business of acquiring and holding eligible assets,
            issuing securities backed by eligible assets, and
            taking actions ancillary thereto; and
                (5) the term ``transferred'' means the debtor,
            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 subsection
            (b)(8) (whether or not reference is made to this title
            or any section hereof), irrespective and 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.
        (g) 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)  * * *

               *       *       *       *       *       *       *

        [(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 days
                    after receipt of such goods by the debtor; and
                [(2) the court may deny reclamation to a seller
            with such a right of reclamation that has made such a
            demand only if the court--
                        [(A) grants the claim of such a seller
                    priority as a claim of a kind specified in
                    section 503(b) of this title; or
                        [(B) secures such claim by a lien.]
        (c)(1) Except as provided in subsection (d) of this section
    and subsection (c) of section 507, and subject to the prior
    rights of holders of security interests in such goods or the
    proceeds thereof, the rights and powers of the trustee under
    sections 544(a), 545, 547, and 549 are subject to the right of
    a seller of goods that has sold goods to the debtor, in the
    ordinary course of such seller's business, to reclaim such
    goods if the debtor has received such goods while insolvent,
    not later than 45 days after the date of the commencement of a
    case under this title, but such seller may not reclaim such
    goods unless such seller demands in writing reclamation of such
    goods--
                (A) not later than 45 days after the date of
            receipt of such goods by the debtor; or
                (B) not later than 20 days after the date of
            commencement of the case, if the 45-day period expires
            after the commencement of the case.
        (2) If a seller of goods fails to provide notice in the
    manner described in paragraph (1), the seller still may assert
    the rights contained in section 503(b)(7).

               *       *       *       *       *       *       *

        (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.
        [(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 goods shipped to the
    debtor by the creditor before the commencement of the case, and
    the creditor may offset the purchase price of such goods
    against any claim of the creditor against the debtor that arose
    before the commencement of the case.
        (j)(1) Notwithstanding paragraphs (2) and (3) of section
    545, the trustee may not avoid a warehouseman's lien for
    storage, transportation, or other costs incidental to the
    storage and handling of goods.
        (2) The prohibition under paragraph (1) shall be applied in
    a manner consistent with any applicable State statute that is
    similar to section 7-209 of the Uniform Commercial Code, as in
    effect on the date of enactment of the Bankruptcy Abuse
    Prevention and Consumer Protection Act of 2001, or any
    successor thereto.
        (k) Notwithstanding sections 544, 545, 547, 548(a)(1)(B),
    and 548(b) the trustee may not avoid a transfer made by or to a
    master netting agreement participant under or in connection
    with any master netting agreement or any individual contract
    covered thereby that is made before the commencement of the
    case, except under section 548(a)(1)(A) and except to the
    extent that the trustee could otherwise avoid such a transfer
    made under an individual contract covered by such master
    netting agreement.

    Sec. 547. Preferences

        (a)  * * *
        (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--
                (1)  * * *

               *       *       *       *       *       *       *

        (c) The trustee may not avoid under this section a
    transfer--
                (1)  * * *
                [(2) to the extent that such transfer was--
                        [(A) in payment of a debt incurred by the
                    debtor in the ordinary course of business or
                    financial affairs of the debtor and the
                    transferee;
                        [(B) made in the ordinary course of
                    business or financial affairs of the debtor and
                    the transferee; and
                        [(C) made according to ordinary business
                    terms;]
                (2) to the extent that such transfer was in payment
            of a debt incurred by the debtor in the ordinary course
            of business or financial affairs of the debtor and the
            transferee, and such transfer was--
                        (A) made in the ordinary course of business
                    or financial affairs of the debtor and the
                    transferee; or
                        (B) made according to ordinary business
                    terms;
                (3) that creates a security interest in property
            acquired by the debtor--
                        (A)  * * *
                        (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--
                        [(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; or]
                (7) to the extent such transfer was a bona fide
            payment of a debt for a domestic support obligation;
                (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)  * * *
        (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)  * * *
                        (ii) [10] 30 days after such transfer takes
                    effect between the transferor and the
                    transferee.

               *       *       *       *       *       *       *

        (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 transfer
    made between 90 days and 1 year before the date of the filing
    of the petition, by the debtor to an entity that is not an
    insider for the benefit of a creditor that is an insider, such
    transfer shall be considered to be avoided under this section
    only with respect to the creditor that is an insider.

               *       *       *       *       *       *       *

    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
            that, with respect to a transfer under any individual
            contract covered thereby, to the extent that such
            master netting agreement participant otherwise did not
            take (or is otherwise not deemed to have taken) such
            transfer for value.

               *       *       *       *       *       *       *

    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 a 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 an
    interest in 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

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

               *       *       *       *       *       *       *

    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)  * * *

               *       *       *       *       *       *       *

                (3) the debt owed to the debtor by such creditor
            was incurred by such creditor--
                        (A)  * * *

               *       *       *       *       *       *       *

                        (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, 560, or 561 of this title).
        (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)(17),
    362(b)(28), 555, 556, 559, 560, 561 365(h), 546(h), 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--
                (A)  * * *

               *       *       *       *       *       *       *

    [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 participant, or securities
    clearing agency to cause the liquidation, termination, or
    acceleration of a securities contract, as defined in section
    741 of this title, 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 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 one or more swap
    agreements 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 one or more swap
    agreements 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) In General.--Subject to subsection (b), the exercise of
    any contractual right, because of a condition of the kind
    specified in section 365(e)(1), to cause the termination,
    liquidation, or acceleration of or to offset or net termination
    values, payment amounts, or other transfer obligations arising
    under or in connection with one or more (or the termination,
    liquidation, or acceleration of one or more)--
                (1) securities contracts, as defined in section
            741(7);
                (2) commodity contracts, as defined in section
            761(4);
                (3) forward contracts;
                (4) repurchase agreements;
                (5) swap agreements; or
                (6) master netting agreements,
    shall not be stayed, avoided, or otherwise limited by operation
    of any provision of this title or by any order of a court or
    administrative agency in any proceeding under this title.
        (b) Exception.--
                (1) In general.--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) Commodity brokers.--If a debtor is a commodity
            broker subject to subchapter IV of chapter 7--
                        (A) a party may not net or offset an
                    obligation to the debtor arising under, or in
                    connection with, a commodity contract 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 that subchapter IV; and
                        (B) another commodity broker may not net or
                    offset an obligation to the debtor arising
                    under, or in connection with, a commodity
                    contract entered into or held on behalf of a
                    customer of the debtor against any claim
                    arising under, or in connection with, other
                    instruments, contracts, or agreements listed in
                    subsection (a).
                (3) Construction.--No provision of subparagraph (A)
            or (B) of paragraph (2) shall prohibit the offset of
            claims and obligations that arise under--
                        (A) a cross-margining agreement that has
                    been approved by the Commodity Futures Trading
                    Commission or submitted to the Commodity
                    Futures Trading Commission under section
                    5(a)(12)(A) of the Commodity Exchange Act and
                    has been approved; or
                        (B) any other netting agreement between a
                    clearing organization, as defined in section
                    761, and another entity that has been approved
                    by the Commodity Futures Trading Commission.
        (c) Definition.--As used in this section, the term
    ``contractual right'' includes a right set forth in a rule or
    bylaw of a national securities exchange, a national securities
    association, or a securities clearing agency, a right set forth
    in a bylaw of a clearing organization or contract market or in
    a resolution of the governing board thereof, and a right,
    whether or not evidenced in writing, arising under common law,
    under law merchant, or by reason of normal business practice.
        (d) Cases Ancillary to Foreign Proceedings.--Any provisions
    of this title relating to securities contracts, commodity
    contracts, forward contracts, repurchase agreements, swap
    agreements, or master netting agreements shall apply in a case
    under chapter 15 of this title, so that enforcement of
    contractual provisions of such contracts and agreements in
    accordance with their terms will not be stayed or otherwise
    limited by operation of any provision of this title or by order
    of a court in any case under this title, and to limit avoidance
    powers to the same extent as in a proceeding under chapter 7 or
    11 of this title (such enforcement not to be limited based on
    the presence or absence of assets of the debtor in the United
    States).

    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 pursuant to section
    365(a), or if a forward contract merchant, stockbroker,
    financial institution, securities clearing agency, repo
    participant, financial participant, master netting agreement
    participant, or swap participant liquidates, terminates, or
    accelerates such contract or agreement, damages shall be
    measured as of the earlier of--
                (1) the date of such rejection; or
                (2) the date 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 11 or
              13.
         * * * * * * *

                     SUBCHAPTER III--STOCKBROKER LIQUIDATION

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

                   SUBCHAPTER IV--COMMODITY BROKER LIQUIDATION

    761.  Definitions for this subchapter.
         * * * * * * *
    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.

               *       *       *       *       *       *       *

                    SUBCHAPTER I--OFFICERS AND ADMINISTRATION

               *       *       *       *       *       *       *

    Sec. 704. Duties of trustee

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

               *       *       *       *       *       *       *

                (8) if the business of the debtor is authorized to
            be operated, file with the court, with the United
            States trustee, and with any governmental unit charged
            with responsibility for collection or determination of
            any tax arising out of such operation, periodic reports
            and summaries of the operation of such business,
            including a statement of receipts and disbursements,
            and such other information as the United States trustee
            or the court requires; [and]
                (9) make a final report and file a final account of
            the administration of the estate with the court and
            with the United States trustee[.];
                (10) if, with respect to an individual debtor,
            there is a claim for a domestic support obligation,
            provide the applicable notification specified in
            subsection (c); and
                (11) use all reasonable and best efforts to
            transfer patients from a health care business that is
            in the process of being closed to an appropriate health
            care business that--
                        (A) is in the vicinity of the health care
                    business that is closing;
                        (B) provides the patient with services that
                    are substantially similar to those provided by
                    the health care business that is in the process
                    of being closed; and
                        (C) maintains a reasonable quality of care.
        (b)(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 after the date of
            the first meeting of creditors, file with the court a
            statement as to whether the debtor's case would be
            presumed to be an abuse under section 707(b); and
                (B) not later than 5 days after receiving a
            statement under subparagraph (A), the court shall
            provide a copy of the statement to all creditors.
        (2) The United States trustee or bankruptcy administrator
    shall, not later than 30 days after the date of filing a
    statement under paragraph (1), either file a motion to dismiss
    or convert under section 707(b) or file a statement setting
    forth the reasons the United States trustee or bankruptcy
    administrator does not believe that such a motion would be
    appropriate, if 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) in the case of a debtor in a household of 1
            person, the median family income of the applicable
            State for 1 earner last reported by the Bureau of the
            Census; or
                (B) in the case of a debtor in a household of 2 or
            more individuals, the highest median family income of
            the applicable State for a family of the same number or
            fewer individuals last reported by the Bureau of the
            Census.
        (3) In any case in which a motion to dismiss or convert, or
    a statement is required to be filed by this subsection, the
    United States trustee or bankruptcy administrator may decline
    to file a motion to dismiss or convert pursuant to section
    704(b)(2) if the product of the debtor's current monthly income
    multiplied by 12 exceeds 100 percent, but does not exceed 150
    percent of--
                (A)(i) in the case of a debtor in a household of 1
            person, the median family income of the applicable
            State for 1 earner last reported by the Bureau of the
            Census; or
                (ii) in the case of a debtor in a household of 2 or
            more individuals, the highest median family income of
            the applicable State for a family of the same number or
            fewer individuals last reported by the Bureau of the
            Census; and
                (B) the product of the debtor's current monthly
            income, reduced by the amounts determined under section
            707(b)(2)(A)(ii) (except for the amount calculated
            under the other necessary expenses standard issued by
            the Internal Revenue Service) and clauses (iii) and
            (iv) of section 707(b)(2)(A), multiplied by 60 is less
            than the lesser of--
                        (i) 25 percent of the debtor's nonpriority
                    unsecured claims in the case or $6,000,
                    whichever is greater; or
                        (ii) $10,000.
        (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, 666) 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;
                        (III) the last recent known name and
                    address of the debtor's employer; and
                        (IV) 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) A holder of a claim or a State child support agency
    may request from a creditor described in paragraph
    (1)(B)(iii)(IV) the last known address of the debtor.
        (B) Notwithstanding any other provision of law, a creditor
    that makes a disclosure of a last known address of a debtor in
    connection with a request made under subparagraph (A) shall not
    be liable to the debtor or any other person by reason of making
    that disclosure.

               *       *       *       *       *       *       *

    Sec. 706. Conversion

        (a) * * *

               *       *       *       *       *       *       *

        (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 11
                        or 13

        (a) * * *
        (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 of] trustee, bankruptcy
    administrator, or 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 11 or 13 of this
    title, if it finds that the granting of relief would be [a
    substantial abuse] an abuse of the provisions of this chapter.
    [There shall be a presumption in favor of granting the relief
    requested by the debtor.] 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)).
        (2)(A)(i) In considering under paragraph (1) whether the
    granting of relief would be an abuse of the provisions of this
    chapter, the court shall presume abuse exists if the debtor's
    current monthly income reduced by the amounts determined under
    clauses (ii), (iii), and (iv), and multiplied by 60 is not less
    than the lesser of--
                (I) 25 percent of the debtor's nonpriority
            unsecured claims in the case, or $6,000, whichever is
            greater; or
                (II) $10,000.
        (ii)(I) The debtor's monthly expenses shall be the debtor's
    applicable monthly expense amounts specified under the National
    Standards and Local Standards, and the debtor's actual monthly
    expenses for the categories specified as Other Necessary
    Expenses issued by the Internal Revenue Service for the area in
    which the debtor resides, as in effect on the date of the 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. Notwithstanding any other
    provision of this clause, the monthly expenses of the debtor
    shall not include any payments for debts. In addition, the
    debtor's monthly expenses shall include the debtor's reasonably
    necessary expenses incurred to maintain the safety of the
    debtor and the family of the debtor from family violence as
    identified under section 309 of the Family Violence Prevention
    and Services Act (42 U.S.C. 10408), or other applicable Federal
    law. The expenses included in the debtor's monthly expenses
    described in the preceding sentence shall be kept confidential
    by the court. In addition, if it is demonstrated that it is
    reasonable and necessary, the debtor's monthly expenses may
    also include an additional allowance for food and clothing of
    up to 5 percent of the food and clothing categories as
    specified by the National Standards issued by the Internal
    Revenue Service.
        (II) In addition, the debtor's monthly expenses may
    include, if applicable, the continuation of actual expenses
    paid by the debtor that are reasonable and necessary for care
    and support of an elderly, chronically ill, or disabled
    household member or member of the debtor's immediate family
    (including parents, grandparents, and siblings of the debtor,
    the dependents of the debtor, and the spouse of the debtor in a
    joint case) who is not a dependent and who is unable to pay for
    such reasonable and necessary expenses.
        (III) In addition, for a debtor eligible for chapter 13,
    the debtor's monthly expenses may include the actual
    administrative expenses of administering a chapter 13 plan for
    the district in which the debtor resides, up to an amount of 10
    percent of the projected plan payments, as determined under
    schedules issued by the Executive Office for United States
    Trustees.
        (IV) In addition, the debtor's monthly expenses may include
    the actual expenses for each dependent child under the age of
    18 years up to $1,500 per year per child to attend a private
    elementary or secondary school, if the debtor provides
    documentation of such expenses and a detailed explanation of
    why such expenses are reasonable and necessary.
        (iii) The debtor's average monthly payments on account of
    secured debts shall be calculated as--
                (I) the sum of--
                        (aa) the total of all amounts scheduled as
                    contractually due to secured creditors in each
                    month of the 60 months following the date of
                    the petition; and
                        (bb) any additional payments to secured
                    creditors necessary for the debtor, in filing a
                    plan under chapter 13 of this title, to
                    maintain possession of the debtor's primary
                    residence, motor vehicle, or other property
                    necessary for the support of the debtor and the
                    debtor's dependents, that serves as collateral
                    for secured debts; divided by
                (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 only be rebutted by demonstrating
    special circumstances that justify additional expenses or
    adjustments of current monthly income for which there is no
    reasonable alternative.
        (ii) In order to establish special circumstances, the
    debtor shall be required to--
                (I) itemize each additional expense or adjustment
            of income; and
                (II) provide--
                        (aa) documentation for such expense or
                    adjustment to income; and
                        (bb) a detailed explanation of the special
                    circumstances that make such expenses or
                    adjustment to income necessary and reasonable.
        (iii) The debtor shall attest under oath to the accuracy of
    any information provided to demonstrate that additional
    expenses or adjustments to income are required.
        (iv) The presumption of abuse may only be rebutted if the
    additional expenses or adjustments to income referred to in
    clause (i) cause the product of the debtor's current monthly
    income reduced by the amounts determined under clauses (ii),
    (iii), and (iv) of subparagraph (A) when multiplied by 60 to be
    less than the lesser of--
                (I) 25 percent of the debtor's nonpriority
            unsecured claims, or $6,000, whichever is greater; or
                (II) $10,000.
        (C) As part of the schedule of current income and
    expenditures required under section 521, the debtor shall
    include a statement of the debtor's current monthly income, and
    the calculations that determine whether a presumption arises
    under subparagraph (A)(i), that shows how each such amount is
    calculated.
        (3) In considering under paragraph (1) whether the granting
    of relief would be an abuse of the provisions of this chapter
    in a case in which the presumption in subparagraph (A)(i) of
    such paragraph does not apply or has been rebutted, the court
    shall consider--
                (A) whether the debtor filed the petition in bad
            faith; or
                (B) the totality of the circumstances (including
            whether the debtor seeks to reject a personal services
            contract and the financial need for such rejection as
            sought by the debtor) of the debtor's financial
            situation demonstrates abuse.
        (4)(A) The court shall order the counsel for the debtor to
    reimburse the trustee for all reasonable costs in prosecuting a
    motion brought under section 707(b), including reasonable
    attorneys' fees, if--
                (i) a trustee appointed under section 586(a)(1) of
            title 28 or from a panel of private trustees maintained
            by the bankruptcy administrator 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
                    violated rule 9011 of the Federal Rules of
                    Bankruptcy Procedure.
        (B) If the court finds that the attorney for the debtor
    violated rule 9011 of the Federal Rules of Bankruptcy
    Procedure, 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
            trustee, the United States trustee, or the bankruptcy
            administrator.
        (C) In the case of a petition, pleading, or written motion,
    the signature of an attorney shall constitute a certification
    that the attorney has--
                (i) performed a reasonable investigation into the
            circumstances that gave rise to the petition, pleading,
            or written motion; and
                (ii) determined that the petition, pleading, or
            written motion--
                        (I) is well grounded in fact; and
                        (II) is warranted by existing law or a good
                    faith argument for the extension, modification,
                    or reversal of existing law and does not
                    constitute an abuse under paragraph (1).
        (D) The signature of an attorney on the petition shall
    constitute a certification that the attorney has no knowledge
    after an inquiry that the information in the schedules filed
    with such petition is incorrect.
        (5)(A) Except as provided in subparagraph (B) and subject
    to paragraph (6), the court may award a debtor all reasonable
    costs (including reasonable attorneys' fees) in contesting a
    motion brought by a party in interest (other than a trustee,
    United States trustee, or bankruptcy administrator) under this
    subsection if--
                (i) the court does not grant the motion; and
                (ii) the court finds that--
                        (I) the position of the party that brought
                    the motion violated rule 9011 of the Federal
                    Rules of Bankruptcy Procedure; 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 small business that has a claim of an aggregate
    amount less than $1,000 shall not be subject to subparagraph
    (A)(ii)(I).
        (C) For purposes of this paragraph--
                (i) the term ``small business'' means an
            unincorporated business, partnership, corporation,
            association, or organization that--
                        (I) has less than 25 full-time employees as
                    determined on the date the motion is filed; and
                        (II) is engaged in commercial or business
                    activity; and
                (ii) the number of employees of a wholly owned
            subsidiary of a corporation includes the employees of--
                        (I) a parent corporation; and
                        (II) any other subsidiary corporation of
                    the parent corporation.
        (6) Only the judge, United States trustee, or bankruptcy
    administrator may bring a motion under section 707(b), if the
    current monthly income of the debtor, or in a joint case, the
    debtor and the debtor's spouse, as of the date of the order for
    relief, when multiplied by 12, is equal to or less than--
                (A) in the case of a debtor in a household of 1
            person, the median family income of the applicable
            State for 1 earner last reported by the Bureau of the
            Census;
                (B) in the case of a debtor in a household of 2, 3,
            or 4 individuals, the highest median family income of
            the applicable State for a family of the same number or
            fewer individuals last reported by the Bureau of the
            Census; or
                (C) in the case of a debtor in a household
            exceeding 4 individuals, the highest median family
            income of the applicable State for a family of 4 or
            fewer individuals last reported by the Bureau of the
            Census, plus $525 per month for each individual in
            excess of 4.
        (7) No judge, United States trustee, panel trustee,
    bankruptcy administrator or other party in interest may bring a
    motion under paragraph (2), if the current monthly income of
    the debtor and the debtor's spouse combined, as of the date of
    the order for relief when multiplied by 12, is equal to or less
    than--
                (A) in the case of a debtor in a household of 1
            person, the median family income of the applicable
            State for 1 earner last reported by the Bureau of the
            Census;
                (B) in the case of a debtor in a household of 2, 3,
            or 4 individuals, the highest median family income of
            the applicable State for a family of the same number or
            fewer individuals last reported by the Bureau of the
            Census; or
                (C) in the case of a debtor in a household
            exceeding 4 individuals, the highest median family
            income of the applicable State for a family of 4 or
            fewer individuals last reported by the Bureau of the
            Census, plus $525 per month for each individual in
            excess of 4.
        (c)(1) In this subsection--
                (A) the term ``crime of violence'' has the meaning
            given that term in section 16 of title 18; and
                (B) the term ``drug trafficking crime'' has the
            meaning given that term in section 924(c)(2) of title
            18.
        (2) Except as provided in paragraph (3), after notice and a
    hearing, the court, on a motion by the victim of a crime of
    violence or a drug trafficking crime, may when it is in the
    best interest of the victims dismiss a voluntary case filed by
    an individual debtor under this chapter if that individual was
    convicted of that crime.
        (3) The court may not dismiss a case under paragraph (2) if
    the debtor establishes by a preponderance of the evidence that
    the filing of a case under this chapter is necessary to satisfy
    a claim for a domestic support obligation.

               *       *       *       *       *       *       *

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

               *       *       *       *       *       *       *

    Sec. 722. Redemption

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

               *       *       *       *       *       *       *

    Sec. 724. Treatment of certain liens

        (a) 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), 507(a)(6), or 507(a)(7) of this
            title, to the extent of the amount of such allowed tax
            claim that is secured by such tax lien;

               *       *       *       *       *       *       *

        (e) Before subordinating a tax lien on real or personal
    property of the estate, the trustee shall--
                (1) exhaust the unencumbered assets of the estate;
            and
                (2) in a manner consistent with section 506(c),
            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)(4).
                (2) Claims for contributions to an employee benefit
            plan entitled to priority under section 507(a)(5).

               *       *       *       *       *       *       *

    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) * * *

               *       *       *       *       *       *       *

                (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;
                        (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.
                (12)(A) Paragraph (11) shall not apply with respect
            to a debtor who resides in a district for which the
            United States trustee or bankruptcy administrator of
            that district determines that the approved
            instructional courses are not adequate to service the
            additional individuals required to complete such
            instructional courses under this section.
                (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.

               *       *       *       *       *       *       *

        (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--
                (1) * * *
                (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
                    referred to in section 586(f) of title 28; or
                        (B) a failure to make available for
                    inspection all necessary accounts, papers,
                    documents, financial records, files, and all
                    other papers, things, or property belonging to
                    the debtor that are requested for an audit
                    referred to in section 586(f) of title 28.

    [Sec. 728. Special tax provisions

        [(a) For the purposes of any State or local law imposing a
    tax on or measured by income, the taxable period of a debtor
    that is an individual shall terminate on the date of the order
    for relief under this chapter, unless the case was converted
    under section 1112 or 1208 of this title.
        [(b) Notwithstanding any State or local law imposing a tax
    on or measured by income, the trustee shall make tax returns of
    income for the estate of an individual debtor in a case under
    this chapter or for a debtor that is a corporation in a case
    under this chapter only if such estate or corporation has net
    taxable income for the entire period after the order for relief
    under this chapter during which the case is pending. If such
    entity has such income, or if the debtor is a partnership, then
    the trustee shall make and file a return of income for each
    taxable period during which the case was pending after the
    order for relief under this chapter.
        [(c) If there are pending a case under this chapter
    concerning a partnership and a case under this chapter
    concerning a partner in such partnership, a governmental unit's
    claim for any unpaid liability of such partner for a State or
    local tax on or measured by income, to the extent that such
    liability arose from the inclusion in such partner's taxable
    income of earnings of such partnership that were not withdrawn
    by such partner, is a claim only against such partnership.
        [(d) Notwithstanding section 541 of this title, if there
    are pending a case under this chapter concerning a partnership
    and a case under this chapter concerning a partner in such
    partnership, then any State or local tax refund or reduction of
    tax of such partner that would have otherwise been property of
    the estate of such partner under section 541 of this title--
                [(1) is property of the estate of such partnership
            to the extent that such tax refund or reduction of tax
            is fairly apportionable to losses sustained by such
            partnership and not reimbursed by such partner; and
                [(2) is otherwise property of the estate of such
            partner.]

                    SUBCHAPTER III--STOCKBROKER LIQUIDATION

    Sec. 741. Definitions for this subchapter

        In this subchapter--
                (1) * * *

               *       *       *       *       *       *       *

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

               *       *       *       *       *       *       *

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

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

                  SUBCHAPTER IV--COMMODITY BROKER LIQUIDATION

    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) any combination of the agreements or
                    transactions referred to in this paragraph;
                        (H) any option to enter into an agreement
                    or transaction referred to in this paragraph;
                        (I) a master agreement that provides for an
                    agreement or transaction referred to in
                    subparagraph (A), (B), (C), (D), (E), (F), (G),
                    or (H), together with all supplements to such
                    master agreement, without regard to whether the
                    master agreement provides for an agreement or
                    transaction that is not a commodity contract
                    under this paragraph, except that the master
                    agreement shall be considered to be a commodity
                    contract under this paragraph only with respect
                    to each agreement or transaction under the
                    master agreement that is referred to in
                    subparagraph (A), (B), (C), (D), (E), (F), (G),
                    or (H); or
                        (J) any security agreement or arrangement
                    or other credit enhancement related to any
                    agreement or transaction referred to in this
                    paragraph, 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, financial participants, securities
                        clearing agencies, swap participants, repo
                        participants, and master netting agreement
                        participants

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

               *       *       *       *       *       *       *

                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, 561, 562, 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) * * *

               *       *       *       *       *       *       *

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

               *       *       *       *       *       *       *

                           CHAPTER 11--REORGANIZATION

                    SUBCHAPTER I--OFFICERS AND ADMINISTRATION

    Sec.
    1101.  Definitions for this chapter.
         * * * * * * *
    1115.  Property of the estate.
    1116.  Duties of trustee or debtor in possession in small business
              cases.

               *       *       *       *       *       *       *

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

        (a)(1) * * *

               *       *       *       *       *       *       *

        (3) On request of a party in interest in a case in which
    the debtor is a small business debtor and for cause, the court
    may order that a committee of creditors not be appointed.
        (4) On request of a party in interest and after notice and
    a hearing, the court may order the United States trustee to
    change the membership of a committee appointed under this
    subsection, if the court determines that the change is
    necessary to ensure adequate representation of creditors or
    equity security holders. The court may order the United States
    trustee to increase the number of members of a committee to
    include a creditor that is a small business concern (as
    described in section 3(a)(1) of the Small Business Act (15
    U.S.C. 632(a)(1))), if the court determines that the creditor
    holds claims (of the kind represented by the committee) the
    aggregate amount of which, in comparison to the annual gross
    revenue of that creditor, is disproportionately large.
        (b)(1) * * *

               *       *       *       *       *       *       *

        (3) A committee appointed under subsection (a) shall--
                (A) provide access to information for creditors
            who--
                        (i) hold claims of the kind represented by
                    that committee; and
                        (ii) are not appointed to the committee;
                (B) solicit and receive comments from the creditors
            described in subparagraph (A); and
                (C) be subject to a court order that compels any
            additional report or disclosure to be made to the
            creditors described in subparagraph (A).

               *       *       *       *       *       *       *

    Sec. 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 or an examiner 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--
                (1) perform the duties of a trustee specified in
            [sections 704(2), 704(5), 704(7), 704(8), and 704(9)]
            paragraphs (2), (5), (7), (8), (9), and (11) of section
            704(a) of this title;

               *       *       *       *       *       *       *

                (6) for any year for which the debtor has not filed
            a tax return required by law, furnish, without personal
            liability, such information as may be required by the
            governmental unit with which such tax return was to be
            filed, in light of the condition of the debtor's books
            and records and the availability of such information;
            [and]
                (7) after confirmation of a plan, file such reports
            as are necessary or as the court orders[.]; and
                (8) if, with respect to an individual debtor, there
            is a claim for a domestic support obligation, provide
            the applicable notification specified in subsection
            (c).

               *       *       *       *       *       *       *

        (c)(1) In any case described in subsection (a)(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, 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;
                        (III) the last recent known name and
                    address of the debtor's employer; and
                        (IV) with respect to the debtor's case, the
                    name of each creditor that holds a claim that--
                                (aa) is not discharged under
                            paragraph (2), (3), or (14) of section
                            523(a); or
                                (bb) was reaffirmed by the debtor
                            under section 524(c).
        (2)(A) A holder of a claim or a State child support agency
    may request from a creditor described in paragraph
    (1)(B)(iii)(IV) the last known address of the debtor.
        (B) Notwithstanding any other provision of law, a creditor
    that makes a disclosure of a last known address of a debtor in
    connection with a request made under subparagraph (A) shall not
    be liable to the debtor or any other person by reason of making
    that disclosure.

               *       *       *       *       *       *       *

    Sec. 1112. Conversion or dismissal

        (a) * * *
        [(b) Except as provided in subsection (c) of this section,
    on request of a party in interest or the United States trustee
    or bankruptcy administrator, and after notice and a hearing,
    the court may convert a case under this chapter to a case under
    chapter 7 of this title or may dismiss a case under this
    chapter, whichever is in the best interest of creditors and the
    estate, for cause, including--
                [(1) continuing loss to or diminution of the estate
            and absence of a reasonable likelihood of
            rehabilitation;
                [(2) inability to effectuate a plan;
                [(3) unreasonable delay by the debtor that is
            prejudicial to creditors;
                [(4) failure to propose a plan under section 1121
            of this title within any time fixed by the court;
                [(5) denial of confirmation of every proposed plan
            and denial of a request made for additional time for
            filing another plan or a modification of a plan;
                [(6) revocation of an order of confirmation under
            section 1144 of this title, and denial of confirmation
            of another plan or a modified plan under section 1129
            of this title;
                [(7) inability to effectuate substantial
            consummation of a confirmed plan;
                [(8) material default by the debtor with respect to
            a confirmed plan;
                [(9) termination of a plan by reason of the
            occurrence of a condition specified in the plan; or
                [(10) nonpayment of any fees or charges required
            under chapter 123 of title 28.]
        (b)(1) Except as provided in paragraph (2) of this
    subsection, subsection (c) of this section, and section
    1104(a)(3), on request of a party in interest, and after notice
    and a hearing, 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 interest objects and
    establishes by a preponderance of the evidence that--
                (A) a plan with a reasonable possibility of being
            confirmed will be filed within a reasonable period of
            time; and
                (B) the grounds include an act or omission of the
            debtor--
                        (i) for which there exists a reasonable
                    justification for the act or omission; and
                        (ii) that will be cured within a reasonable
                    period of time fixed by the court.
        (3) The court shall commence the hearing on any motion
    under this subsection not later than 30 days after filing of
    the motion, and shall decide the motion not later than 15 days
    after commencement of 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, the term ``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 that
            poses a risk to the estate or to the public;
                (D) unauthorized use of cash collateral harmful to
            1 or more creditors;
                (E) failure to comply with an order of the court;
                (F) repeated 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
            Procedure;
                (H) failure timely to provide information or attend
            meetings reasonably requested by the United States
            trustee or the bankruptcy administrator;
                (I) failure timely to pay taxes due after the date
            of the order for relief or to file tax returns due
            after the order for relief;
                (J) failure to file a disclosure statement, or to
            file or confirm a plan, within the time fixed by this
            title or by order of the court;
                (K) failure to pay any fees or charges required
            under chapter 123 of title 28;
                (L) revocation of an order of confirmation under
            section 1144;
                (M) inability to effectuate substantial
            consummation of a confirmed plan;
                (N) material default by the debtor with respect to
            a confirmed plan;
                (O) termination of a confirmed plan by reason of
            the occurrence of a condition specified in the plan;
            and
                (P) failure of the debtor to pay any domestic
            support obligation that first becomes payable after the
            date on which the petition is filed.
        (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 not later than 15 days
    after commencement of the hearing, unless the movant expressly
    consents to a continuance for a specific period of time or
    compelling circumstances prevent the court from meeting the
    time limits established by this paragraph.

               *       *       *       *       *       *       *

    Sec. 1115. Property of the estate

        (a) In a case concerning an individual debtor, property of
    the estate includes, in addition to the property specified in
    section 541--
                (1) all property of the kind specified in section
            541 that the debtor acquires after the commencement of
            the case but before the case is closed, dismissed, or
            converted to a case under chapter 7, 12, or 13,
            whichever occurs first; and
                (2) earnings from services performed by the debtor
            after the commencement of the case but before the case
            is closed, dismissed, or converted to a case under
            chapter 7, 12, or 13, whichever occurs first.
        (b) Except as provided in section 1104 or a confirmed plan
    or order confirming a plan, the debtor shall remain in
    possession of all property of the estate.

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

        In a small business case, a trustee or the debtor in
    possession, in addition to the duties provided in this title
    and as otherwise required by law, shall--
                (1) append to the voluntary petition or, in an
            involuntary case, file not later than 7 days after the
            date of the order for relief--
                        (A) its most recent balance sheet,
                    statement of operations, cash-flow statement,
                    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 and other required
            government filings; and
                (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
                (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 (2), 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 20 months after the date of
    the order for relief under this chapter.
        [(e) In a case in which the debtor is a small business and
    elects to be considered a small business--
                [(1) only the debtor may file a plan until after
            100 days after the date of the order for relief under
            this chapter;
                [(2) all plans shall be filed within 160 days after
            the date of the order for relief; and
                [(3) on request of a party in interest made within
            the respective periods specified in paragraphs (1) and
            (2) and after notice and a hearing, the court may--
                        [(A) reduce the 100-day period or the 160-
                    day period specified in paragraph (1) or (2)
                    for cause; and
                        [(B) increase the 100-day period specified
                    in paragraph (1) if the debtor shows that the
                    need for an increase is caused by circumstances
                    for which the debtor should not be held
                    accountable.]
        (e) In a small business case--
                (1) only the debtor may file a plan until after 180
            days after the date of the order for relief, unless
            that period is--
                        (A) extended as provided by this
                    subsection, after notice and hearing; or
                        (B) the court, for cause, orders otherwise;
                (2) the plan, and any necessary disclosure
            statement, shall be filed not later than 300 days after
            the date of the order for relief; and
                (3) the time periods specified in paragraphs (1)
            and (2), and the time fixed in section 1129(e), within
            which the plan shall be confirmed, may be extended only
            if--
                        (A) the debtor, after providing notice to
                    parties in interest (including the United
                    States trustee), demonstrates by a
                    preponderance of the evidence that it is more
                    likely than not that the court will confirm a
                    plan within a reasonable period of time;
                        (B) a new deadline is imposed at the time
                    the extension is granted; and
                        (C) the order extending time is signed
                    before the existing deadline has expired.

               *       *       *       *       *       *       *

    Sec. 1123. Contents of plan

        (a) Notwithstanding any otherwise applicable nonbankruptcy
    law, a plan shall--
                (1) * * *

               *       *       *       *       *       *       *

                (6) provide for the inclusion in the charter of the
            debtor, if the debtor is a corporation, or of any
            corporation referred to in paragraph (5)(B) or (5)(C)
            of this subsection, of a provision prohibiting the
            issuance of nonvoting equity securities, and providing,
            as to the several classes of securities possessing
            voting power, an appropriate distribution of such power
            among such classes, including, in the case of any class
            of equity securities having a preference over another
            class of equity securities with respect to dividends,
            adequate provisions for the election of directors
            representing such preferred class in the event of
            default in the payment of such dividends; [and]
                (7) contain only provisions that are consistent
            with the interests of creditors and equity security
            holders and with public policy with respect to the
            manner of selection of any officer, director, or
            trustee under the plan and any successor to such
            officer, director, or trustee[.]; and
                (8) in a case concerning an individual, provide for
            the payment to creditors through the plan of all or
            such portion of earnings from personal services
            performed by the debtor after the commencement of the
            case or other future income of the debtor as is
            necessary for the execution of the plan.

               *       *       *       *       *       *       *

    Sec. 1124. Impairment of claims or interests

        Except as provided in section 1123(a)(4) of this title, a
    class of claims or interests is impaired under a plan unless,
    with respect to each claim or interest of such class, the
    plan--
                (1) * * *
                (2) notwithstanding any contractual provision or
            applicable law that entitles the holder of such claim
            or interest to demand or receive accelerated payment of
            such claim or interest after the occurrence of a
            default--
                        (A) cures any such default that occurred
                    before or after the commencement of the case
                    under this title, other than a default of a
                    kind specified in section 365(b)(2) of this
                    title or of a kind that section 365(b)(2) of
                    this title expressly does not require to be
                    cured;

               *       *       *       *       *       *       *

                        (C) compensates the holder of such claim or
                    interest for any damages incurred as a result
                    of any reasonable reliance by such holder on
                    such contractual provision or such applicable
                    law; [and]
                        (D) if such claim or such interest arises
                    from any failure to perform a nonmonetary
                    obligation, other than a default arising from
                    failure to operate a non-residential real
                    property lease subject to section 365(b)(1)(A),
                    compensates the holder of such claim or such
                    interest (other than the debtor or an insider)
                    for any actual pecuniary loss incurred by such
                    holder as a result of such failure; and
                        [(D)] (E) does not otherwise alter the
                    legal, equitable, or contractual rights to
                    which such claim or interest entitles the
                    holder of such claim or interest.

               *       *       *       *       *       *       *

    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 discussion of the potential
            material Federal tax consequences of the plan to the
            debtor, any successor to the debtor, and a hypothetical
            investor typical of the holders of claims or interests
            in the case, that would enable [a hypothetical
            reasonable investor typical of holders of claims or
            interests] such a hypothetical investor of the relevant
            class to make an informed judgment about the plan, but
            adequate information need not include such information
            about any other possible or proposed plan and in
            determining whether a disclosure statement provides
            adequate information, the court shall consider the
            complexity of the case, the benefit of additional
            information to creditors and other parties in interest,
            and the cost of providing additional information; and

               *       *       *       *       *       *       *

        [(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) the court may determine that the plan itself
            provides adequate information and that a separate
            disclosure statement is not necessary;
                (2) the court may approve a disclosure statement
            submitted on standard forms approved by the court or
            adopted under section 2075 of title 28; and
                (3)(A) the court may conditionally approve a
            disclosure statement subject to final approval after
            notice and a hearing;
                (B) acceptances and rejections of a plan may be
            solicited based on a conditionally approved disclosure
            statement if the debtor provides adequate information
            to each holder of a claim or interest that is
            solicited, but a conditionally approved disclosure
            statement shall be mailed not later than 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. 1127. Modification of plan

        (a) * * *

               *       *       *       *       *       *       *

        (e) In a case concerning an individual, the plan may be
    modified at any time after confirmation of the plan but before
    the completion of payments under the plan, whether or not the
    plan has been substantially consummated, upon request of the
    debtor, the trustee, the United States trustee, or the holder
    of an allowed unsecured claim, to--
                (1) increase or reduce the amount of payments on
            claims of a particular class provided for by the plan;
                (2) extend or reduce the time period for such
            payments; or
                (3) alter the amount of the distribution to a
            creditor whose claim is provided for by the plan to the
            extent necessary to take account of any payment of such
            claim made other than under the plan.
        (f)(1) Sections 1121 through 1128 of this title and the
    requirements of section 1129 of this title apply to any
    modification under subsection (a).
        (2) The plan, as modified, shall become the plan only after
    there has been disclosure under section 1125, as the court may
    direct, notice and a hearing, and such modification is
    approved.

               *       *       *       *       *       *       *

    Sec. 1129. Confirmation of plan

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

               *       *       *       *       *       *       *

                (9) Except to the extent that the holder of a
            particular claim has agreed to a different treatment of
            such claim, the plan provides that--
                        (A) * * *
                        (B) with respect to a class of claims of a
                    kind specified in section 507(a)(3), 507(a)(4),
                    507(a)(5), 507(a)(6), or 507(a)(7) of this
                    title, each holder of a claim of such class
                    will receive--
                                (i) * * *
                                (ii) if such class has not accepted
                            the plan, cash on the effective date of
                            the plan equal to the allowed amount of
                            such claim; [and]
                        (C) with respect to a claim of a kind
                    specified in section 507(a)(8) of this title,
                    the holder of such claim will receive on
                    account of such claim [deferred cash payments,
                    over a period not exceeding six years after the
                    date of assessment of such claim, of a value,
                    as of the effective date of the plan, equal to
                    the allowed amount of such claim.] regular
                    installment payments in cash--
                                (i) of a total value, as of the
                            effective date of the plan, equal to
                            the allowed amount of such claim;
                                (ii) over a period ending not later
                            than 5 years after the date of the
                            entry of the order for relief under
                            section 301, 302, or 303; and
                                (iii) in a manner not less
                            favorable than the most favored
                            nonpriority unsecured claim provided
                            for in the plan (other than cash
                            payments made to a class of creditors
                            under section 1122(b)); and
                        (D) with respect to a secured claim which
                    would otherwise meet the description of an
                    unsecured claim of a governmental unit under
                    section 507(a)(8), but for the secured status
                    of that claim, the holder of that claim will
                    receive on account of that claim, cash
                    payments, in the same manner and over the same
                    period, as prescribed in subparagraph (C).

               *       *       *       *       *       *       *

                (14) If the debtor is required by a judicial or
            administrative order or statute to pay a domestic
            support obligation, the debtor has paid all amounts
            payable under such order or statute for such obligation
            that first become payable after the date on which the
            petition is filed.
                (15) In a case concerning an individual in which
            the holder of an allowed unsecured claim objects to the
            confirmation of the plan--
                        (A) the value of the property to be
                    distributed under the plan on account of such
                    claim is, as of the effective date of the plan,
                    not less than the amount of such claim; or
                        (B) the value of the property to be
                    distributed under the plan is not less than the
                    debtor's projected disposable income (as that
                    term is defined in section 1325(b)(2)) to be
                    received during the 5-year period beginning on
                    the date that the first payment is due under
                    the plan, or during the term of the plan,
                    whichever is longer.
                (16) All transfers of property of the plan shall be
            made in accordance with any applicable provisions of
            nonbankruptcy law that govern the transfer of property
            by a corporation or trust that is not a moneyed,
            business, or commercial corporation or trust.
        (b)(1) * * *
        (2) For the purpose of this subsection, the condition that
    a plan be fair and equitable with respect to a class includes
    the following requirements:
                (A) * * *
                (B) With respect to a class of unsecured claims--
                        (i) * * *
                        (ii) the holder of any claim or interest
                    that is junior to the claims of such class will
                    not receive or retain under the plan on account
                    of such junior claim or interest any property,
                    except that in a case concerning an individual,
                    the debtor may retain property included in the
                    estate under section 1115, subject to the
                    requirements of subsection (a)(14).

               *       *       *       *       *       *       *

        (e) In a small business case, the plan shall be confirmed
    not later than 175 days after the date of the order for relief,
    unless such 175-day period is extended as provided in section
    1121(e)(3).

               *       *       *       *       *       *       *

                    SUBCHAPTER III--POSTCONFIRMATION MATTERS

    Sec. 1141. Effect of confirmation

        (a) * * *

               *       *       *       *       *       *       *

        (d)(1) * * *
        (2) [The confirmation of a plan does not discharge an
    individual debtor] A discharge under this chapter does not
    discharge a debtor from any debt excepted from discharge under
    section 523 of this title.

               *       *       *       *       *       *       *

        (5) In a case concerning an individual--
                (A) except as otherwise ordered for cause shown,
            the discharge is not effective until completion of all
            payments under the plan; and
                (B) at any time after the confirmation of the plan
            and after notice and a hearing, the court may grant a
            discharge to a debtor that has not completed payments
            under the plan only if--
                        (i) for each allowed unsecured claim, the
                    value, as of the effective date of the plan, of
                    property actually distributed under the plan on
                    account of that claim is not less than the
                    amount that would have been paid on such claim
                    if the estate of the debtor had been liquidated
                    under chapter 7 of this title on such date; and
                        (ii) modification of the plan under 1127 of
                    this title is not practicable.
        (6) Notwithstanding paragraph (1), the confirmation of a
    plan does not discharge a debtor that is a corporation from any
    debt described in section 523(a)(2) or 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.

               *       *       *       *       *       *       *

    Sec. 1146. Special tax provisions

        [(a) For the purposes of any State or local law imposing a
    tax on or measured by income, the taxable period of a debtor
    that is an individual shall terminate on the date of the order
    for relief under this chapter, unless the case was converted
    under section 706 of this title.
        [(b) The trustee shall make a State or local tax return of
    income for the estate of an individual debtor in a case under
    this chapter for each taxable period after the order for relief
    under this chapter during which the case is pending.]
        [(c)] (a) The issuance, transfer, or exchange of a
    security, or the making or delivery of an instrument of
    transfer under a plan confirmed under section 1129 of this
    title, may not be taxed under any law imposing a stamp tax or
    similar tax.
        [(d)] (b) 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 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--
                (1) the date on which such governmental unit
            responds to the request under this subsection; or
                (2) 270 days after such request.

               *       *       *       *       *       *       *

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

               *       *       *       *       *       *       *

                (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 a domestic support obligation, 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 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, 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;
                        (III) the last recent known name and
                    address of the debtor's employer; and
                        (IV) 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 (14) of section
                            523(a); or
                                (bb) was reaffirmed by the debtor
                            under section 524(c).
        (2)(A) A holder of a claim or a State child support agency
    may request from a creditor described in paragraph
    (1)(B)(iii)(IV) the last known address of the debtor.
        (B) Notwithstanding any other provision of law, a creditor
    that makes a disclosure of a last known address of a debtor in
    connection with a request made under subparagraph (A) shall not
    be liable to the debtor or any other person by reason of making
    that disclosure.

               *       *       *       *       *       *       *

    Sec. 1208. Conversion or dismissal

        (a) * * *

               *       *       *       *       *       *       *

        (c) On request of a party in interest, and after notice and
    a hearing, the court may dismiss a case under this chapter for
    cause, including--
                (1) * * *

               *       *       *       *       *       *       *

                (8) termination of a confirmed plan by reason of
            the occurrence of a condition specified in the plan;
            [or]
                (9) continuing loss to or diminution of the estate
            and absence of a reasonable likelihood of
            rehabilitation[.]; and
                (10) failure of the debtor to pay any domestic
            support obligation that first becomes payable after the
            date on which the petition is filed.

               *       *       *       *       *       *       *

                            SUBCHAPTER II--THE PLAN

               *       *       *       *       *       *       *

    Sec. 1222. Contents of plan

        (a) The plan shall--
                (1) * * *
                [(2) provide for the full payment, in deferred cash
            payments, of all claims entitled to priority under
            section 507 of this title, unless the holder of a
            particular claim agrees to a different treatment of
            such claim; and]
                (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;
                (3) if the plan classifies claims and interests,
            provide the same treatment for each claim or interest
            within a particular class unless the holder of a
            particular claim or interest agrees to less favorable
            treatment[.]; and
                (4) notwithstanding any other provision of this
            section, a plan may provide for less than full payment
            of all amounts owed for a claim entitled to priority
            under section 507(a)(1)(B) only if the plan provides
            that all of the debtor's projected disposable income
            for a 5-year period, beginning on the date that the
            first payment is due under the plan, will be applied to
            make payments under the plan.
        (b) Subject to subsections (a) and (c) of this section, the
    plan may--
                (1) * * *

               *       *       *       *       *       *       *

                (11) provide for the payment of interest accruing
            after the date of the filing of the petition on
            unsecured claims that are nondischargeable under
            section 1328(a), except that such interest may be paid
            only to the extent that the debtor has disposable
            income available to pay such interest after making
            provision for full payment of all allowed claims;
                [(11)] (12) include any other appropriate provision
            not inconsistent with this title.

               *       *       *       *       *       *       *

    Sec. 1225. Confirmation of plan

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

               *       *       *       *       *       *       *

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

               *       *       *       *       *       *       *

                        (C) the debtor surrenders the property
                    securing such claim to such holder; [and]
                (6) the debtor will be able to make all payments
            under the plan and to comply with the plan[.]; and
                (7) if the debtor is required by a judicial or
            administrative order or statute to pay a domestic
            support obligation, the debtor has paid all amounts
            payable under such order for such obligation that first
            become payable after the date on which the petition is
            filed.
        (b)(1) * * *
        (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 domestic support
            obligation that first becomes payable after the date on
            which the petition is filed; or

               *       *       *       *       *       *       *

    Sec. 1228. Discharge

        (a) As soon as practicable after completion by the debtor
    of all payments under the plan, and in the case of a debtor who
    is required by a judicial or administrative order to pay a
    domestic support obligation, after such debtor certifies that
    all amounts payable under such order or statute that are due on
    or before the date of the certification (including amounts due
    before the petition was filed, but only to the extent provided
    for in the plan) have been paid, 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--
                (1) provided for under section 1222(b)(5) or
            [1222(b)(10)] 1222(b)(9) of this title; or
                (2) of the kind specified in section 523(a) of this
            title.

               *       *       *       *       *       *       *

        (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)] 1222(b)(9) of this title; or
                (2) of a kind specified in section 523(a) of this
            title.

               *       *       *       *       *       *       *

    Sec. 1231. Special tax provisions

        [(a) For the purpose of any State or local law imposing a
    tax on or measured by income, the taxable period of a debtor
    that is an individual shall terminate on the date of the order
    for relief under this chapter, unless the case was converted
    under section 706 of this title.
        [(b) The trustee shall make a State or local tax return of
    income for the estate of an individual debtor in a case under
    this chapter for each taxable period after the order for relief
    under this chapter during which the case is pending.]
        [(c)] (a) The issuance, transfer, or exchange of a
    security, or the making or delivery of an instrument of
    transfer under a plan confirmed under section 1225 of this
    title, may not be taxed under any law imposing a stamp tax or
    similar tax.
        [(d)] (b) 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--
                (1) the date on which such governmental unit
            responds to the request under this subsection; or
                (2) 270 days after such request.

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

             SUBCHAPTER I--OFFICERS, ADMINISTRATION, AND THE ESTATE

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

               *       *       *       *       *       *       *

             SUBCHAPTER I--OFFICERS, ADMINISTRATION, AND THE ESTATE

               *       *       *       *       *       *       *

    Sec. 1302. Trustee

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

               *       *       *       *       *       *       *

                (4) advise, other than on legal matters, and assist
            the debtor in performance under the plan; [and]
                (5) ensure that the debtor commences making timely
            payments under section 1326 of this title[.]; and
                (6) if, with respect to an individual debtor, there
            is a claim for a domestic support obligation, provide
            the applicable notification specified in subsection
            (d).

               *       *       *       *       *       *       *

        (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, 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 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;
                        (III) the last recent known name and
                    address of the debtor's employer; and
                        (IV) 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 (14) of section
                            523(a); or
                                (bb) was reaffirmed by the debtor
                            under section 524(c).
        (2)(A) A holder of a claim or a State child support agency
    may request from a creditor described in paragraph
    (1)(B)(iii)(IV) the last known address of the debtor.
        (B) Notwithstanding any other provision of law, a creditor
    that makes a disclosure of a last known address of a debtor in
    connection with a request made under subparagraph (A) shall not
    be liable to the debtor or any other person by reason of making
    that disclosure.

               *       *       *       *       *       *       *

    Sec. 1307. Conversion or dismissal

        (a) * * *

               *       *       *       *       *       *       *

        (c) Except as provided in subsection (e) 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
    interests of creditors and the estate, for cause, including--
                (1) * * *

               *       *       *       *       *       *       *

                (9) only on request of the United States trustee,
            failure of the debtor to file, within fifteen days, or
            such additional time as the court may allow, after the
            filing of the petition commencing such case, the
            information required by paragraph (1) of section 521;
            [or]
                (10) only on request of the United States trustee,
            failure to timely file the information required by
            paragraph (2) of section 521[.]; or
                (11) failure of the debtor to pay any domestic
            support obligation that first becomes payable after the
            date on which the petition is filed.
        (e) Upon the failure of the debtor to file a tax return
    under section 1308, on request of a party in interest or the
    United States trustee and after notice and a hearing, the court
    shall dismiss a case or convert a case under this chapter to a
    case under chapter 7 of this title, whichever is in the best
    interest of the creditors and the estate.
        [(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. 1308. Filing of prepetition tax returns

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

                             SUBCHAPTER II--THE PLAN

               *       *       *       *       *       *       *

    Sec. 1322. Contents of plan

        (a) The plan shall--
                (1) * * *
                (2) provide for the full payment, in deferred cash
            payments, of all claims entitled to priority under
            section 507 of this title, unless the holder of a
            particular claim agrees to a different treatment of
            such claim; [and]
                (3) if the plan classifies claims, provide the same
            treatment for each claim within a particular class[.];
            and
                (4) notwithstanding any other provision of this
            section, a plan may provide for less than full payment
            of all amounts owed for a claim entitled to priority
            under section 507(a)(1)(B) only if the plan provides
            that all of the debtor's projected disposable income
            for a 5-year period beginning on the date that the
            first payment is due under the plan will be applied to
            make payments under the plan.
        (b) Subject to subsections (a) and (c) of this section, the
    plan may--
                (1) * * *

               *       *       *       *       *       *       *

                (9) provide for the vesting of property of the
            estate, on confirmation of the plan or at a later time,
            in the debtor or in any other entity; [and]
                (10) provide for the payment of interest accruing
            after the date of the filing of the petition on
            unsecured claims that are nondischargeable under
            section 1328(a), except that such interest may be paid
            only to the extent that the debtor has disposable
            income available to pay such interest after making
            provision for full payment of all allowed claims; and
                [(10)] (11) include any other appropriate provision
            not inconsistent with this title.

               *       *       *       *       *       *       *

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

               *       *       *       *       *       *       *

        (f) A plan may not materially alter the terms of a loan
    described in section 362(b)(19) and any amounts required to
    repay such loan shall not constitute ``disposable income''
    under section 1325.

               *       *       *       *       *       *       *

    Sec. 1324. Confirmation hearing

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

               *       *       *       *       *       *       *

                (5) with respect to each allowed secured claim
            provided for by the plan--
                        (A) the holder of such claim has accepted
                    the plan;
                        (B)[(i) the plan provides that the holder
                    of such claim retain the lien securing such
                    claim; and]
                        (i) the plan provides that--
                                (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;
                        (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[.];
                (7) the action of the debtor in filing the petition
            was in good faith;
                (8) the debtor is required by a judicial or
            administrative order or statute to pay a domestic
            support obligation, the debtor has paid all amounts
            payable under such order or statute for such obligation
            that first becomes payable after the date on which the
            petition is filed; and
                (9) the debtor has filed all applicable Federal,
            State, and local tax returns as required by section
            1308.
    For purposes of paragraph (5), section 506 shall not apply to a
    claim described in that paragraph if the creditor has a
    purchase money security interest securing the debt that is the
    subject of the claim, the debt was incurred within the 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 1-year
    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--
                (A) the value of the property to be distributed
            under the plan on account of such claim is not less
            than the amount of such claim; or
                (B) the plan provides that all of the debtor's
            projected disposable income to be received in the
            [three-year period] applicable commitment period
            beginning on the date that the first payment is due
            under the plan will be applied to make payments to
            unsecured creditors under 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, including charitable
            contributions (that meet the definition of ``charitable
            contribution'' under section 548(d)(3)) to a qualified
            religious or charitable entity or organization (as that
            term is defined in section 548(d)(4)) in an amount not
            to exceed 15 percent of the gross income of the debtor
            for the year in which the contributions are made; and
                [(B) if the debtor is engaged in business, for the
            payment of expenditures necessary for the continuation,
            preservation, and operation of such business.]
                (2) For purposes of this subsection, the term
            ``disposable income'' means current monthly income
            received by the debtor (other than child support
            payments, foster care payments, or disability payments
            for a dependent child made in accordance with
            applicable nonbankruptcy law to the extent reasonably
            necessary to be expended for such child) less amounts
            reasonably necessary to be expended--
                        (A) for the maintenance or support of the
                    debtor or a dependent of the debtor or for a
                    domestic support obligation that first becomes
                    payable after the date on which the petition is
                    filed or for a domestic support obligation that
                    first becomes payable after the date the
                    petition is filed and for charitable
                    contributions (that meet the definition of
                    ``charitable contribution'' under section
                    548(d)(3) to a qualified religious or
                    charitable entity or organization (as that term
                    is defined in section 548(d)(4)) in an amount
                    not to exceed 15 percent of gross income of the
                    debtor for the year in which the contributions
                    are made; and
                        (B) if the debtor is engaged in business,
                    for the payment of expenditures necessary for
                    the continuation, preservation, and operation
                    of such business.
                (3) Amounts reasonably necessary to be expended
            under paragraph (2) shall be determined in accordance
            with subparagraphs (A) and (B) of section 707(b)(2), if
            the debtor has current monthly income, when multiplied
            by 12, greater than--
                        (A) in the case of a debtor in a household
                    of 1 person, the median family income of the
                    applicable State for 1 earner last reported by
                    the Bureau of the Census;
                        (B) in the case of a debtor in a household
                    of 2, 3, or 4 individuals, the highest median
                    family income of the applicable State for a
                    family of the same number or fewer individuals
                    last reported by the Bureau of the Census; or
                        (C) in the case of a debtor in a household
                    exceeding 4 individuals, the highest median
                    family income of the applicable State for a
                    family of 4 or fewer individuals last reported
                    by the Bureau of the Census, plus $525 per
                    month for each individual in excess of 4.
        (4) For purposes of this subsection, the ``applicable
    commitment period''--
                (A) subject to subparagraph (B), shall be--
                        (i) 3 years; or
                        (ii) not less than 5 years, if the current
                    monthly income of the debtor and the debtor's
                    spouse combined, when multiplied by 12, is not
                    less than--
                                (I) in the case of a debtor in a
                            household of 1 person, the median
                            family income of the applicable State
                            for 1 earner last reported by the
                            Bureau of the Census;
                                (II) in the case of a debtor in a
                            household of 2, 3, or 4 individuals,
                            the highest median family income of the
                            applicable State for a family of the
                            same number or fewer individuals last
                            reported by the Bureau of the Census;
                            or
                                (III) in the case of a debtor in a
                            household exceeding 4 individuals, the
                            highest median family income of the
                            applicable State for a family of 4 or
                            fewer individuals last reported by the
                            Bureau of the Census, plus $525 per
                            month for each individual in excess of
                            4; and
                (B) may be less than 3 or 5 years, whichever is
            applicable under subparagraph (A), but only if the plan
            provides for payment in full of all allowed unsecured
            claims over a shorter period.

               *       *       *       *       *       *       *

    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.
        [(2) A payment made under this subsection shall be retained
    by the trustee until confirmation or denial of confirmation of
    a plan. If a plan is confirmed, the trustee shall distribute
    any such payment in accordance with the plan as soon as
    practicable. If a plan is not confirmed, the trustee shall
    return any such payment to the debtor, after deducting any
    unpaid claim allowed under section 503(b) of this title.]
        (a)(1) Unless the court orders otherwise, the debtor shall
    commence making payments not later than 30 days after the date
    of the filing of the plan or the order for relief, whichever is
    earlier, in the amount--
                (A) proposed by the plan to the trustee;
                (B) scheduled in a lease of personal property
            directly to the lessor for that portion of the
            obligation that becomes due after the order for relief,
            reducing the payments under subparagraph (A) by the
            amount so paid and providing the trustee with evidence
            of such payment, including the amount and date of
            payment; and
                (C) that provides adequate protection directly to a
            creditor holding an allowed claim secured by personal
            property to the extent the claim is attributable to the
            purchase of such property by the debtor for that
            portion of the obligation that becomes due after the
            order for relief, reducing the payments under
            subparagraph (A) by the amount so paid and providing
            the trustee with evidence of such payment, including
            the amount and date of payment.
        (2) A payment made under paragraph (1)(A) shall be retained
    by the trustee until confirmation or denial of confirmation. If
    a plan is confirmed, the trustee shall distribute any such
    payment in accordance with the plan as soon as is practicable.
    If a plan is not confirmed, the trustee shall return any such
    payments not previously paid and not yet due and owing to
    creditors pursuant to paragraph (3) to the debtor, after
    deducting any unpaid claim allowed under section 503(b).
        (3) Subject to section 363, the court may, upon notice and
    a hearing, modify, increase, or reduce the payments required
    under this subsection pending confirmation of a plan.
        (4) Not later than 60 days after the date of filing of a
    case under this chapter, a debtor retaining possession of
    personal property subject to a lease or securing a claim
    attributable in whole or in part to the purchase price of such
    property shall provide the lessor or secured creditor
    reasonable evidence of the maintenance of any required
    insurance coverage with respect to the use or ownership of such
    property and continue to do so for so long as the debtor
    retains possession of such property.
        (b) Before or at the time of each payment to creditors
    under the plan, there shall be paid--
                (1) any unpaid claim of the kind specified in
            section 507(a)(1) of this title; [and]
                (2) if a standing trustee appointed under section
            586(b) of title 28 is serving in the case, the
            percentage fee fixed for such standing trustee under
            section 586(e)(1)(B) of title 28[.]; and
                (3) if a chapter 7 trustee has been allowed
            compensation due to the conversion or dismissal of the
            debtor's prior case pursuant to section 707(b), and
            some portion of that compensation remains unpaid in a
            case converted to this chapter or in the case dismissed
            under section 707(b) and refiled under this chapter,
            the amount of any such unpaid compensation, which shall
            be paid monthly--
                        (A) by prorating such amount over the
                    remaining duration of the plan; and
                        (B) by monthly payments not to exceed the
                    greater of--
                                (i) $25; or
                                (ii) the amount payable to
                            unsecured nonpriority creditors, as
                            provided by the plan, multiplied by 5
                            percent, and the result divided by the
                            number of months in the plan.

               *       *       *       *       *       *       *

        (d) Notwithstanding any other provision of this title--
                (1) compensation referred to in subsection (b)(3)
            is payable and may be collected by the trustee under
            that paragraph, even if such amount has been discharged
            in a prior proceeding under this title; and
                (2) such compensation is payable in a case under
            this chapter only to the extent permitted by subsection
            (b)(3).

    Sec. 1328. Discharge

        (a) As soon as practicable after completion by the debtor
    of all payments under the plan, and in the case of a debtor who
    is required by a judicial or administrative order to pay a
    domestic support obligation, after such debtor certifies that
    all amounts payable under such order or statute that are due on
    or before the date of the certification (including amounts due
    before the petition was filed, but only to the extent provided
    for in the plan) have been paid, unless the court approves a
    written waiver of discharge executed by the debtor after the
    order for relief under this chapter, the court shall grant the
    debtor a discharge of all debts provided for by the plan or
    disallowed under section 502 of this title, except any debt--
                [(1) provided for under section 1322(b)(5) of this
            title;
                [(2) of the kind specified in paragraph (5), (8),
            or (9) of section 523(a) of this title; or
                [(3) for restitution, or a criminal fine, included
            in a sentence on the debtor's conviction of a crime.]
                (1) provided for under section 1322(b)(5);
                (2) of the kind specified in section 507(a)(8)(C)
            or in paragraph (1)(B), (1)(C), (2), (3), (4), (5),
            (8), or (9) of section 523(a);
                (3) for restitution, or a criminal fine, included
            in a sentence on the debtor's conviction of a crime; or
                (4) for restitution, or damages, awarded in a civil
            action against the debtor as a result of willful or
            malicious injury by the debtor that caused personal
            injury to an individual or the death of an individual.

               *       *       *       *       *       *       *

        (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.

    Sec. 1329. Modification of plan after confirmation

        (a) * * *

               *       *       *       *       *       *       *

        (c) A plan modified under this section may not provide for
    payments over a period that expires after [three years] the
    applicable commitment period under section 1325(b)(1)(B) after
    the time that the first payment under the original confirmed
    plan was due, unless the court, for cause, approves a longer
    period, but the court may not approve a period that expires
    after five years after such time.

               *       *       *       *       *       *       *

               CHAPTER 15--ANCILLARY AND OTHER CROSS-BORDER CASES

    Sec.
    1501.  Purpose and scope of application.

                        SUBCHAPTER I--GENERAL PROVISIONS

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

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

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

         SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF

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

           SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN
                                 REPRESENTATIVES

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

                      SUBCHAPTER V--CONCURRENT PROCEEDINGS

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

    Sec. 1501. Purpose and scope of application

        (a) The purpose of this chapter is to incorporate the Model
    Law on Cross-Border Insolvency so as to provide effective
    mechanisms for dealing with cases of cross-border insolvency
    with the objectives of--
                (1) cooperation between--
                        (A) United States courts, United States
                    trustees, trustees, examiners, debtors, and
                    debtors in possession; and
                        (B) the courts and other competent
                    authorities of foreign countries involved in
                    cross-border insolvency cases;
                (2) greater legal certainty for trade and
            investment;
                (3) fair and efficient administration of cross-
            border insolvencies that protects the interests of all
            creditors, and other interested entities, including the
            debtor;
                (4) protection and maximization of the value of the
            debtor's assets; and
                (5) facilitation of the rescue of financially
            troubled businesses, thereby protecting investment and
            preserving employment.
        (b) This chapter applies where--
                (1) assistance is sought in the United States by a
            foreign court or a foreign representative in connection
            with a foreign proceeding;
                (2) assistance is sought in a foreign country in
            connection with a case under this title;
                (3) a foreign proceeding and a case under this
            title with respect to the same debtor are taking place
            concurrently; or
                (4) creditors or other interested persons in a
            foreign country have an interest in requesting the
            commencement of, or participating in, a case or
            proceeding under this title.
        (c) This chapter does not apply to--
                (1) a proceeding concerning an entity, other than a
            foreign insurance company, identified by exclusion in
            section 109(b);
                (2) an individual, or to an individual and such
            individual's spouse, who have debts within the limits
            specified in section 109(e) and who are citizens of the
            United States or aliens lawfully admitted for permanent
            residence in the United States; or
                (3) an entity subject to a proceeding under the
            Securities Investor Protection Act of 1970, a
            stockbroker subject to subchapter III of chapter 7 of
            this title, or a commodity broker subject to subchapter
            IV of chapter 7 of this title.
        (d) The court may not grant relief under this chapter with
    respect to any deposit, escrow, trust fund, or other security
    required or permitted under any applicable State insurance law
    or regulation for the benefit of claim holders in the United
    States.

                        SUBCHAPTER I--GENERAL PROVISIONS

    Sec. 1502. Definitions

        For the purposes of this chapter, the term--
                (1) ``debtor'' means an entity that is the subject
            of a foreign proceeding;
                (2) ``establishment'' means any place of operations
            where the debtor carries out a nontransitory economic
            activity;
                (3) ``foreign court'' means a judicial or other
            authority competent to control or supervise a foreign
            proceeding;
                (4) ``foreign main proceeding'' means a foreign
            proceeding 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;
                (7) ``recognition'' means the entry of an order
            granting recognition of a foreign main proceeding or
            foreign nonmain proceeding under this chapter; and
                (8) ``within the territorial jurisdiction of the
            United States'', when used with reference to property
            of a debtor, refers to tangible property located within
            the territory of the United States and intangible
            property deemed under applicable nonbankruptcy law to
            be located within that territory, including any
            property subject to attachment or garnishment that may
            properly be seized or garnished by an action in a
            Federal or State court in the United States.

    Sec. 1503. International obligations of the United States

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

    Sec. 1504. Commencement of ancillary case

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

    Sec. 1505. Authorization to act in a foreign country

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

    Sec. 1506. Public policy exception

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

    Sec. 1507. Additional assistance

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

    Sec. 1508. Interpretation

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

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

    Sec. 1509. Right of direct access

        (a) A foreign representative may commence a case under
    section 1504 by filing directly with the court a petition for
    recognition of a foreign proceeding under section 1515.
        (b) If the court grants recognition under section 1515, and
    subject to any limitations that the court may impose consistent
    with the policy of this chapter--
                (1) the foreign representative has the capacity to
            sue and be sued in a court in the United States;
                (2) the foreign representative may apply directly
            to a court in the United States for appropriate relief
            in that court; and
                (3) a court in the United States shall grant comity
            or cooperation to the foreign representative.
        (c) A request for comity or cooperation by a foreign
    representative in a court in the United States other than the
    court which granted recognition shall be accompanied by a
    certified copy of an order granting recognition under section
    1517.
        (d) If the court denies recognition under this chapter, the
    court may issue any appropriate order necessary to prevent the
    foreign representative from obtaining comity or cooperation
    from courts in the United States.
        (e) Whether or not the court grants recognition, and
    subject to sections 306 and 1510, a foreign representative is
    subject to applicable nonbankruptcy law.
        (f) Notwithstanding any other provision of this section,
    the failure of a foreign representative to commence a case or
    to obtain recognition under this chapter does not affect any
    right the foreign representative may have to sue in a court in
    the United States to collect or recover a claim which is the
    property of the debtor.

    Sec. 1510. Limited jurisdiction

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

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

        (a) Upon recognition, a foreign representative may
    commence--
                (1) an involuntary case under section 303; or
                (2) a voluntary case under section 301 or 302, if
            the foreign proceeding is a foreign main proceeding.
        (b) The petition commencing a case under subsection (a)
    must be accompanied by a certified copy of an order granting
    recognition. The court where the petition for recognition has
    been filed must be advised of the foreign representative's
    intent to commence a case under subsection (a) prior to such
    commencement.

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

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

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

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

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

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

         SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF

    Sec. 1515. Application for recognition

        (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) shall be translated into English. The court may
    require a translation into English of additional documents.

    Sec. 1516. Presumptions concerning recognition

        (a) If the decision or certificate referred to in section
    1515(b) indicates that the foreign proceeding is a foreign
    proceeding (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 granting recognition

        (a) Subject to section 1506, after notice and a hearing, an
    order recognizing a foreign proceeding shall be entered if--
                (1) the foreign proceeding for which recognition is
            sought is a foreign main proceeding or foreign nonmain
            proceeding within the meaning of section 1502;
                (2) the foreign representative applying for
            recognition is a person or body as defined in section
            101; and
                (3) the petition meets the requirements of section
            1515.
        (b) The foreign proceeding shall be recognized--
                (1) as a foreign main proceeding if it is taking
            place in the country where the debtor has the center of
            its main interests; or
                (2) as a foreign nonmain proceeding if the debtor
            has an establishment within the meaning of section 1502
            in the foreign country where the proceeding is pending.
        (c) A petition for recognition of a foreign proceeding
    shall be decided upon at the earliest possible time. Entry of
    an order recognizing a foreign proceeding constitutes
    recognition under this chapter.
        (d) The provisions of this subchapter do not prevent
    modification or termination of recognition if it is shown that
    the grounds for granting it were fully or partially lacking or
    have ceased to exist, but in considering such action the court
    shall give due weight to possible prejudice to parties that
    have relied upon the order granting recognition. The case under
    this chapter may be closed in the manner prescribed under
    section 350.

    Sec. 1518. Subsequent information

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

    Sec. 1519. Relief that may be granted upon filing petition for
                        recognition

        (a) From the time of filing a petition for recognition
    until the court rules on the petition, the court may, at the
    request of the foreign representative, where relief is urgently
    needed to protect the assets of the debtor or the interests of
    the creditors, grant relief of a provisional nature,
    including--
                (1) staying execution against the debtor's assets;
                (2) entrusting the administration or realization of
            all or part of the debtor's assets located in the
            United States to the foreign representative or another
            person authorized by the court, including an examiner,
            in order to protect and preserve the value of assets
            that, by their nature or because of other
            circumstances, are perishable, susceptible to
            devaluation or otherwise in jeopardy; and
                (3) any relief referred to in paragraph (3), (4),
            or (7) of section 1521(a).
        (b) Unless extended under section 1521(a)(6), the relief
    granted under this section terminates when the petition for
    recognition is granted.
        (c) It is a ground for denial of relief under this section
    that such relief would interfere with the administration of a
    foreign main proceeding.
        (d) The court may not enjoin a police or regulatory act of
    a governmental unit, including a criminal action or proceeding,
    under this section.
        (e) The standards, procedures, and limitations applicable
    to an injunction shall apply to relief under this section.
        (f) The exercise of rights not subject to the stay arising
    under section 362(a) pursuant to paragraph (6), (7), (17), or
    (28) of section 362(b) or pursuant to section 362(l) shall not
    be stayed by any order of a court or administrative agency in
    any proceeding under this chapter.

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

        (a) Upon recognition of a foreign proceeding that is a
    foreign main proceeding--
                (1) sections 361 and 362 apply with respect to the
            debtor and that property of the debtor that is within
            the territorial jurisdiction of the United States;
                (2) sections 363, 549, and 552 of this title apply
            to a transfer of an interest of the debtor in property
            that is within the territorial jurisdiction of the
            United States to the same extent that the sections
            would apply to property of an estate;
                (3) unless the court orders otherwise, the foreign
            representative may operate the debtor's business and
            may exercise the rights and powers of a trustee under
            and to the extent provided by sections 363 and 552; and
                (4) section 552 applies to property of the debtor
            that is within the territorial jurisdiction of the
            United States.
        (b) Subsection (a) does not affect the right to commence an
    individual action or proceeding in a foreign country to the
    extent necessary to preserve a claim against the debtor.
        (c) Subsection (a) does not affect the right of a foreign
    representative or an entity to file a petition commencing a
    case under this title or the right of any party to file claims
    or take other proper actions in such a case.

    Sec. 1521. Relief that may be granted upon recognition

        (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 thedebtor or the interests
    of the creditors, the court may, at the request of the foreign
    representative, grant any appropriate relief, including--
                (1) staying the commencement or continuation of an
            individual action or proceeding concerning the debtor's
            assets, rights, obligations or liabilities to the
            extent they have not been stayed under section 1520(a);
                (2) staying execution against the debtor's assets
            to the extent it has not been stayed under section
            1520(a);
                (3) suspending the right to transfer, encumber or
            otherwise dispose of any assets of the debtor to the
            extent this right has not been suspended under section
            1520(a);
                (4) providing for the examination of witnesses, the
            taking of evidence or the delivery of information
            concerning the debtor's assets, affairs, rights,
            obligations or liabilities;
                (5) entrusting the administration or realization of
            all or part of the debtor's assets within the
            territorial jurisdiction of the United States to the
            foreign representative or another person, including an
            examiner, authorized by the court;
                (6) extending relief granted under section 1519(a);
            and
                (7) granting any additional relief that may be
            available to a trustee, except for relief available
            under sections 522, 544, 545, 547, 548, 550, and
            724(a).
        (b) Upon recognition of a foreign proceeding, whether main
    or nonmain, the court may, at the request of the foreign
    representative, entrust the distribution of all or part of the
    debtor's assets located in the United States to the foreign
    representative or another person, including an examiner,
    authorized by the court, provided that the court is satisfied
    that the interests of creditors in the United States are
    sufficiently protected.
        (c) In granting relief under this section to a
    representative of a foreign nonmain proceeding, the court must
    be satisfied that the relief relates to assets that, under the
    law of the United States, should be administered in the foreign
    nonmain proceeding or concerns information required in that
    proceeding.
        (d) The court may not enjoin a police or regulatory act of
    a governmental unit, including a criminal action or proceeding,
    under this section.
        (e) The standards, procedures, and limitations applicable
    to an injunction shall apply to relief under paragraphs (1),
    (2), (3), and (6) of subsection (a).
        (f) The exercise of rights not subject to the stay arising
    under section 362(a) pursuant to paragraph (6), (7), (17), or
    (28) of section 362(b) or pursuant to section 362(l) shall not
    be stayed by any order of a court or administrative agency in
    any proceeding under this chapter.

    Sec. 1522. Protection of creditors and other interested persons

        (a) The court may grant relief under section 1519 or 1521,
    or may modify or terminate relief under subsection (c), only if
    the interests of the creditors and other interested entities,
    including the debtor, are sufficiently protected.
        (b) The court may subject relief granted under section 1519
    or 1521, or the operation of the debtor's business under
    section 1520(a)(3) of this title, to conditions it considers
    appropriate, including the giving of security or the filing of
    a bond.
        (c) The court may, at the request of the foreign
    representative or an entity affected by relief granted under
    section 1519 or 1521, or at its own motion, modify or terminate
    such relief.
        (d) Section 1104(d) shall apply to the appointment of an
    examiner under this chapter. Any examiner shall comply with the
    qualification requirements imposed on a trustee by section 322.

    Sec. 1523. Actions to avoid acts detrimental to creditors

        (a) Upon recognition of a foreign proceeding, the foreign
    representative has standing in a case concerning the debtor
    pending under another chapter of this title to initiate actions
    under sections 522, 544, 545, 547, 548, 550, 553, and 724(a).
        (b) When the foreign proceeding is a foreign nonmain
    proceeding, the court must be satisfied that an action under
    subsection (a) relates to assets that, under United States law,
    should be administered in the foreign nonmain proceeding.

    Sec. 1524. Intervention by a foreign representative

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

          SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN
                                REPRESENTATIVES

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

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

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

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

    Sec. 1527. Forms of cooperation

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

                      SUBCHAPTER V--CONCURRENT PROCEEDINGS

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

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

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

        If 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 laws of the United
            States, should be administered in the foreign nonmain
            proceeding or concerns information required in that
            proceeding.
                (4) In achieving cooperation and coordination under
            sections 1528 and 1529, the court may grant any of the
            relief authorized under section 305.

    Sec. 1530. Coordination of more than 1 foreign proceeding

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

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

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

    Sec. 1532. Rule of payment in concurrent proceedings

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

                          TITLE 18, UNITED STATES CODE

               *       *       *       *       *       *       *
                                PART I--CRIMES

               *       *       *       *       *       *       *

                             CHAPTER 9--BANKRUPTCY

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

               *       *       *       *       *       *       *

    Sec. 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
            [this title] title 11.

               *       *       *       *       *       *       *

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

        (a) In General.--The Attorney General of the United States
    shall designate the individuals described in subsection (b) to
    have primary responsibility in carrying out enforcement
    activities in addressing violations of section 152 or 157
    relating to abusive reaffirmations of debt. In addition to
    addressing the violations referred to in the preceding
    sentence, the individuals described under subsection (b) shall
    address violations of section 152 or 157 relating to materially
    fraudulent statements in bankruptcy schedules that are
    intentionally false or intentionally misleading.
        (b) United States 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, in addition to any other
    responsibilities, have primary responsibility for carrying out
    the duties of a United States attorney under section 3057.
        (d) Bankruptcy Procedures.--The bankruptcy courts shall
    establish procedures for referring any case which may contain a
    materially fraudulent statement in a bankruptcy schedule to the
    individuals designated under this section.

               *       *       *       *       *       *       *

                                  ----------

                          TITLE 28, UNITED STATES CODE

               *       *       *       *       *       *       *
                         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 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.
        (2) The bankruptcy judges appointed pursuant to this
    section shall be appointed for the several judicial districts
    as follows:

                               Districts                             Judges

    Alabama:
        Northern..................................................         5
        Middle....................................................         2
        Southern..................................................         2
                *       *       *       *       *       *       *
    Georgia:
        Northern..................................................         8
        Middle....................................................     [2] 3
        Southern..................................................         2
        [Middle and Southern......................................        1]

               *       *       *       *       *       *       *
    Sec. 157. Procedures

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

               *       *       *       *       *       *       *

                (N) orders approving the sale of property other
            than property resulting from claims brought by the
            estate against persons who have not filed claims
            against the estate; [and]
                (O) other proceedings affecting the liquidation of
            the assets of the estate or the adjustment of the
            debtor-creditor or the equity security holder
            relationship, except personal injury tort or wrongful
            death claims[.]; and
                (P) recognition of foreign proceedings and other
            matters under chapter 15 of title 11.

               *       *       *       *       *       *       *

    Sec. 158. Appeals

        (a) * * *

               *       *       *       *       *       *       *

        [(d) The courts of appeals shall have jurisdiction of
    appeals from all final decisions, judgments, orders, and
    decrees entered under subsections (a) and (b) of this section.]
        (d)(1) In a case in which the appeal is heard by the
    district court, the judgment, decision, order, or decree of the
    bankruptcy judge shall be deemed a judgment, decision, order,
    or decree of the district court entered 31 days after such
    appeal is filed with the district court, unless not later than
    30 days after such appeal is filed with the district court--
                (A) the district court--
                        (i) files a decision on the appeal from the
                    judgment, decision, order, or decree of the
                    bankruptcy judge; or
                        (ii) enters an order extending such 30-day
                    period for cause upon motion of a party or upon
                    the court's own motion; or
                (B) all parties to the appeal file written consent
            that the district court may retain such appeal until it
            enters a decision.
        (2) For the purpose of this subsection, an appeal shall be
    considered filed with the district court on the date on which
    the notice of appeal is filed, except that in a case in which
    the appeal is heard by the district court because a party has
    made an election under subsection (c)(1)(B), the appeal shall
    be considered filed with the district court on the date on
    which such election is made.
        (e) The courts of appeals shall have jurisdiction of
    appeals from--
                (1) all final judgments, decisions, orders, and
            decrees of district courts entered under subsection
            (a);
                (2) all final judgments, decisions, orders, and
            decrees of bankruptcy appellate panels entered under
            subsection (b); and
                (3) all judgments, decisions, orders, and decrees
            of district courts entered under subsection (d) to the
            extent that such judgments, decisions, orders, and
            decrees would be reviewable by a district court under
            subsection (a).
        (f) In accordance with rules prescribed by the Supreme
    Court of the United States under sections 2072 through 2077,
    the court of appeals may, in its discretion, exercise
    jurisdiction over an appeal from an interlocutory judgment,
    decision, order, or decree under subsection (e)(3).

    Sec. 159. Bankruptcy statistics

        (a) The clerk of each district shall collect statistics
    regarding individual debtors with primarily consumer debts
    seeking relief under chapters 7, 11, and 13 of title 11. Those
    statistics shall be on a standardized form prescribed by the
    Director of the Administrative Office of the United States
    Courts (referred to in this section as the ``Director'').
        (b) The Director shall--
                (1) compile the statistics referred to in
            subsection (a);
                (2) make the statistics available to the public;
            and
                (3) not later than October 31, 2002, and annually
            thereafter, prepare, and submit to Congress a report
            concerning the information collected under subsection
            (a) that contains an analysis of the information.
        (c) The compilation required under subsection (b) shall--
                (1) be itemized, by chapter, with respect to title
            11;
                (2) be presented in the aggregate and for each
            district; and
                (3) include information concerning--
                        (A) the total assets and total liabilities
                    of the debtors described in subsection (a), and
                    in each category of assets and liabilities, as
                    reported in the schedules prescribed pursuant
                    to section 2075 of this title and filed by
                    those debtors;
                        (B) the current monthly income, average
                    income, and average expenses of those debtors
                    as reported on the schedules and statements
                    that each such debtor files under sections 521
                    and 1322 of title 11;
                        (C) the aggregate amount of debt discharged
                    in the reporting period, determined as the
                    difference between the total amount of debt and
                    obligations of a debtor reported on the
                    schedules and the amount of such debt reported
                    in categories which are predominantly
                    nondischargeable;
                        (D) the average period of time between the
                    filing of the petition and the closing of the
                    case;
                        (E) for the reporting period--
                                (i) the number of cases in which a
                            reaffirmation was filed; and
                                (ii)(I) the total number of
                            reaffirmations filed;
                                (II) of those cases in which a
                            reaffirmation was filed, the number of
                            cases in which the debtor was not
                            represented by an attorney; and
                                (III) of those cases in which a
                            reaffirmation was filed, the number of
                            cases in which the reaffirmation was
                            approved by the court;
                        (F) with respect to cases filed under
                    chapter 13 of title 11, for the reporting
                    period--
                                (i)(I) the number of cases in which
                            a final order was entered determining
                            the value of property securing a claim
                            in an amount less than the amount of
                            the claim; and
                                (II) the number of final orders
                            determining the value of property
                            securing a claim issued;
                                (ii) the number of cases dismissed,
                            the number of cases dismissed for
                            failure to make payments under the
                            plan, the number of cases refiled after
                            dismissal, and the number of cases in
                            which the plan was completed,
                            separately itemized with respect to the
                            number of modifications made before
                            completion of the plan, if any; and
                                (iii) the number of cases in which
                            the debtor filed another case during
                            the 6-year period preceding the filing;
                        (G) the number of cases in which creditors
                    were fined for misconduct and any amount of
                    punitive damages awarded by the court for
                    creditor misconduct; and
                        (H) the number of cases in which sanctions
                    under rule 9011 of the Federal Rules of
                    Bankruptcy Procedure were imposed against
                    debtor's counsel or 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; and
                        [(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 section 603(a) of the Bankruptcy Abuse Prevention
            and Consumer Protection Act of 2001; 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
            1112 of title 11, the United States trustee shall apply
            promptly after making that finding to the court for
            relief.

               *       *       *       *       *       *       *

        (d)(1) The Attorney General shall prescribe by rule
    qualifications for membership on the panels established by
    United States trustees under paragraph (a)(1) of this section,
    and qualifications for appointment under subsection (b) of this
    section to serve as standing trustee in cases under chapter 12
    or 13 of title 11. The Attorney General may not require that an
    individual be an attorney in order to qualify for appointment
    under subsection (b) of this section to serve as standing
    trustee in cases under chapter 12 or 13 of title 11.
        (2) A trustee whose appointment under subsection (a)(1) or
    under subsection (b) is terminated or who ceases to be assigned
    to cases filed under title 11, United States Code, may obtain
    judicial review of the final agency decision by commencing an
    action in the United States district court for the district for
    which the panel to which the trustee is appointed under
    subsection (a)(1), or in the United States district court for
    the district in which the trustee is appointed under subsection
    (b) resides, after first exhausting all available
    administrative remedies, which if the trustee so elects, shall
    also include an administrative hearing on the record. Unless
    the trustee elects to have an administrative hearing on the
    record, the trustee shall be deemed to have exhausted all
    administrative remedies for purposes of this paragraph if the
    agency fails to make a final agency decision within 90 days
    after the trustee requests administrative remedies. The
    Attorney General shall prescribe procedures to implement this
    paragraph. The decision of the agency shall be affirmed by the
    district court unless it is unreasonable and without cause
    based on the administrative record before the agency.
        (e)(1) * * *

               *       *       *       *       *       *       *

        (3) After first exhausting all available administrative
    remedies, an individual appointed under subsection (b) may
    obtain judicial review of final agency action to deny a claim
    of actual, necessary expenses under this subsection by
    commencing an action in the United States district court in the
    district where the individual resides. The decision of the
    agency shall be affirmed by the district court unless it is
    unreasonable and without cause based upon the administrative
    record before the agency.
        (4) The Attorney General shall prescribe procedures to
    implement this subsection.
        (f)(1) The United States trustee for each district is
    authorized to contract with auditors to perform audits in cases
    designated by the United States trustee, in accordance with the
    procedures established under section 603(a) of the Bankruptcy
    Abuse Prevention and Consumer Protection Act of 2001.
        (2)(A) The report of each audit referred to in paragraph
    (1) shall be filed with the court and transmitted to the United
    States trustee. Each report shall clearly and conspicuously
    specify any material misstatement of income or expenditures or
    of assets identified by the person performing the audit. In any
    case in which a material misstatement of income or expenditures
    or of assets has been reported, the clerk of the bankruptcy
    court shall give notice of the misstatement to the creditors in
    the case.
        (B) If a material misstatement of income or expenditures or
    of assets is reported, the United States trustee shall--
                (i) report the material misstatement, if
            appropriate, to the United States Attorney pursuant to
            section 3057 of title 18; and
                (ii) if advisable, take appropriate action,
            including but not limited to commencing an adversary
            proceeding to revoke the debtor's discharge pursuant to
            section 727(d) of title 11.

               *       *       *       *       *       *       *

    Sec. 589a. United States Trustee System Fund

        (a) * * *
        (b) For the purpose of recovering the cost of services of
    the United States Trustee System, there shall be deposited as
    offsetting collections to the appropriation ``United States
    Trustee System Fund'', to remain available until expended, the
    following--
                [(1) 27.42 percent of the fees collected under
            section 1930(a)(1) of this title;]
                (1)(A) 40.63 percent of the fees collected under
            section 1930(a)(1)(A) of this title in cases commenced
            under chapter 7 of title 11; and
                (B) 70.00 percent of the fees collected under
            section 1930(a)(1)(B) of this title in cases commenced
            under chapter 13 of title 11;
                (2) [one-half] three-fourths of the fees collected
            under section 1930(a)(3) of this title;
                (3) one-half of the fees collected under section
            1930(a)(4) of this title;
                (4) [one-half] 100 percent of the fees collected
            under section 1930(a)(5) of this title;

               *       *       *       *       *       *       *

    Sec. 589b. Bankruptcy data

        (a) Rules.--The Attorney General shall, within a reasonable
    time after the effective date of this section, issue rules
    requiring uniform forms for (and from time to time thereafter
    to appropriately modify and approve)--
                (1) final reports by trustees in cases under
            chapters 7, 12, and 13 of title 11; and
                (2) periodic reports by debtors in possession or
            trustees, as the case may be, in cases under chapter 11
            of title 11.
        (b) Reports.--Each report referred to in subsection (a)
    shall be designed (and the requirements as to place and manner
    of filing shall be established) so as to facilitate compilation
    of data and maximum possible access of the public, both by
    physical inspection at one or more central filing locations,
    and by electronic access through the Internet or other
    appropriate media.
        (c) Required Information.--The information required to be
    filed in the reports referred to in subsection (b) shall be
    that which is in the best interests of debtors and creditors,
    and in the public interest in reasonable and adequate
    information to evaluate the efficiency and practicality of the
    Federal bankruptcy system. In issuing rules proposing the forms
    referred to in subsection (a), the Attorney General shall
    strike the best achievable practical balance between--
                (1) the reasonable needs of the public for
            information about the operational results of the
            Federal bankruptcy system;
                (2) economy, simplicity, and lack of undue burden
            on persons with a duty to file reports; and
                (3) appropriate privacy concerns and safeguards.
        (d) Final Reports.--Final reports proposed for adoption by
    trustees under chapters 7, 12, and 13 of title 11 shall, in
    addition to such other matters as are required by law or as the
    Attorney General in the discretion of the Attorney General,
    shall propose, include with respect to a case under such
    title--
                (1) information about the length of time the case
            was pending;
                (2) assets abandoned;
                (3) assets exempted;
                (4) receipts and disbursements of the estate;
                (5) expenses of administration, including for use
            under section 707(b), actual costs of administering
            cases under chapter 13 of title 11;
                (6) claims asserted;
                (7) claims allowed; and
                (8) distributions to claimants and claims
            discharged without payment,
    in each case by appropriate category and, in cases under
    chapters 12 and 13 of title 11, date of confirmation of the
    plan, each modification thereto, and defaults by the debtor in
    performance under the plan.
        (e) Periodic Reports.--Periodic reports proposed for
    adoption by trustees or debtors in possession under chapter 11
    of title 11 shall, in addition to such other matters as are
    required by law or as the Attorney General, in the discretion
    of the Attorney General, shall propose, include--
                (1) information about the standard industry
            classification, published by the Department of
            Commerce, for the businesses conducted by the debtor;
                (2) length of time the case has been pending;
                (3) number of full-time employees as of the date of
            the order for relief and at the end of each reporting
            period since the case was filed;
                (4) cash receipts, cash disbursements and
            profitability of the debtor for the most recent period
            and cumulatively since the date of the order for
            relief;
                (5) compliance with title 11, whether or not tax
            returns and tax payments since the date of the order
            for relief have been timely filed and made;
                (6) all professional fees approved by the court in
            the case for the most recent period and cumulatively
            since the date of the order for relief (separately
            reported, for the professional fees incurred by or on
            behalf of the debtor, between those that would have
            been incurred absent a bankruptcy case and those not);
            and
                (7) plans of reorganization filed and confirmed
            and, with respect thereto, by class, the recoveries of
            the holders, expressed in aggregate dollar values and,
            in the case of claims, as a percentage of total claims
            of the class allowed.

               *       *       *       *       *       *       *

                     PART III--COURT OFFICERS AND EMPLOYEES

               *       *       *       *       *       *       *

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

               *       *       *       *       *       *       *

    Sec. 960. Tax liability

        (a) Any officers and agents conducting any business under
    authority of a United States court shall be subject to all
    Federal, State and local taxes applicable to such business to
    the same extent as if it were conducted by an individual or
    corporation.
        (b) A tax under subsection (a) shall be paid on or before
    the due date of the tax under applicable nonbankruptcy law,
    unless--
                (1) the tax is a property tax secured by a lien
            against property that is abandoned 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, an order of the
            court makes a finding of probable insufficiency of
            funds of the estate to pay in full the administrative
            expenses allowed under section 503(b) of title 11 that
            have the same priority in distribution under section
            726(b) of title 11 as the priority of that tax.

               *       *       *       *       *       *       *

                        PART IV--JURISDICTION AND VENUE

               *       *       *       *       *       *       *

                   CHAPTER 85--DISTRICT COURTS; JURISDICTION

               *       *       *       *       *       *       *

    Sec. 1334. Bankruptcy cases and proceedings

        (a) * * *
        (b) [Notwithstanding] Except as provided in subsection
    (e)(2), and notwithstanding any Act of Congress that confers
    exclusive jurisdiction on a court or courts other than the
    district courts, the district courts shall have original but
    not exclusive jurisdiction of all civil proceedings arising
    under title 11, or arising in or related to cases under title
    11.
        (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 11 or arising in or related to a case 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)] subsection (e) or (f) of
    section 158, 1291, or 1292 of this title or by the Supreme
    Court of the United States under section 1254 of 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.
        [(e) The district court in which a case under title 11 is
    commenced or is pending shall have exclusive jurisdiction of
    all of the property, wherever located, of the debtor as of the
    commencement of such case, and of property of the estate.]
        (e) The district court in which a case under title 11 is
    commenced or is pending shall have exclusive jurisdiction--
                (1) of all the property, wherever located, of the
            debtor as of the date of commencement of such case, and
            of property of the estate; and
                (2) over all claims or causes of action that
            involve construction of section 327 of title 11, United
            States Code, or rules relating to disclosure
            requirements under section 327.

               *       *       *       *       *       *       *

                      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.

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

        [(a) A case under section 304 of title 11 to enjoin the
    commencement or continuation of an action or proceeding in a
    State or Federal court, or the enforcement of a judgment, may
    be commenced only in the district court for the district where
    the State or Federal court sits in which is pending the action
    or proceeding against which the injunction is sought.
        [(b) A case under section 304 of title 11 to enjoin the
    enforcement of a lien against a property, or to require the
    turnover of property of an estate, may be commenced only in the
    district court for the district in which such property is
    found.
        [(c) A case under section 304 of title 11, other than a
    case specified in subsection (a) or (b) of this section, may be
    commenced only in the district court for the district in which
    is located the principal place of business in the United
    States, or the principal assets in the United States, of the
    estate that is the subject of such case.]

    Sec. 1410. Venue of cases ancillary to foreign proceedings

        A case under chapter 15 of title 11 may be commenced in the
    district court for the district--
                (1) in which the debtor has its principal place of
            business or principal assets in the United States;
                (2) if the debtor does not have a place of business
            or assets in the United States, in which there is
            pending against the debtor an action or proceeding in a
            Federal or State court; or
                (3) in a case other than those specified in
            paragraph (1) or (2), in which venue will be consistent
            with the interests of justice and the convenience of
            the parties, having regard to the relief sought by the
            foreign representative.

               *       *       *       *       *       *       *

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

               *       *       *       *       *       *       *

    Sec. 1452. Removal of claims related to bankruptcy cases

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

               *       *       *       *       *       *       *

                          CHAPTER 123--FEES AND COSTS

               *       *       *       *       *       *       *

    Sec. 1930. Bankruptcy fees

        (a) [Notwithstanding section 1915 of this title, the] The
    parties commencing a case under title 11 shall pay to the clerk
    of the district court or the clerk of the bankruptcy court, if
    one has been certified pursuant to section 156(b) of this
    title, the following filing fees:
                [(1) For a case commenced under chapter 7 or 13 of
            title 11, $155.]
                (1) For a case commenced--
                        (A) under chapter 7 of title 11, $160; or
                        (B) under chapter 13 of title 11, $150.

               *       *       *       *       *       *       *

        (f)(1) Under the procedures prescribed by the Judicial
    Conference of the United States, the district court or the
    bankruptcy court may waive the filing fee in a case under
    chapter 7 of title 11 for an individual if the court determines
    that such debtor has income less than 150 percent of the income
    official poverty line (as defined by the Office of Management
    and Budget, and revised annually in accordance with section
    673(2) of the Omnibus Budget Reconciliation Act of 1981)
    applicable to a family of the size involved and is unable to
    pay that fee in installments. For purposes of this paragraph,
    the term ``filing fee'' means the filing required by subsection
    (a), or any other fee prescribed by the Judicial Conference
    under subsections (b) and (c) that is payable to the clerk upon
    the commencement of a case under chapter 7.
        (2) The district court or the bankruptcy court may waive
    for such debtors other fees prescribed under subsections (b)
    and (c).
        (3) This subsection does not restrict the district court or
    the bankruptcy court from waiving, in accordance with Judicial
    Conference policy, fees prescribed under this section for other
    debtors and creditors.

               *       *       *       *       *       *       *

                               PART V--PROCEDURE

               *       *       *       *       *       *       *

                         CHAPTER 131 - RULES OF COURTS

               *       *       *       *       *       *       *

    Sec. 2075. Bankruptcy rules

        The Supreme Court shall have the power to prescribe by
    general rules, the forms of process, writs, pleadings, and
    motions, and the practice and procedure in cases under title
    11. Such rules shall not abridge, enlarge, or modify any
    substantive right. The Supreme Court shall transmit to Congress
    not later than May 1 of the year in which a rule prescribed
    under this section is to become effective a copy of the
    proposed rule. The rule shall take effect no earlier than
    December 1 of the year in which it is transmitted to Congress
    unless otherwise provided by law. The bankruptcy rules
    promulgated under this section shall prescribe a form for the
    statement required under section 707(b)(2)(C) of title 11 and
    may provide general rules on the content of such statement.
                                  ----------

             SECTION 406 OF THE JUDICIARY APPROPRIATIONS ACT, 1990

      Sec. 406. (a)  * * *
      (b) All fees as shall be hereafter collected for any service
    not of a kind described in any of the items enumerated as items
    1 through 7 and as items 9 through 18, as in effect on November
    21, 1989, of the bankruptcy miscellaneous fee schedule
    prescribed by the Judicial Conference of the United States
    [pursuant to 28 U.S.C. section 1930(b) and 33.87 per centum of
    the fees hereafter collected under 28 U.S.C. section 1930(a)(1)
    and 25 percent of the fees hereafter collected under 28 U.S.C.
    section 1930(a)(3) shall be deposited as offsetting receipts to
    the fund established under 28 U.S.C. section 1931] under
    section 1930(b) of title 28, United States Code, and 31.25
    percent of the fees collected under section 1930(a)(1)(A) of
    that title, 30.00 percent of the fees collected under section
    1930(a)(1)(B) of that title, and 25 percent of the fees
    collected under section 1930(a)(3) of that title shall be
    deposited as offsetting receipts to the fund established under
    section 1931 of that title and shall remain available to the
    Judiciary until expended to reimburse any appropriation for the
    amount paid out of such appropriation for expenses of the
    Courts of Appeals, District Courts, and other Judicial Services
    and the Administrative Office of the United States Courts. The
    Judicial Conference shall report to the Committees on
    Appropriations of the House of Representatives and the Senate
    on a quarterly basis beginning on the first day of each fiscal
    year regarding the sums deposited in said fund.

               *       *       *       *       *       *       *

                                  ----------

                         FEDERAL DEPOSIT INSURANCE ACT

               *       *       *       *       *       *       *
        Sec. 11. (a) * * *

               *       *       *       *       *       *       *

        (e) Provisions Relating to Contracts Entered Into Before
    Appointment of Conservator or Receiver.--
                (1) * * *

               *       *       *       *       *       *       *

                (8) Certain qualified financial contracts.--
                        (A) Rights of parties to contracts.--
                    Subject to [paragraph (10)] paragraphs (9) and
                    (10) of this subsection and notwithstanding any
                    other provision of this Act (other than
                    subsection (d)(9) of this section and section
                    13(e)), any other Federal law, or the law of
                    any State, no person shall be stayed or
                    prohibited from exercising--
                                (i) any right [to cause the
                            termination or liquidation] such person
                            has to cause the termination,
                            liquidation, or acceleration of any
                            qualified financial contract with an
                            insured depository institution which
                            arises upon the appointment of the
                            Corporation as receiver for such
                            institution at any time after such
                            appointment;
                                [(ii) any right under any security
                            arrangement relating to any contract or
                            agreement described in clause (i); or]
                                (ii) any right under any security
                            agreement or arrangement or other
                            credit enhancement related to one or
                            more qualified financial contracts
                            described in clause (i);

               *       *       *       *       *       *       *

                      (C) Certain transfers not avoidable.--
                                (i) In general.--Notwithstanding
                            paragraph (11), section 5242 of the
                            Revised Statutes of the United States
                            (12 U.S.C. 91) or any other Federal or
                            State law relating to the avoidance of
                            preferential or fraudulent transfers,
                            the Corporation, whether acting as such
                            or as conservator or receiver of an
                            insured depository institution, may not
                            avoid any transfer of money or other
                            property in connection with any
                            qualified financial contract with an
                            insured depository institution.

               *       *       *       *       *       *       *

                        (D) Certain contracts and agreements
                    defined.--For purposes of this subsection--
                                (i) Qualified financial contract.--
                            The term ``qualified financial
                            contract'' means any securities
                            contract, commodity contract, forward
                            contract, repurchase agreement, swap
                            agreement, and any similar agreement
                            that the Corporation determines by
                            regulation, resolution, or order to be
                            a qualified financial contract for
                            purposes of this paragraph.
                                [(ii) Securities contract.--The
                            term ``securities contract''--
                                        [(I) has the meaning given
                                    to such term in section 741 of
                                    title 11, United States Code,
                                    except that the term
                                    ``security'' (as used in such
                                    section) shall be deemed to
                                    include any mortgage loan, any
                                    mortgage-related security (as
                                    defined in section 3(a)(41) of
                                    the Securities Exchange Act of
                                    1934), and any interest in any
                                    mortgage loan or mortgage-
                                    related security; and
                                        [(II) does not include any
                                    participation in a commercial
                                    mortgage loan unless the
                                    Corporation determines by
                                    regulation, resolution, or
                                    order to include any such
                                    participation within the
                                    meaning of such term.
                                [(iii) Commodity contract.--The
                            term ``commodity contract'' has the
                            meaning given to such term in section
                            761 of title 11, United States Code.
                                [(iv) Forward contract.--The term
                            ``forward contract'' has the meaning
                            given to such term in section 101 of
                            title 11, United States Code.
                                [(v) Repurchase agreement.--The
                            term ``repurchase agreement''--
                                        [(I) has the meaning given
                                    to such term in section 101 of
                                    title 11, the United States
                                    Code, except that the items (as
                                    described in such section)
                                    which may be subject to any
                                    such agreement shall be deemed
                                    to include mortgage-related
                                    securities (as such term is
                                    defined in section 3(a)(41) of
                                    the Securities Exchange Act of
                                    1934), any mortgage loan, and
                                    any interest in any mortgage
                                    loan; and
                                        [(II) does not include any
                                    participation in a commercial
                                    mortgage loan unless the
                                    Corporation determines by
                                    regulation, resolution, or
                                    order to include any such
                                    participation within the
                                    meaning of such term.
                                [(vi) Swap agreement.--The term
                            ``swap agreement''--
                                        [(I) means any agreement,
                                    including the terms and
                                    conditions incorporated by
                                    reference in any such
                                    agreement, which is a rate swap
                                    agreement, basis swap,
                                    commodity swap, forward rate
                                    agreement, interest rate
                                    future, interest rate option
                                    purchased, forward foreign
                                    exchange agreement, rate cap
                                    agreement, rate floor
                                    agreement, rate collar
                                    agreement, currency swap
                                    agreement, cross-currency rate
                                    swap agreement, currency
                                    future, or currency option
                                    purchased or any other similar
                                    agreement, and
                                        [(II) includes any
                                    combination of such agreements
                                    and any option to enter into
                                    any such agreement.
                                [(vii) Treatment of master
                            agreement as 1 swap agreement.--Any
                            master agreement for any agreements
                            described in clause (vi)(I) together
                            with all supplements to such master
                            agreement shall be treated as 1 swap
                            agreement.
                                [(viii) Transfer.--The term
                            ``transfer'' has the meaning given to
                            such term in section 101 of title 11,
                            United States Code.]
                                (ii) Securities contract.--The term
                            ``securities contract''--
                                        (I) means a contract for
                                    the purchase, sale, or loan of
                                    a security, a certificate of
                                    deposit, a mortgage loan, or
                                    any interest in a mortgage
                                    loan, a group or index of
                                    securities, certificates of
                                    deposit, or mortgage loans or
                                    interests therein (including
                                    any interest therein or based
                                    on the value thereof) or any
                                    option on any of the foregoing,
                                    including any option to
                                    purchase or sell any such
                                    security, certificate of
                                    deposit, loan, interest, group
                                    or index, or option;
                                        (II) does not include any
                                    purchase, sale, or repurchase
                                    obligation under a
                                    participation in a commercial
                                    mortgage loan unless the
                                    Corporation determines by
                                    regulation, resolution, or
                                    order to include any such
                                    agreement within the meaning of
                                    such term;
                                        (III) means any option
                                    entered into on a national
                                    securities exchange relating to
                                    foreign currencies;
                                        (IV) means the guarantee by
                                    or to any securities clearing
                                    agency of any settlement of
                                    cash, securities, certificates
                                    of deposit, mortgage loans or
                                    interests therein, group or
                                    index of securities,
                                    certificates of deposit, or
                                    mortgage loans or interests
                                    therein (including any interest
                                    therein or based on the value
                                    thereof) or option on any of
                                    the foregoing, including any
                                    option to purchase or sell any
                                    such security, certificate of
                                    deposit, loan, interest, group
                                    or index or option;
                                        (V) means any margin loan;
                                        (VI) means any other
                                    agreement or transaction that
                                    is similar to any agreement or
                                    transaction referred to in this
                                    clause;
                                        (VII) means any combination
                                    of the agreements or
                                    transactions referred to in
                                    this clause;
                                        (VIII) means any option to
                                    enter into any agreement or
                                    transaction referred to in this
                                    clause;
                                        (IX) means a master
                                    agreement that provides for an
                                    agreement or transaction
                                    referred to in subclause (I),
                                    (III), (IV), (V), (VI), (VII),
                                    or (VIII), together with all
                                    supplements to any such master
                                    agreement, without regard to
                                    whether the master agreement provides
                                    for an agreement or transaction that
                                    is not a securities contract under
                                    this clause, except that the master
                                    agreement shall be considered to be a
                                    securities contract under this clause
                                    only with respect to each agreement
                                    or transaction under the master
                                    agreement that is referred to in
                                    subclause (I), (III), (IV), (V),
                                    (VI), (VII), or (VIII); and
                                        (X) means any security
                                    agreement or arrangement or
                                    other credit enhancement
                                    related to any agreement or
                                    transaction referred to in this
                                    clause.
                                (iii) Commodity contract.--The term
                            ``commodity contract'' means--
                                        (I) with respect to a
                                    futures commission merchant, a
                                    contract for the purchase or
                                    sale of a commodity for future
                                    delivery on, or subject to the
                                    rules of, a contract market or
                                    board of trade;
                                        (II) with respect to a
                                    foreign futures commission
                                    merchant, a foreign future;
                                        (III) with respect to a
                                    leverage transaction merchant,
                                    a leverage transaction;
                                        (IV) with respect to a
                                    clearing organization, a
                                    contract for the purchase or
                                    sale of a commodity for future
                                    delivery on, or subject to the
                                    rules of, a contract market or
                                    board of trade that is cleared
                                    by such clearing organization,
                                    or commodity option traded on,
                                    or subject to the rules of, a
                                    contract market or board of
                                    trade that is cleared by such
                                    clearing organization;
                                        (V) with respect to a
                                    commodity options dealer, a
                                    commodity option;
                                        (VI) any other agreement or
                                    transaction that is similar to
                                    any agreement or transaction
                                    referred to in this clause;
                                        (VII) any combination of
                                    the agreements or transactions
                                    referred to in this clause;
                                        (VIII) any option to enter
                                    into any agreement or
                                    transaction referred to in this
                                    clause;
                                        (IX) a master agreement
                                    that provides for an agreement
                                    or transaction referred to in
                                    subclause (I), (II), (III),
                                    (IV), (V), (VI), (VII), or
                                    (VIII), together with all
                                    supplements to any such master
                                    agreement, without regard to
                                    whether the master agreement
                                    provides for an agreement or
                                    transaction that is not a
                                    commodity contract under this
                                    clause, except that the master
                                    agreement shall be considered
                                    to be a commodity contract
                                    under this clause only with
                                    respect to each agreement or
                                    transaction under the master
                                    agreement that is referred to
                                    in subclause (I), (II), (III),
                                    (IV), (V), (VI), (VII), or
                                    (VIII); or
                                        (X) any security agreement
                                    or arrangement or other credit
                                    enhancement related to any
                                    agreement or transaction
                                    referred to in this clause.
                                (iv) Forward contract.--The term
                            ``forward contract'' means--
                                        (I) a contract (other than
                                    a commodity contract) for the
                                    purchase, sale, or transfer of
                                    a commodity or any similar
                                    good, article, service, right,
                                    or interest which is presently
                                    or in the future becomes the
                                    subject of dealing in the
                                    forward contract trade, or
                                    product or byproduct thereof,
                                    with a maturity date more than
                                    2 days after the date the
                                    contract is entered into,
                                    including, a repurchase
                                    transaction, reverse repurchase
                                    transaction, consignment,
                                    lease, swap, hedge transaction,
                                    deposit, loan, option,
                                    allocated transaction,
                                    unallocated transaction, or any
                                    other similar agreement;
                                        (II) any combination of
                                    agreements or transactions
                                    referred to in subclauses (I)
                                    and (III);
                                        (III) any option to enter
                                    into any agreement or
                                    transaction referred to in
                                    subclause (I) or (II);
                                        (IV) a master agreement
                                    that provides for an agreement
                                    or transaction referred to in
                                    subclauses (I), (II), or (III),
                                    together with all supplements
                                    to any such master agreement,
                                    without regard to whether the
                                    master agreement provides for
                                    an agreement or transaction
                                    that is not a forward contract
                                    under this clause, except that
                                    the master agreement shall be
                                    considered to be a forward
                                    contract under this clause only
                                    with respect to each agreement
                                    or transaction under the master
                                    agreement that is referred to in
                                    subclause (I), (II), or (III); or
                                        (V) any security agreement
                                    or arrangement or other credit
                                    enhancement related to any
                                    agreement or transaction
                                    referred to in subclause (I),
                                    (II), (III), or (IV).
                                (v) Repurchase agreement.--The term
                            ``repurchase agreement'' (which
                            definition also applies to a reverse
                            repurchase agreement)--
                                        (I) means an agreement,
                                    including related terms, which
                                    provides for the transfer of
                                    one or more certificates of
                                    deposit, mortgage-related
                                    securities (as such term is
                                    defined in the Securities
                                    Exchange Act of 1934), mortgage
                                    loans, interests in mortgage-
                                    related securities or mortgage
                                    loans, eligible bankers'
                                    acceptances, qualified foreign
                                    government securities or
                                    securities that are direct
                                    obligations of, or that are
                                    fully guaranteed by, the United
                                    States or any agency of the
                                    United States against the
                                    transfer of funds by the
                                    transferee of such certificates
                                    of deposit, eligible bankers'
                                    acceptances, securities, loans,
                                    or interests with a
                                    simultaneous agreement by such
                                    transferee to transfer to the
                                    transferor thereof certificates
                                    of deposit, eligible bankers'
                                    acceptances, securities, loans,
                                    or interests as described
                                    above, at a date certain not
                                    later than 1 year after such
                                    transfers or on demand, against
                                    the transfer of funds, or any
                                    other similar agreement;
                                        (II) does not include any
                                    repurchase obligation under a
                                    participation in a commercial
                                    mortgage loan unless the
                                    Corporation determines by
                                    regulation, resolution, or
                                    order to include any such
                                    participation within the
                                    meaning of such term;
                                        (III) means any combination
                                    of agreements or transactions
                                    referred to in subclauses (I)
                                    and (IV);
                                        (IV) means any option to
                                    enter into any agreement or
                                    transaction referred to in
                                    subclause (I) or (III);
                                        (V) means a master
                                    agreement that provides for an
                                    agreement or transaction
                                    referred to in subclause (I),
                                    (III), or (IV), together with
                                    all supplements to any such
                                    master agreement, without
                                    regard to whether the master
                                    agreement provides for an
                                    agreement or transaction that
                                    is not a repurchase agreement
                                    under this clause, except that
                                    the master agreement shall be
                                    considered to be a repurchase
                                    agreement under this subclause
                                    only with respect to each
                                    agreement or transaction under
                                    the master agreement that is
                                    referred to in subclause (I),
                                    (III), or (IV); and
                                        (VI) means any security
                                    agreement or arrangement or
                                    other credit enhancement
                                    related to any agreement or
                                    transaction referred to in
                                    subclause (I), (III), (IV), or
                                    (V).
                            For purposes of this clause, the term
                            ``qualified foreign government
                            security'' means a security that is a
                            direct obligation of, or that is fully
                            guaranteed by, the central government
                            of a member of the Organization for
                            Economic Cooperation and Development
                            (as determined by regulation or order
                            adopted by the appropriate Federal
                            banking authority).
                                (vi) Swap agreement.--The term
                            ``swap agreement'' means--
                                        (I) any agreement,
                                    including the terms and
                                    conditions incorporated by
                                    reference in any such
                                    agreement, which is an interest
                                    rate swap, option, future, or
                                    forward agreement, including a
                                    rate floor, rate cap, rate
                                    collar, cross-currency rate
                                    swap, and basis swap; a spot,
                                    same day-tomorrow, tomorrow-
                                    next, forward, or other foreign
                                    exchange or precious metals
                                    agreement; a currency swap,
                                    option, future, or forward
                                    agreement; an equity index or
                                    equity swap, option, future, or
                                    forward agreement; a debt index
                                    or debt swap, option, future,
                                    or forward agreement; a credit
                                    spread or credit swap, option,
                                    future, or forward agreement; a
                                    commodity index or commodity
                                    swap, option, future, or
                                    forward agreement; or a weather
                                    swap, weather derivative, or
                                    weather option;
                                        (II) any agreement or
                                    transaction similar to any
                                    other agreement or transaction
                                    referred to in this clause that
                                    is presently, or in the future
                                    becomes, regularly entered into
                                    in the swap market (including
                                    terms and conditions
                                    incorporated by reference in
                                    such agreement) and that is a
                                    forward, swap, future, or
                                    option on one or more rates,
                                    currencies, commodities, equity
                                    securities or other equity
                                    instruments, debt securities or
                                    other debt instruments, or
                                    economic indices or measures of
                                    economic risk or value;
                                        (III) any combination of
                                    agreements or transactions
                                    referred to in this clause;
                                        (IV) any option to enter
                                    into any agreement or
                                    transaction referred to in this
                                    clause;
                                        (V) a master agreement that
                                    provides for an agreement or
                                    transaction referred to in
                                    subclause (I), (II), (III), or
                                    (IV), together with all
                                    supplements to any such master
                                    agreement, without regard to
                                    whether the master agreement
                                    contains an agreement or
                                    transaction that is not a swap
                                    agreement under this clause,
                                    except that the master
                                    agreement shall be considered
                                    to be a swap agreement under
                                    this clause only with respect
                                    to each agreement or
                                    transaction under the master
                                    agreement that is referred to
                                    in subclause (I), (II), (III),
                                    or (IV); and
                                        (VI) any security agreement
                                    or arrangement or other credit
                                    enhancement related to any
                                    agreements or transactions
                                    referred to in subparagraph
                                    (I), (II), (III), (IV), or (V).
                            Such term is applicable for purposes of
                            this title only and shall not be
                            construed or applied so as to challenge
                            or affect the characterization,
                            definition, or treatment of any swap
                            agreement under any other statute,
                            regulation, or rule, including the
                            Securities Act of 1933, the Securities
                            Exchange Act of 1934, the Public
                            Utility Holding Company Act of 1935,
                            the Trust Indenture Act of 1939, the
                            Investment Company Act of 1940, the
                            Investment Advisers Act of 1940, the
                            Securities Investor Protection Act of
                            1970, the Commodity Exchange Act, and
                            the regulations promulgated by the
                            Securities and Exchange Commission or
                            the Commodity Futures Trading
                            Commission.
                                (vii) Treatment of master agreement
                            as one agreement.--Any master agreement
                            for any contract or agreement described
                            in any preceding clause of this
                            subparagraph (or any master agreement
                            for such master agreement or
                            agreements), together with all
                            supplements to such master agreement,
                            shall be treated as a single agreement
                            and a single qualified financial
                            contract. If a master agreement
                            contains provisions relating to
                            agreements or transactions that are not
                            themselves qualified financial
                            contracts, the master agreement shall
                            be deemed to be a qualified financial
                            contract only with respect to those
                            transactions that are themselves
                            qualified financial contracts.
                                (viii) Transfer.--The term
                            ``transfer'' means every mode, direct
                            or indirect, absolute or conditional,
                            voluntary or involuntary, of disposing
                            of or parting with property or with an
                            interest in property, including
                            retention of title as a security
                            interest and foreclosure of the
                            depository institutions's equity of
                            redemption.
                        (E) Certain protections in event of
                    appointment of conservator.--Notwithstanding
                    any other provision of this Act ([other than
                    paragraph (12) of this subsection, subsection
                    (d)(9)] other than subsections (d)(9) and
                    (e)(10) of this section, and section 13(e) of
                    this Act), any other Federal law, or the law of
                    any State, no person shall be stayed or
                    prohibited from exercising--
                                (i) * * *
                                [(ii) any right under any security
                            arrangement relating to such qualified
                            financial contracts; or]
                                (ii) any right under any security
                            agreement or arrangement or other
                            credit enhancement related to one or
                            more qualified financial contracts
                            described in clause (i);

               *       *       *       *       *       *       *

                        (F) Clarification.--No provision of law
                    shall be construed as limiting the right or
                    power of the Corporation, or authorizing any
                    court or agency to limit or delay, in any
                    manner, the right or power of the Corporation
                    to transfer any qualified financial contract in
                    accordance with paragraphs (9) and (10) of this
                    subsection or to disaffirm or repudiate any
                    such contract in accordance with subsection
                    (e)(1) of this section.
                        (G) Walkaway clauses not effective.--
                                (i) In general.--Notwithstanding
                            the provisions of subparagraphs (A) and
                            (E), and sections 403 and 404 of the
                            Federal Deposit Insurance Corporation
                            Improvement Act of 1991, no walkaway
                            clause shall be enforceable in a
                            qualified financial contract of an
                            insured depository institution in
                            default.
                                (ii) Walkaway clause defined.--For
                            purposes of this subparagraph, the term
                            ``walkaway clause'' means a provision
                            in a qualified financial contract that,
                            after calculation of a value of a
                            party's position or an amount due to or
                            from 1 of the parties in accordance
                            with its terms upon termination,
                            liquidation, or acceleration of the
                            qualified financial contract, either
                            does not create a payment obligation of
                            a party or extinguishes a payment
                            obligation of a party in whole or in
                            part solely because of such party's
                            status as a nondefaulting party.
                        (H) Recordkeeping requirements.--The
                    Corporation, in consultation with the
                    appropriate Federal banking agencies, may
                    prescribe regulations requiring more detailed
                    recordkeeping with respect to qualified
                    financial contracts (including market
                    valuations) by insured depository institutions.
                [(9) Transfer of qualified financial contracts.--In
            making any transfer of assets or liabilities of a
            depository institution in default which includes any
            qualified financial contract, the conservator or
            receiver for such depository institution shall either--
                        [(A) transfer to 1 depository institution
                    (other than a depository institution in
                    default)--
                                [(i) all qualified financial
                            contracts between--
                                        [(I) any person or any
                                    affiliate of such person; and
                                        [(II) the depository
                                    institution in default;
                                [(ii) all claims of such person or
                            any affiliate of such person against
                            such depository institution under any
                            such contract (other than any claim
                            which, under the terms of any such
                            contract, is subordinated to the claims
                            of general unsecured creditors of such
                            institution);
                                [(iii) all claims of such
                            depository institution against such
                            person or any affiliate of such person
                            under any such contract; and
                                [(iv) all property securing any
                            claim described in clause (ii) or (iii)
                            under any such contract; or
                        [(B) transfer none of the financial
                    contracts, claims, or property referred to in
                    subparagraph (A) (with respect to such person
                    and any affiliate of such person).]
                (9) Transfer of qualified financial contracts.--
                        (A) In general.--In making any transfer of
                    assets or liabilities of a depository
                    institution in default which includes any
                    qualified financial contract, the conservator
                    or receiver for such depository institution
                    shall either--
                                (i) transfer to one financial
                            institution, other than a financial
                            institution for which a conservator,
                            receiver, trustee in bankruptcy, or
                            other legal custodian has been
                            appointed or which is otherwise the
                            subject of a bankruptcy or insolvency
                            proceeding--
                                        (I) all qualified financial
                                    contracts between any person or
                                    any affiliate of such person
                                    and the depository institution
                                    in default;
                                        (II) all claims of such
                                    person or any affiliate of such
                                    person against such depository
                                    institution under any such
                                    contract (other than any claim
                                    which, under the terms of any
                                    such contract, is subordinated
                                    to the claims of general
                                    unsecured creditors of such
                                    institution);
                                        (III) all claims of such
                                    depository institution against
                                    such person or any affiliate of
                                    such person under any such
                                    contract; and
                                        (IV) all property securing
                                    or any other credit enhancement
                                    for any contract described in
                                    subclause (I) or any claim
                                    described in subclause (II) or
                                    (III) under any such contract;
                                    or
                                (ii) transfer none of the qualified
                            financial contracts, claims, property
                            or other credit enhancement referred to
                            in clause (i) (with respect to such
                            person and any affiliate of such
                            person).
                        (B) Transfer to foreign bank, foreign
                    financial institution, or branch or agency of a
                    foreign bank or financial institution.--In
                    transferring any qualified financial contract
                    and related claims and property under
                    subparagraph (A)(i), the conservator or
                    receiver for the depository institution shall
                    not make such transfer to a foreign bank,
                    financial institution organized under the laws
                    of a foreign country, or a branch or agency of
                    a foreign bank or financial institution
                    unless, under the law applicable to such bank,
                    financial institution, branch or agency, to the
                    qualified financial contracts, and to any
                    netting contract, any security agreement or
                    arrangement or other credit enhancement related
                    to one or more qualified financial contracts,
                    the contractual rights of the parties to such
                    qualified financial contracts, netting contracts,
                    security agreements or arrangements, or other
                    credit enhancements are enforceable substantially
                    to the same extent as permitted under this section.
                        (C) Transfer of contracts subject to the
                    rules of a clearing organization.--In the event
                    that a conservator or receiver transfers any
                    qualified financial contract and related
                    claims, property, and credit enhancements
                    pursuant to subparagraph (A)(i) and such
                    contract is subject to the rules of a clearing
                    organization, the clearing organization shall
                    not be required to accept the transferee as a
                    member by virtue of the transfer.
                        (D) Definition.--For purposes of this
                    paragraph, the term ``financial institution''
                    means a broker or dealer, a depository
                    institution, a futures commission merchant, or
                    any other institution, as determined by the
                    Corporation by regulation to be a financial
                    institution.
                (10) Notification of transfer.--
                        (A) In general.--If--
                                (i) the conservator or receiver for
                            an insured depository institution in
                            default makes any transfer of the
                            assets and liabilities of such
                            institution; and
                                (ii) the transfer includes any
                            qualified financial contract,
                    [the conservator or receiver shall use such
                    conservator's or receiver's best efforts to
                    notify any person who is a party to any such
                    contract of such transfer by 12:00, noon (local
                    time) on the business day following such
                    transfer.] the conservator or receiver shall
                    notify any person who is a party to any such
                    contract of such transfer by 5:00 p.m. (eastern
                    time) on the business day following the date of
                    the appointment of the receiver in the case of
                    a receivership, or the business day following
                    such transfer in the case of a conservatorship.
                        (B) Certain rights not enforceable.--
                                (i) Receivership.--A person who is
                            a party to a qualified financial
                            contract with an insured depository
                            institution may not exercise any right
                            that such person has to terminate,
                            liquidate, or net such contract under
                            paragraph (8)(A) of this subsection or
                            section 403 or 404 of the Federal
                            Deposit Insurance Corporation
                            Improvement Act of 1991, solely by
                            reason of or incidental to the
                            appointment of a receiver for the
                            depository institution (or the
                            insolvency or financial condition of
                            the depository institution for which
                            the receiver has been appointed)--
                                        (I) until 5:00 p.m.
                                    (eastern time) on the business
                                    day following the date of the
                                    appointment of the receiver; or
                                        (II) after the person has
                                    received notice that the
                                    contract has been transferred
                                    pursuant to paragraph (9)(A).
                                (ii) Conservatorship.--A person who
                            is a party to a qualified financial
                            contract with an insured depository
                            institution may not exercise any right
                            that such person has to terminate, liquidate,
                            or net such contract under paragraph (8)(E)
                            of this subsection or sections 403 or 404 of
                            the Federal Deposit Insurance Corporation
                            Improvement Act of 1991, solely by reason of
                            or incidental to the appointment of a
                            conservator for the depository institution
                            (or the insolvency or financial condition
                            of the depository institution for which the
                            conservator has been appointed).
                                (iii) Notice.--For purposes of this
                            paragraph, the Corporation as receiver
                            or conservator of an insured depository
                            institution shall be deemed to have
                            notified a person who is a party to a
                            qualified financial contract with such
                            depository institution if the
                            Corporation has taken steps reasonably
                            calculated to provide notice to such
                            person by the time specified in
                            subparagraph (A).
                        (C) Treatment of bridge banks.--The
                    following institutions shall not be considered
                    to be a financial institution for which a
                    conservator, receiver, trustee in bankruptcy,
                    or other legal custodian has been appointed or
                    which is otherwise the subject of a bankruptcy
                    or insolvency proceeding for purposes of
                    paragraph (9):
                                (i) A bridge bank.
                                (ii) A depository institution
                            organized by the Corporation, for which
                            a conservator is appointed either--
                                        (I) immediately upon the
                                    organization of the
                                    institution; or
                                        (II) at the time of a
                                    purchase and assumption
                                    transaction between the
                                    depository institution and the
                                    Corporation as receiver for a
                                    depository institution in
                                    default.
                        [(B)] (D) Business day defined.--For
                    purposes of this paragraph, the term ``business
                    day'' means any day other than any Saturday,
                    Sunday, or any day on which either the New York
                    Stock Exchange or the Federal Reserve Bank of
                    New York is closed.
                (11) Disaffirmance or repudiation of qualified
            financial contracts.--In exercising the rights of
            disaffirmance or repudiation of a conservator or
            receiver with respect to any qualified financial
            contract to which an insured depository institution is
            a party, the conservator or receiver for such
            institution shall either--
                        (A) disaffirm or repudiate all qualified
                    financial contracts between--
                                (i) any person or any affiliate of
                            such person; and
                                (ii) the depository institution in
                            default; or
                        (B) disaffirm or repudiate none of the
                    qualified financial contracts referred to in
                    subparagraph (A) (with respect to such person
                    or any affiliate of such person).
                [(11)] (12) Certain security interests not
            avoidable.--No provision of this subsection shall be
            construed as permitting the avoidance of any legally
            enforceable or perfected security interest in any of
            the assets of any depository institution except where
            such an interest is taken in contemplation of the
            institution's insolvency or with the intent to hinder,
            delay, or defraud the institution or the creditors of
            such institution.
                [(12)] (13) Authority to enforce contracts.--
                        (A) In general.--The conservator or
                    receiver may enforce any contract, other than a
                    director's or officer's liability insurance
                    contract or a depository institution bond,
                    entered into by the depository institution
                    notwithstanding any provision of the contract
                    providing for termination, default,
                    acceleration, or exercise of rights upon, or
                    solely by reason of, insolvency or the
                    appointment of or the exercise of rights or
                    powers by a conservator or receiver.

               *       *       *       *       *       *       *

                [(13)] (14) Exception for federal reserve and
            federal home loan banks.--No provision of this
            subsection shall apply with respect to--
                        (A)  * * *

               *       *       *       *       *       *       *

                [(14)] (15) Selling credit card accounts
            receivable.--
                        (A) * * *

               *       *       *       *       *       *       *

                [(15)] (16) Certain credit card customer lists
            protected.--
                        (A) * * *

               *       *       *       *       *       *       *

        Sec. 13. (a) * * *

               *       *       *       *       *       *       *

        (e) Agreements Against Interests of Corporation.--
                (1) * * *
                [(2) Public deposits.--An agreement to provide for
            the lawful collateralization of deposits of a Federal,
            State, or local governmental entity or of any depositor
            referred to in section 11(a)(2) shall not be deemed to
            be invalid pursuant to paragraph (1)(B) solely because
            such agreement was not executed contemporaneously with
            the acquisition of the collateral or with any changes
            in the collateral made in accordance with such
            agreement.]
                (2) Exemptions from contemporaneous execution
            requirement.--An agreement to provide for the lawful
            collateralization of--
                        (A) deposits of, or other credit extension
                    by, a Federal, State, or local governmental
                    entity, or of any depositor referred to in
                    section 11(a)(2), including an agreement to
                    provide collateral in lieu of a surety bond;
                        (B) bankruptcy estate funds pursuant to
                    section 345(b)(2) of title 11, United States
                    Code;
                        (C) extensions of credit, including any
                    overdraft, from a Federal reserve bank or
                    Federal home loan bank; or
                        (D) one or more qualified financial
                    contracts, as defined in section 11(e)(8)(D),
            shall not be deemed invalid pursuant to paragraph
            (1)(B) solely because such agreement was not executed
            contemporaneously with the acquisition of the
            collateral or because of pledges, delivery, or
            substitution of the collateral made in accordance with
            such agreement.

               *       *       *       *       *       *       *

                                  ----------

         FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991

               *       *       *       *       *       *       *

                       TITLE IV--MISCELLANEOUS PROVISIONS

                   Subtitle A--Payment System Risk Reduction

            CHAPTER 1--BILATERAL AND CLEARING ORGANIZATION NETTING

               *       *       *       *       *       *       *

    SEC. 402. DEFINITIONS.

        For purposes of this chapter--
                (1)  * * *

               *       *       *       *       *       *       *

                (2) Clearing organization.--The term ``clearing
            organization'' means a clearinghouse, clearing
            association, clearing corporation, or similar
            organization--
                        (A) that provides clearing, netting, or
                    settlement services for its members and--
                                (i)  * * *
                                (ii) which is registered as a
                            clearing agency under the Securities
                            Exchange Act of 1934, or is exempt from
                            such registration by order of the
                            Securities and Exchange Commission; or
                        (B) that is registered as a derivatives
                    clearing organization under section 5b of the
                    Commodity Exchange Act or that has been granted
                    an exemption under section 4(c)(1) of the
                    Commodity Exchange Act.

               *       *       *       *       *       *       *

                (6) Depository institution.--The term ``depository
            institution'' means--
                        (A) a depository institution as defined in
                    section 19(b)(1)(A) of the Federal Reserve Act
                    (other than clause (vii));
                        (B) an uninsured national bank or an
                    uninsured State bank that is a member of the
                    Federal Reserve System, if the national bank or
                    State member bank is not eligible to make
                    application to become an insured bank under
                    section 5 of the Federal Deposit Insurance Act;
                        [(B) a branch or agency as defined in
                    section 1(b) of the International Banking Act
                    of 1978;]
                        (C) a branch or agency of a foreign bank, a
                    foreign bank and any branch or agency of the
                    foreign bank, or the foreign bank that
                    established the branch or agency, as those
                    terms are defined in section 1(b) of the
                    International Banking Act of 1978;
                        [(C)] (D) a corporation chartered under
                    section 25(a) of the Federal Reserve Act; or
                        [(D)] (E) a corporation having an agreement
                    or undertaking with the Board of Governors of
                    the Federal Reserve System under section 25 of
                    the Federal Reserve Act.

               *       *       *       *       *       *       *

                (11) Member.--The term ``member'' means a member of
            or participant in a clearing organization, and includes
            the clearing organization and any other clearing
            organization with which such clearing organization has
            a netting contract.

               *       *       *       *       *       *       *

                (14) Netting contract.--
                        (A) In general.--The term ``netting
                    contract''--
                                [(i) means a contract or agreement
                            between 2 or more financial
                            institutions or members, that--
                                        [(I) is governed by the
                                    laws of the United States, any
                                    State, or any political
                                    subdivision of any State, and
                                        [(II) provides for netting
                                    present or future payment
                                    obligations or payment
                                    entitlements (including
                                    liquidation or close-out values
                                    relating to the obligations or
                                    entitlements) among the parties
                                    to the agreement; and]
                                (i) means a contract or agreement
                            between 2 or more financial
                            institutions, clearing organizations,
                            or members that provides for netting
                            present or future payment obligations
                            or payment entitlements (including
                            liquidation or closeout values relating
                            to such obligations or entitlements)
                            among the parties to the agreement; and
                                (ii) includes the rules of a
                            clearing organization.
                        (B) Invalid contracts not included.--The
                    term ``netting contract'' does not include any
                    contract or agreement that is invalid under or
                    precluded by Federal law.
                (15) Payment.--The term ``payment'' means a payment
            of United States dollars, another currency, or a
            composite currency, and a noncash delivery, including a
            payment or delivery to liquidate an unmatured
            obligation.

    SEC. 403. BILATERAL NETTING.

        [(a) General Rule.--Notwithstanding any other provision of
    law, the covered contractual payment obligations and the
    covered contractual payment entitlements between any 2
    financial institutions shall be netted in accordance with, and
    subject to the conditions of, the terms of any applicable
    netting contract.]
        (a) General Rule.--Notwithstanding any other provision of
    State or Federal law (other than paragraphs (8)(E), (8)(F), and
    (10)(B) of section 11(e) of the Federal Deposit Insurance Act
    or any order authorized under section 5(b)(2) of the Securities
    Investor Protection Act of 1970), the covered contractual
    payment obligations and the covered contractual payment
    entitlements between any 2 financial institutions shall be
    netted in accordance with, and subject to the conditions of,
    the terms of any applicable netting contract (except as
    provided in section 561(b)(2) of title 11, United States Code).

               *       *       *       *       *       *       *

        (f) Enforceability of Security Agreements.--The provisions
    of any security agreement or arrangement or other credit
    enhancement related to one or more netting contracts between
    any 2 financial institutions shall be enforceable in accordance
    with their terms (except as provided in section 561(b)(2) of
    title 11, United States Code), and shall not be stayed,
    avoided, or otherwise limited by any State or Federal law
    (other than paragraphs (8)(E), (8)(F), and (10)(B) of section
    11(e) of the Federal Deposit Insurance Act and section 5(b)(2)
    of the Securities Investor Protection Act of 1970).

    SEC. 404. CLEARING ORGANIZATION NETTING.

        [(a) General Netting Rule.--Notwithstanding any other
    provision of law, the covered contractual payment obligations
    and covered contractual payment entitlements of a member of a
    clearing organization to and from all other members of a
    clearing organization shall be netted in accordance with and
    subject to the conditions of any applicable netting contract.]
        (a) General Rule.--Notwithstanding any other provision of
    State or Federal law (other than paragraphs (8)(E), (8)(F), and
    (10)(B) of section 11(e) of the Federal Deposit Insurance Act
    and any order authorized under section 5(b)(2) of the
    Securities Investor Protection Act of 1970), the covered
    contractual payment obligations and the covered contractual
    payment entitlements of a member of a clearing organization to
    and from all other members of a clearing organization shall be
    netted in accordance with and subject to the conditions of any
    applicable netting contract (except as provided in section
    561(b)(2) of title 11, United States Code).

               *       *       *       *       *       *       *

        (h) Enforceability of Security Agreements.--The provisions
    of any security agreement or arrangement or other credit
    enhancement related to one or more netting contracts between
    any 2 members of a clearing organization shall be enforceable
    in accordance with their terms (except as provided in section
    561(b)(2) of title 11, United States Code), and shall not be
    stayed, avoided, or otherwise limited by any State or Federal
    law (other than paragraphs (8)(E), (8)(F), and (10)(B) of
    section 11(e) of the Federal Deposit Insurance Act and section
    5(b)(2) of the Securities Investor Protection Act of 1970).

               *       *       *       *       *       *       *

    SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL BANKS AND
                        UNINSURED FEDERAL BRANCHES AND AGENCIES.

        (a) In General.--Notwithstanding any other provision of
    law, paragraphs (8), (9), (10), and (11) of section 11(e) of
    the Federal Deposit Insurance Act shall apply to an uninsured
    national bank or uninsured Federal branch or Federal agency,
    except that for such purpose--
                (1) any reference to the ``Corporation as
            receiver'' or ``the receiver or the Corporation'' shall
            refer to the receiver of an uninsured national bank or
            uninsured Federal branch or Federal agency appointed by
            the Comptroller of the Currency;
                (2) any reference to the ``Corporation'' (other
            than in section 11(e)(8)(D) of such Act), the
            ``Corporation, whether acting as such or as conservator
            or receiver'', a ``receiver'', or a ``conservator''
            shall refer to the receiver or conservator of an
            uninsured national bank or uninsured Federal branch or
            Federal agency appointed by the Comptroller of the
            Currency; and
                (3) any reference to an ``insured depository
            institution'' or ``depository institution'' shall refer
            to an uninsured national bank or an uninsured Federal
            branch or Federal agency.
        (b) Liability.--The liability of a receiver or conservator
    of an uninsured national bank or uninsured Federal branch or
    agency shall be determined in the same manner and subject to
    the same limitations that apply to receivers and conservators
    of insured depository institutions under section 11(e) of the
    Federal Deposit Insurance Act.
        (c) Regulatory Authority.--
                (1) In general.--The Comptroller of the Currency,
            in consultation with the Federal Deposit Insurance
            Corporation, may promulgate regulations to implement
            this section.
                (2) Specific requirement.--In promulgating
            regulations to implement this section, the Comptroller
            of the Currency shall ensure that the regulations
            generally are consistent with the regulations and
            policies of the Federal Deposit Insurance Corporation
            adopted pursuant to the Federal Deposit Insurance Act.
        (d) Definitions.--For purposes of this section, the terms
    ``Federal branch'', ``Federal agency'', and ``foreign bank''
    have the same meanings as in section 1(b) of the International
    Banking Act of 1978.

    SEC. [407.] 407A. NATIONAL EMERGENCIES.

        The provisions of this subtitle may not be construed to
    limit the authority of the President under the Trading With the
    Enemy Act (50 U.S.C. App. 1 et seq.) or the International
    Emergency Economic Powers Act (50 U.S.C. 1701 et seq.).

               *       *       *       *       *       *       *

                                  ----------

          SECTION 5 OF THE SECURITIES INVESTOR PROTECTION ACT OF 1970

    SEC. 5. PROTECTION OF CUSTOMERS.

        (a) * * *

               *       *       *       *       *       *       *

        (b) Court Action.--
                (1) * * *
                (2) Jurisdiction and powers of court.--
                        (A) * * *

               *       *       *       *       *       *       *

                        (C) Exception from stay.--
                                (i) Notwithstanding section 362 of
                            title 11, United States Code, neither
                            the filing of an application under
                            subsection (a)(3) nor any order or
                            decree obtained by SIPC from the court
                            shall operate as a stay of any
                            contractual rights of a creditor to
                            liquidate, terminate, or accelerate a
                            securities contract, commodity
                            contract, forward contract, repurchase
                            agreement, swap agreement, or master
                            netting agreement, as those terms are
                            defined in sections 101 and 741 of
                            title 11, United States Code, to offset
                            or net termination values, payment
                            amounts, or other transfer obligations
                            arising under or in connection with one
                            or more of such contracts or
                            agreements, or to foreclose on any cash
                            collateral pledged by the debtor,
                            whether or not with respect to one or
                            more of such contracts or agreements.
                                (ii) Notwithstanding clause (i),
                            such application, order, or decree may
                            operate as a stay of the foreclosure
                            on, or disposition of, securities
                            collateral pledged by the debtor,
                            whether or not with respect to one or
                            more of such contracts or agreements,
                            securities sold by the debtor under a
                            repurchase agreement, or securities
                            lent under a securities lending
                            agreement.
                                (iii) As used in this subparagraph,
                            the term ``contractual right'' includes
                            a right set forth in a rule or bylaw of
                            a national securities exchange, a
                            national securities association, or a
                            securities clearing agency, a right set
                            forth in a bylaw of a clearing
                            organization or contract market or in a
                            resolution of the governing board thereof,
                            and a right, whether or not in writing,
                            arising under common law, under law merchant,
                            or by reason of normal business practice.

               *       *       *       *       *       *       *

                                  ----------

                              TRUTH IN LENDING ACT

               *       *       *       *       *       *       *

                        CHAPTER 2--CREDIT TRANSACTIONS

               *       *       *       *       *       *       *

    Sec. 127. Open end consumer credit plans

        (a)  * * *

               *       *       *       *       *       *       *

        (b) The creditor of any account under an open end consumer
    credit plan shall transmit to the obligor, for each billing
    cycle at the end of which there is an outstanding balance in
    that account or with respect to which a finance charge is
    imposed, a statement setting forth each of the following items
    to the extent applicable:
                (1)  * * *

               *       *       *       *       *       *       *

                (11)(A) In the case of an open end credit plan that
            requires a minimum monthly payment of not more than 4
            percent of the balance on which finance charges are
            accruing, the following statement, located on the front
            of the billing statement, disclosed clearly and
            conspicuously: ``Minimum Payment Warning: Making only
            the minimum payment will increase the interest you pay
            and the time it takes to repay your balance. For
            example, making only the typical 2% minimum monthly
            payment on a balance of $1,000 at an interest rate of
            17% would take 88 months to repay the balance in full.
            For an estimate of the time it would take to repay your
            balance, making only minimum payments, call this toll-
            free number: ____________.'' (the blank space to be
            filled in by the creditor).
                (B) In the case of an open end credit plan that
            requires a minimum monthly payment of more than 4
            percent of the balance on which finance charges are
            accruing, the following statement, in a prominent
            location on the front of the billing statement,
            disclosed clearly and conspicuously: ``Minimum Payment
            Warning: Making only the required minimum payment will
            increase the interest you pay and the time it takes to
            repay your balance. Making a typical 5% minimum monthly
            payment on a balance of $300 at an interest rate of 17%
            would take 24 months to repay the balance in full. For
            an estimate of the time it would take to repay your
            balance, making only minimum monthly payments, call
            this toll-free number: ____________.'' (the blank space
            to be filled in by the creditor).
                (C) Notwithstanding subparagraphs (A) and (B), in
            the case of a creditor with respect to which compliance
            with this title is enforced by the Federal Trade
            Commission, the following statement, in a prominent
            location on the front of the billing statement,
            disclosed clearly and conspicuously: ``Minimum Payment
            Warning: Making only the required minimum payment will
            increase the interest you pay and the time it takes to
            repay your balance. For example, making only the
            typical 5% minimum monthly payment on a balance of $300
            at an interest rate of 17% would take 24 months to
            repay the balance in full. For an estimate of the time
            it would take to repay your balance, making only
            minimum monthly payments, call the Federal Trade
            Commission at this toll-free number: ____________.''
            (the blank space to be filled in by the creditor). A
            creditor who is subject to this subparagraph shall not
            be subject to subparagraph (A) or (B).
                (D) Notwithstanding subparagraph (A), (B), or (C),
            in complying with any such subparagraph, a creditor may
            substitute an example based on an interest rate that is
            greater than 17 percent. Any creditor that is subject
            to subparagraph (B) may elect to provide the disclosure
            required under subparagraph (A) in lieu of the
            disclosure required under subparagraph (B).
                (E) The Board shall, by rule, periodically
            recalculate, as necessary, the interest rate and
            repayment period under subparagraphs (A), (B), and (C).
                (F)(i) The toll-free telephone number disclosed by
            a creditor or the Federal Trade Commission under
            subparagraph (A), (B), or (G), as appropriate, may be a
            toll-free telephone number established and maintained
            by the creditor or the Federal Trade Commission, as
            appropriate, or may be a toll-free telephone number
            established and maintained by a third party for use by
            the creditor or multiple creditors or the Federal Trade
            Commission, as appropriate. The toll-free telephone
            number may connect consumers to an automated device
            through which consumers may obtain information
            described in subparagraph (A), (B), or (C), by
            inputting information using a touch-tone telephone or
            similar device, if consumers whose telephones are not
            equipped to use such automated device are provided the
            opportunity to be connected to an individual from whom
            the information described in subparagraph (A), (B), or
            (C), as applicable, may be obtained. A person that
            receives a request for information described in
            subparagraph (A), (B), or (C) from an obligor through
            the toll-free telephone number disclosed under
            subparagraph (A), (B), or (C), as applicable, shall
            disclose in response to such request only the
            information set forth in the table promulgated by the
            Board under subparagraph (H)(i).
                (ii)(I) The Board shall establish and maintain for
            a period not to exceed 24 months following the
            effective date of the Bankruptcy Abuse Prevention and
            Consumer Protection Act of 2001, a toll-free telephone
            number, or provide a toll-free telephone number
            established and maintained by a third party, for use by
            creditors that are depository institutions (as defined
            in section 3 of the Federal Deposit Insurance Act),
            including a Federal credit union or State credit union
            (as defined in section 101 of the Federal Credit Union
            Act (12 U.S.C. 1752)), with total assets not exceeding
            $250,000,000. The toll-free telephone number may
            connect consumers to an automated device through which
            consumers may obtain information described in
            subparagraph (A) or (B), as applicable, by inputting
            information using a touch-tone telephone or similar
            device, if consumers whose telephones are not equipped
            to use such automated device are provided the
            opportunity to be connected to an individual from whom
            the information described in subparagraph (A) or (B),
            as applicable, may be obtained. A person that receives
            a request for information described in subparagraph (A)
            or (B) from an obligor through the toll-free telephone
            number disclosed under subparagraph (A) or (B), as
            applicable, shall disclose in response to such request
            only the information set forth in the table promulgated
            by the Board under subparagraph (H)(i). The dollar
            amount contained in this subclause shall be adjusted
            according to an indexing mechanism established by the
            Board.
                (II) Not later than 6 months prior to the
            expiration of the 24-month period referenced in
            subclause (I), the Board shall submit to the Committee
            on Banking, Housing, and Urban Affairs of the Senate
            and the Committee on Banking and Financial Services of
            the House of Representatives a report on the program
            described in subclause (I).
                (G) The Federal Trade Commission shall establish
            and maintain a toll-free number for the purpose of
            providing to consumers the information required to be
            disclosed under subparagraph (C).
                (H) The Board shall--
                        (i) establish a detailed table illustrating
                    the approximate number of months that it would
                    take to repay an outstanding balance if a
                    consumer pays only the required minimum monthly
                    payments and if no other advances are made,
                    which table shall clearly present standardized
                    information to be used to disclose the
                    information required to be disclosed under
                    subparagraph (A), (B), or (C), as applicable;
                        (ii) establish the table required under
                    clause (i) by assuming--
                                (I) a significant number of
                            different annual percentage rates;
                                (II) a significant number of
                            different account balances;
                                (III) a significant number of
                            different minimum payment amounts; and
                                (IV) that only minimum monthly
                            payments are made and no additional
                            extensions of credit are obtained; and
                        (iii) promulgate regulations that provide
                    instructional guidance regarding the manner in
                    which the information contained in the table
                    established under clause (i) should be used in
                    responding to the request of an obligor for any
                    information required to be disclosed under
                    subparagraph (A), (B), or (C).
                (I) The disclosure requirements of this paragraph
            do not apply to any charge card account, the primary
            purpose of which is to require payment of charges in
            full each month.
                (J) A creditor that maintains a toll-free telephone
            number for the purpose of providing customers with the
            actual number of months that it will take to repay the
            customer's outstanding balance is not subject to the
            requirements of subparagraph (A) or (B).
                (K) A creditor that maintains a toll-free telephone
            number for the purpose of providing customers with the
            actual number of months that it will take to repay an
            outstanding balance shall include the following
            statement on each billing statement: ``Making only the
            minimum payment will increase the interest you pay and
            the time it takes to repay your balance. For more
            information, call this toll-free number: ________.''
            (the blank space to be filled in by the creditor).
                (12) If a late payment fee is to be imposed due to
            the failure of the obligor to make payment on or before
            a required payment due date, the following shall be
            stated clearly and conspicuously on the billing
            statement:
                        (A) The date on which that payment is due
                    or, if different, the earliest date on which a
                    late payment fee may be charged.
                        (B) The amount of the late payment fee to
                    be imposed if payment is made after such date.
        (c) Disclosure in Credit and Charge Card Applications and
    Solicitations.--
                (1)  * * *

               *       *       *       *       *       *       *

                (6) Additional notice concerning ``introductory
            rates''.--
                        (A) In general.--Except as provided in
                    subparagraph (B), an application or
                    solicitation to open a credit card account and
                    all promotional materials accompanying such
                    application or solicitation for which a
                    disclosure is required under paragraph (1), and
                    that offers a temporary annual percentage rate
                    of interest, shall--
                                (i) use the term ``introductory''
                            in immediate proximity to each listing
                            of the temporary annual percentage rate
                            applicable to such account, which term
                            shall appear clearly and conspicuously;
                                (ii) if the annual percentage rate
                            of interest that will apply after the
                            end of the temporary rate period will
                            be a fixed rate, state in a clear and
                            conspicuous manner in a prominent
                            location closely proximate to the first
                            listing of the temporary annual
                            percentage rate (other than a listing
                            of the temporary annual percentage rate
                            in the tabular format described in
                            section 122(c)), the time period in
                            which the introductory period will end
                            and the annual percentage rate that
                            will apply after the end of the
                            introductory period; and
                                (iii) if the annual percentage rate
                            that will apply after the end of the
                            temporary rate period will vary in
                            accordance with an index, state in a
                            clear and conspicuous manner in a
                            prominent location closely proximate to
                            the first listing of the temporary
                            annual percentage rate (other than a
                            listing in the tabular format
                            prescribed by section 122(c)), the time
                            period in which the introductory period
                            will end and the rate that will apply
                            after that, based on an annual
                            percentage rate that was in effect
                            within 60 days before the date of
                            mailing the application or
                            solicitation.
                        (B) Exception.--Clauses (ii) and (iii) of
                    subparagraph (A) do not apply with respect to
                    any listing of a temporary annual percentage
                    rate on an envelope or other enclosure in which
                    an application or solicitation to open a credit
                    card account is mailed.
                        (C) Conditions for introductory rates.--An
                    application or solicitation to open a credit
                    card account for which a disclosure is required
                    under paragraph (1), and that offers a
                    temporary annual percentage rate of interest
                    shall, if that rate of interest is revocable
                    under any circumstance or upon any event,
                    clearly and conspicuously disclose, in a
                    prominent manner on or with such application or
                    solicitation--
                                (i) a general description of the
                            circumstances that may result in the
                            revocation of the temporary annual
                            percentage rate; and
                                (ii) if the annual percentage rate
                            that will apply upon the revocation of
                            the temporary annual percentage rate--
                                        (I) will be a fixed rate,
                                    the annual percentage rate that
                                    will apply upon the revocation
                                    of the temporary annual
                                    percentage rate; or
                                        (II) will vary in
                                    accordance with an index, the
                                    rate that will apply after the
                                    temporary rate, based on an
                                    annual percentage rate that was
                                    in effect within 60 days before
                                    the date of mailing the
                                    application or solicitation.
                        (D) Definitions.--In this paragraph--
                                (i) the terms ``temporary annual
                            percentage rate of interest'' and
                            ``temporary annual percentage rate''
                            mean any rate of interest applicable to
                            a credit card account for an
                            introductory period of less than 1
                            year, if that rate is less than an
                            annual percentage rate that was in
                            effect within 60 days before the date
                            of mailing the application or
                            solicitation; and
                                (ii) the term ``introductory
                            period'' means the maximum time period
                            for which the temporary annual
                            percentage rate may be applicable.
                        (E) Relation to other disclosure
                    requirements.--Nothing in this paragraph may be
                    construed to supersede subsection (a) of
                    section 122, or any disclosure required by
                    paragraph (1) or any other provision of this
                    subsection.
                (7) Internet-based applications and
            solicitations.--
                        (A) In general.--In any solicitation to
                    open a credit card account for any person under
                    an open end consumer credit plan using the
                    Internet or other interactive computer service,
                    the person making the solicitation shall
                    clearly and conspicuously disclose--
                                (i) the information described in
                            subparagraphs (A) and (B) of paragraph
                            (1); and
                                (ii) the information described in
                            paragraph (6).
                        (B) Form of disclosure.--The disclosures
                    required by subparagraph (A) shall be--
                                (i) readily accessible to consumers
                            in close proximity to the solicitation
                            to open a credit card account; and
                                (ii) updated regularly to reflect
                            the current policies, terms, and fee
                            amounts applicable to the credit card
                            account.
                        (C) Definitions.--For purposes of this
                    paragraph--
                                (i) the term ``Internet'' means the
                            international computer network of both
                            Federal and non-Federal interoperable
                            packet switched data networks; and
                                (ii) the term ``interactive
                            computer service'' means any
                            information service, system, or access
                            software provider that provides or
                            enables computer access by multiple
                            users to a computer server, including
                            specifically a service or system that
                            provides access to the Internet and
                            such systems operated or services
                            offered by libraries or educational
                            institutions.

               *       *       *       *       *       *       *

        (h) Prohibition on Certain Actions for Failure To Incur
    Finance Charges.--A creditor of an account under an open end
    consumer credit plan may not terminate an account prior to its
    expiration date solely because the consumer has not incurred
    finance charges on the account. Nothing in this subsection
    shall prohibit a creditor from terminating an account for
    inactivity in 3 or more consecutive months.

    SEC. 127A.  DISCLOSURE REQUIREMENTS FOR OPEN END CONSUMER CREDIT PLANS
                        SECURED BY THE CONSUMER'S PRINCIPAL DWELLING.

        (a) Application Disclosures.--In the case of any open end
    consumer credit plan which provides for any extension of credit
    which is secured by the consumer's principal dwelling, the
    creditor shall make the following disclosures in accordance
    with subsection (b):
                (1)  * * *

               *       *       *       *       *       *       *

                (13) Statement regarding [consultation of tax
            advisor] tax deductibility.--[A statement that the] A
            statement that--
                        (A) the consumer should consult a tax
                    advisor regarding the deductibility of interest
                    and charges under the plan[.]; and
                        (B) in any case in which the extension of
                    credit exceeds the fair market value (as
                    defined under the Internal Revenue Code of
                    1986) of the dwelling, the interest on the
                    portion of the credit extension that is greater
                    than the fair market value of the dwelling is
                    not tax deductible for Federal income tax
                    purposes.

               *       *       *       *       *       *       *

    Sec. 128. Consumer credit not under open end credit plans

        (a) For each consumer credit transaction other than under
    an open end credit plan, the creditor shall disclose each of
    the following items, to the extent applicable:
                (1)  * * *

               *       *       *       *       *       *       *

                (15) In the case of a consumer credit transaction
            that is secured by the principal dwelling of the
            consumer, in which the extension of credit may exceed
            the fair market value of the dwelling, a clear and
            conspicuous statement that--
                        (A) the interest on the portion of the
                    credit extension that is greater than the fair
                    market value of the dwelling is not tax
                    deductible for Federal income tax purposes; and
                        (B) the consumer should consult a tax
                    adviser for further information regarding the
                    deductibility of interest and charges.
        (b)(1)  * * *

               *       *       *       *       *       *       *

        (3) In the case of a credit transaction described in
    paragraph (15) of subsection (a), disclosures required by that
    paragraph shall be made to the consumer at the time of
    application for such extension of credit.

               *       *       *       *       *       *       *

                         CHAPTER 3--CREDIT ADVERTISING

               *       *       *       *       *       *       *

    Sec. 144. Advertising of credit other than open end plans

        (a)  * * *

               *       *       *       *       *       *       *

        (e) Each advertisement to which this section applies that
    relates to a consumer credit transaction that is secured by the
    principal dwelling of a consumer in which the extension of
    credit may exceed the fair market value of the dwelling, and
    which advertisement is disseminated in paper form to the public
    or through the Internet, as opposed to by radio or television,
    shall clearly and conspicuously state that--
                (1) the interest on the portion of the credit
            extension that is greater than the fair market value of
            the dwelling is not tax deductible for Federal income
            tax purposes; and
                (2) the consumer should consult a tax adviser for
            further information regarding the deductibility of
            interest and charges.

               *       *       *       *       *       *       *

    SEC. 147. ADVERTISING OF OPEN END CONSUMER CREDIT PLANS SECURED BY THE
                        CONSUMER'S PRINCIPAL DWELLING.

        (a)  * * *

               *       *       *       *       *       *       *

        (b) Tax Deductibility.--[If any]
                (1) In general.--If any advertisement described in
            subsection (a) contains a statement that any interest
            expense incurred with respect to the plan is or may be
            tax deductible, the advertisement shall not be
            misleading with respect to such deductibility.
                (2) Credit in excess of fair market value.--Each
            advertisement described in subsection (a) that relates
            to an extension of credit that may exceed the fair
            market value of the dwelling, and which advertisement
            is disseminated in paper form to the public or through
            the Internet, as opposed to by radio or television,
            shall include a clear and conspicuous statement that--
                        (A) the interest on the portion of the
                    credit extension that is greater than the fair
                    market value of the dwelling is not tax
                    deductible for Federal income tax purposes; and
                        (B) the consumer should consult a tax
                    adviser for further information regarding the
                    deductibility of interest and charges.

               *       *       *       *       *       *       *

                               Markup Transcript

                                BUSINESS MEETING

                          WEDNESDAY, FEBRUARY 14, 2001

                      House of Representatives,
                                    Committee on the Judiciary,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 10:03 a.m., in
    Room 2141, Rayburn House Office Building, Hon. F. James
    Sensenbrenner (chairman of the committee) presiding.
        Chairman Sensenbrenner. The committee will be in order. The
    Chair notes the presence of a working quorum and, pursuant to
    notice, I now call up the bill H.R. 333, the Bankruptcy Abuse
    Prevention and Consumer Protection Act of 2001, for purposes of
    markup and move its favorable recommendation to the House.
    Without objection, the bill will be considered as read and open
    for amendment at any point. Without objection, the Chair is
    authorized to declare recesses of the committee during
    consideration of the noticed bills. Without objection, all
    members' statements will be included in the appropriate point
    in the record.
        The Chair moves to strike the last word, and recognizes
    himself for 5 minutes.
        Today, we have scheduled for markup two bills, both of
    which have long histories before this committee. H.R. 333, the
    Bankruptcy Abuse Prevention and Consumer Protection Act of 2001
    represents the culmination of more than 3 years of intense and
    incisive consideration by this committee. Over these 3 years,
    the bill has benefitted immensely from the legislative process.
        During the last Congress alone, this committee entertained
    59 amendments over the course of a 5-day markup of H.R. 833,
    which is this bill's predecessor, which included 29 recorded
    votes. Of these amendments, 27 were agreed to. On the floor, 11
    more amendments were considered. Likewise, this bill's
    predecessors on the Senate side also had benefit of an
    extensive and mandatory process. Beginning in November 1999,
    through final passage the following February, more than 250
    amendments were proposed.
        We also need to keep in mind that this bill is the product
    of extensive negotiation and compromise. Shortly after H.R.
    833, as amended, was passed by the Senate last year, members
    and their staffs from both bodies spent nearly 7 months engaged
    in what was initially an informal conference to reconcile
    differences between the bills. The product of these extensive
    negotiations was the conference report that accompanied H.R.
    2415. This legislation was so uncontroversial that it passed
    the House by a voice vote last October. In the Senate, the
    legislation was passed by a veto-proof vote of 70 to 28. But
    for President Clinton's pocket veto in the waning days of the
    last session, the conference report, which is virtually
    identical to H.R. 333, would now be law.
        While I acknowledge that H.R. 333 is not beyond further
    perfection, I am concerned that any further substantive
    amendments to this bill will upset the delicate balance and
    various compromises that have been struck. We must be mindful
    of the fact that the House has registered its unqualified
    support for this bill's progenitors on not just one occasion,
    but four separate times.
        Once we complete the markup of H.R. 333, we will then
    consider H.R. 256 for markup. H.R. 256 reenacts and extends
    chapter 12 of the Bankruptcy Code, a specialized form of
    bankruptcy relief for family farmers. Chapter 12 allows
    eligible family farmers, under the supervision of a bankruptcy
    trustee, to reorganize their debts pursuant to a repayment
    plan. The special attributes of this form of bankruptcy relief
    make it better suited to meet the particularized needs of
    family farmers in financial distress than other forms of
    bankruptcy relief.
        This committee has previously considered and supported the
    extension of chapter 12. In addition, the House, on two
    occasions in the last Congress, passed legislation which would
    have extended chapter 12. Unfortunately, however, the Senate
    did not act on these bills, and chapter 12 expired on July 1,
    2000, as a result. H.R. 256 simply reenacts chapter 12 of the
    Bankruptcy Code, effective retroactively to July 1, 2000. In
    addition, the bill extends this temporary form of bankruptcy
    relief for 11 months, until June 1, 2001. It is important to
    note, however, that H.R. 333 would make chapter 12 a permanent
    form of bankruptcy relief under the Code.
        I now turn to my colleague, the gentleman from Michigan,
    Mr. Conyers, the distinguished ranking member of this
    committee, and ask him if he has any opening remarks. The
    gentleman is recognized for 5 minutes.
        Mr. Conyers. Thank you very much, Mr. Chairman.
        In the spirit of cooperation that has informed the
    Judiciary Committee 107th Congress, I would like to point out
    that both you and I arrived at the same time today here for the
    meeting.
        Chairman Sensenbrenner. And we couldn't be more cooperative
    than that. [Laughter.]
        Mr. Conyers. No, the timing, plus, I have two occasions
    which I got here before you still to my credit. So this intense
    cooperation I hope isn't getting anybody down so soon. I am
    delighted to come to the hearing. We're searching for more of
    our members, some of whom I know have asked to be excused. Mr.
    Delahunt is in another committee.
        But the fact still remains there are a few economic issues
    facing the Congress that are more far-reaching than bankruptcy
    reform. As you all know, more of our citizens come and your
    constituents come into the bankruptcy courts more frequently
    than all of the other Federal courts combined. And at a time of
    record-high consumer debt, our economy slowing, there is no
    doubt that any changes that we make in the Bankruptcy Code will
    have a significant impact on our financial well-being.
        Now, let me say, first and foremost, that I want to
    acknowledge that the bill before us has improved substantially
    over the course of the last two Congresses. I credit that to
    Mr. Gekas, the subcommittee Chair. We modified the means test.
    We've added safe-harbor protections; the bill includes an
    informa pauperis provision, and I commend the majority on this
    committee and the subcommittee chairman for these positive
    improvements. The bill, however, is still flawed, dangerously
    flawed, and I realize that, to me, the best course that those
    of us oppose it should make several focused proposed
    corrections and hope that we can gain a support of a majority
    number of people on this committee.
        The first amendment that I will propose, and hope will be
    favorably considered, deals with the alimony and child support
    because, although we are seeking to enhance the status of
    alimony and child support payments, the problem is that in
    bankruptcy it is impossible to do this if we also enhance the
    status of credit card debt and place it in direct competition
    with alimony and child support payments. And so, members of the
    committee, this is what I seek to correct, precisely. It is
    very important, and I have a proposal that I will shortly offer
    to do that.
        Now, the second thing is dealing with small business
    bankruptcy. We need to make sure that the new requirements are
    rational and that if a deadline cannot be met, for example,
    because of a regulatory process that must take place before the
    plan can be developed, we should give the court discretion to
    waive the deadline. Now, this is not a big, huge item, this is
    a small adjustment that we are asking that be made that will
    have a very large beneficial result.
        And, finally, a couple of technical corrections that in
    calculating the debtor's income in chapter 13, we use actual
    income, not a figure based on a job he no longer has, and that
    lawyers who are bankruptcy petition preparers need not file a
    document stating they are not lawyers.
        And so there you have it. These three proposals, to the
    extent that enough of the members in the committee could reach
    some joinder with me on, I think we may be able to have an even
    better bill than the one that is before us now.
        Thank you.
        Chairman Sensenbrenner. I thank the gentleman from
    Michigan.
        Let me state that in terms of how we are going to proceed
    today, the Chair has noticed a markup for this bill for
    tomorrow morning at 10 o'clock. I think that, given the fact
    that there are no votes tomorrow on the floor of the House,
    members would kind of like to get out of town and go back to
    their districts. However, I would like to be able to wrap this
    up either today or tomorrow. So, with a little bit of
    bipartisan cooperation, perhaps we can get this done today,
    which would eliminate the necessity of having to come back
    tomorrow.
        It is my intention to keep the committee in session until
    about 5:30. Today is Valentine's Day, and I certainly do not
    want to have the Valentines of all of those in the room get
    very angry at this committee during the first markup to keep
    you away from whatever obligations you have arranged for
    yourselves later on tonight. So, if we can work until 5:30,
    with an hour off for lunch, about the time that the votes are
    called on the floor, I think that we will either be able to get
    done or to get almost done and have the ball at least on the
    10-yard line, and I would like to ask the members to be
    cooperative in that respect.
        Without objection, other members' opening statements will
    be placed in the record at this point, and are there any
    amendments?
        Mr. Watt. Mr. Chairman, may I make an inquiry?
        Chairman Sensenbrenner. The gentleman from North Carolina.
        Mr. Watt. Have you all reached some agreement that
    prohibits opening statements by the rest of the members of the
    committee or what----
        Chairman Sensenbrenner. No. No, we have not, Mr. Watt. But,
    you know, let me say that, you know, I have never seen any kind
    of press comment on opening statements by members of the
    committee----
        Mr. Watt. Well, Mr. Chairman, I----
        Chairman Sensenbrenner. I am not going----
        Mr. Watt. With all respect to the chairman, this isn't
    about press. I don't even know that the press is here. This is
    a markup of a bill.
        Chairman Sensenbrenner. If the gentleman wants to move to
    strike the last word, there is no way I can prevent you from
    doing that. But, you know, let me say that if this markup drags
    on, we're going to be here tomorrow, and that's an imposition
    on the other members.
        The gentleman is recognized for 5 minutes.
        Mr. Watt. Thank you, Mr. Chairman. I appreciate the
    chairman's indulgence and the committee's indulgence. I will
    just say at the outset, nothing that I do or say today will be
    done or said for any dilatory purpose, but this is a
    legislative body, this is the Judiciary Committee, and this is
    the place that a bill receives consideration in the most detail
    if it is going to be considered at all. I'm not sure I know
    what the implication to read into the chairman's statement
    about press coverage of opening statements. I don't think I
    have given him any reason to think that every time a camera is
    around I've got to be in front of it, but I do think I have
    given the chairman, and other people on this committee, reason
    to understand that if we are going to engage in a serious
    markup of a serious bill that has serious implications for the
    American people, neither Valentine's Day, nor Christmas, nor
    Hanukkah, nor any other excuses, even concerns about the
    necessity of having to return to Washington tomorrow need deter
    that.
        Now, having said that, let me be clear in what I will try
    to do, as I was with Mr. Gekas last year. I start, unlike some
    people who I have heard talk about this issue, with the
    agreement with a number of my colleagues, that the bankruptcy
    law needs to be revised and reformed in many ways. I know that
    there are a number of people who are gaming the bankruptcy
    system, and I don't like it any more than anybody else,
    regardless of their purported philosophical stripes on this
    committee.
        What I am seeking to do is to offer amendments, and I will
    seek to offer amendments. I have a total of 14, and I am going
    to put the chairman on notice about that at this very moment. I
    may or may not offer all of them, but I have 14 of them in my
    file, and every single one of them is designed, from my
    perspective, to make this bill one that I have the capacity to
    vote for. That's what I'm trying to get to. I support
    bankruptcy reform. The bill that has come out of this
    conference, I do not support. And if the bill is not revised, I
    cannot support it, and therefore I cannot follow through on
    what I have said to my colleagues on the committee or my
    constituents at home about what I feel about bankruptcy reform,
    which is that the Bankruptcy Code does need some reform and
    revisions, but I think this bill does not do it, in a number of
    respects, in the best way, and I think this bill, in a number
    of respects, is counterproductive to what it purports to do and
    will make more bankruptcy litigation, more paperwork, more red
    tape, and discourage a number of people from going into chapter
    13 bankruptcies, rather than encouraging more people to get out
    of chapter 7 and into--into 13, as the bill purports to do.
        So, if the chairman has any illusions about, you know, this
    whole--this, for me, this is not about being bipartisan or
    nonbipartisan. I don't know what bills anybody has struck about
    time to consider this bill, but I came here to work, and I will
    be here to work tomorrow, if we are here to work, if it is
    necessary to try to amend the bill in a way that will get it to
    the point where----
        Chairman Sensenbrenner. The gentleman's time has expired.
        Mr. Watt [continuing]. At the end of the day, I can
    support----
        Chairman Sensenbrenner. The gentleman's time has expired.
        Mr. Watt [continuing]. Or vote against the bill.
        Chairman Sensenbrenner. Are there any amendments?
        Mr. Conyers. I have one.
        Chairman Sensenbrenner. The gentleman from Michigan.
        The clerk will report the amendment.
        Mr. Conyers. The Alimony and Child Support Amendment.
        The Clerk. Amendment to H.R. 333 offered by Mr. Conyers and
    Ms. Waters, page 144, line 14, strike the period----
        Mr. Conyers. I ask unanimous consent the amendment be
    considered as read.
        Chairman Sensenbrenner. Without objection, so ordered. And
    the gentleman is recognized for 5 minutes.
        Mr. Conyers. Members of the committee and Mr. Chairman, I
    offer this amendment on behalf of myself and Representative
    Maxine Waters, and we offer the amendment because of the bill's
    adverse impact on payment of domestic support obligations.
        As is known, the bill increases the amount of funds being
    paid to unsecured creditors, and such payments will often come
    at the expense of other less-aggressive creditors, such as
    women and children owed alimony and child support. This problem
    is by no means insignificant, given that an estimated quarter
    of a million to 325,000 bankruptcy cases involve child support
    and alimony orders during the most recent years. In particular,
    by making significant amounts of credit card debt
    nondischargeable, more of these debts will survive bankruptcy.
    And, of course, outside the bankruptcy court is precisely the
    arena where sophisticated credit card companies have the
    greatest advantages.
        While the bankruptcy court provides a strict set of
    priority and payment rules, generally seeking to provide equal
    treatment of creditors with similar legal rights, State law
    collection is far more akin to survival of the fittest.
    Whichever creditor engages in the most aggressive tactic, be it
    through repeated collection demands and letters cutting off
    access to future credit, garnishment of wages or foreclosure on
    asset is the one most likely to be repaid.
        And that's why the women and children's advocacy groups
    have come out in opposition to the bill. The National Women's
    Law Center has said the child support provisions of the bill
    fail to ensure that the increased rights the bill would give to
    commercial creditors do not come at the--should not come at the
    expense of families owed support. The Governing Council of the
    Family Law Section of the ABA has written that if credit card
    debt is added to the current list of items that are not
    dischargeable after a bankruptcy of a support payer, the
    alimony and child support recipient will be forced to compete
    with the well-organized, well-financed, obscenely profitable
    credit card companies, and it's not a fair fight, and it's one
    that women and children who rely on support will usually lose.
        And so it's not just the advocacy groups who flag the
    problem, the Congressional Research Service, nonpartisan, has
    written that child support and credit card obligations could be
    pitted against each other. Both the domestic creditor and the
    commercial credit card creditor could pursue the debtor and
    attempt to collect from postpetition assets, but not in the
    bankruptcy court.
        So all this amendment does is respond to the problem by
    providing a creditor should not receive any greater protections
    under the bill with regard to luxury good purchases, ATM debt
    or credit card debt used to pay taxes if it would impair the
    debtor's ability to pay alimony and child support. The
    amendment does not--does nothing to impair the present position
    of the creditors. It merely states that before we give that
    greater protection than they now enjoy--than they now enjoy, we
    need to make sure that alimony and child care are protected.
    Surely this is something that most of us can agree is fair and
    makes good sense.
        Thank you.
        [The Amendment to H.R. 333 Offered by Mr. Conyers and Ms.
    Waters follows:]

        Chairman Sensenbrenner. Would the gentleman yield back the
    balance of his time?
        Let the Chair say that the lights on the timer on the desk
    are in the process of being repaired. The timer is working up
    at the chairman's desk. For what purpose does the gentleman
    from Pennsylvania seek recognition?
        Mr. Gekas. I move to strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Gekas. I thank the chair.
        One of the answers to the gentleman from Michigan is found
    in his own words, in his opening statement, that to the effect
    that this bill, which he acknowledges is better than the one we
    started with from his point of view, has taken great endeavors
    over the past two terms to establish the primacy of domestic
    support and women's and children's issues and has, in various
    ways and in various provisions, established and reestablished
    the primary consideration of making sure that support payments
    reached their destinations as a priority.
        Therefore, the language that he now employs in these
    amendments, although they go to a different portion of the
    bankruptcy concepts of the 60 days, and 90 days, and 80 days,
    and 70 days, provisions that have been historically cutoff
    marks for bankruptcy, do not, in any way, enhance the situation
    that we've already cured.
        I ask the members to vote no on this amendment, but I have
    asserted to the gentleman from Michigan, so that everyone will
    know, that I am willing again to, between now and the floor
    action on the House--in the House chamber, to review this with
    him, with a view to possibly agreeing on some measure of solace
    to him or compromise even further. I believe that we have
    compromised and negotiated sufficiently to assure the American
    people that the primary obligation of support is preserved.
        Mr. Conyers. Would the gentleman yield for my last comment?
        You see the problem, George, is when both are competing
    equally, they--the mother and the children--are at a
    disadvantage because they don't have the professional law firms
    that regularly handle this. They come in one by one and get
    their socks beat off. And all I am saying is that we ought to
    take that into consideration, since we both profess to be
    concerned about maintaining this stringent rule about
    protecting child support and alimony orders.
        Mr. Gekas. Seizing back my time. The concerns that the
    gentleman has I think are wrapped up in the notion that and the
    fact that support obligations are part of another part of the
    court system in which they take extra pains in support court
    and in domestic court and in all of the penal provisions that
    apply to collection of support. You say that the people are
    without help, that the domestic seekers of support are without
    help. They've got an entire court system that is available to
    them and is imbedded, right from the start, in our system of
    bankruptcy, so that they are protected even by more than an
    ordinary consumer lawyer that might appear for that individual
    to protect one's life, there's an entire system already set up
    to guarantee support flowing to those who will be benefitted by
    it. I ask for a no vote on the amendment.
        Mr. Watt. Mr. Chairman?
        Chairman Sensenbrenner. Does the gentleman yield back the
    balance of his time?
        Mr. Gekas. I do.
        Chairman Sensenbrenner. For what purpose does the gentleman
    from North Carolina seek recognition?
        Mr. Watt. I move to strike the last word in support of
    the----
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Watt. Thank you, Mr. Chairman.
        I want to rise in support of Mr. Conyers' amendment. Mr.
    Gekas, of course, is right that there is a separate system for
    child support. It is--that separate system was put in place
    because we have placed a premium and value on having a child
    support system, but it doesn't do any good to have a domestic
    court, State court or a child support enforcement mechanism or
    whatever system we have in place to protect and secure the
    obtaining of a judgment for child support if that judgment, if
    that agreement, if that system is not going to be given some
    sanctity above and beyond an automobile loan or some other kind
    of loan that we don't think is as important in the bankruptcy
    context.
        Mr. Gekas is absolutely right that if you are not in the
    bankruptcy court, there is plenty of protection and system to
    try to make sure of that, and the reason for that, of course,
    is that we, we value--that's a reflection of the values that
    State court and even interstate mechanisms have now been put in
    place to guarantee collection of child support, but if we
    undermine that in the bankruptcy court by allowing somebody to
    just go in and declare bankruptcy and then put automobile loans
    and luxury goods up to $250 or whatever we decide is going to
    go into some kind of preferred category, which we are doing
    over and over in this bill, putting more and more things into a
    preferred category, then basically what we've done is set up a
    system where more people, at the end of the day, are competing
    on a preferred basis with child support.
        And this amendment is a clear and unequivocal statement
    that when that occurs, if it occurs, if those other competing
    creditors are going to put domestic support, child support at a
    disadvantage and child support is going to be compromised in
    any way, we want to continue to give it the same value and
    recognition that we have, in fact, given it outside the
    bankruptcy context for good and valid public policy reasons.
        I'm not sure what you can--what the--what the gentleman's
    objection to this language is. He says he supports making sure
    that child support gets paid. That's been all the rhetoric
    throughout this process. I don't know how much clearer you
    could be playing around with the words between now and the
    floor. This is the committee that this bill is supposed to be
    considered and marked up in, and I assure you that if we don't
    put this language in this bill in this committee, it will never
    see the light of day again between now and the floor or on the
    floor.
        If we value child support, then we should support the
    amendment. It does no disadvantage, no harm to any other values
    that are purported to be advanced by this bill. What it says is
    what we have said over and over again in a number of different
    contexts, that child support is our number one priority.
        I yield to Mr. Conyers.
        Mr. Conyers. Thank you for an excellent statement, Mr.
    Watt. What you have said about the urgency of this passing now
    or never is so true that any future negotiations with us, and
    the subcommittee chairman, and to see how things go in Rules,
    and out on the floor and all of that, if this provision isn't
    in now, we all, realistically, know that it's not going to ever
    appear anywhere else again.
        Chairman Sensenbrenner. The gentleman's time has expired.
        Mr. Delahunt. Mr. Chairman?
        Chairman Sensenbrenner. Who seeks recognition?
        Mr. Delahunt. Mr. Chairman?
        Chairman Sensenbrenner. The gentleman from Massachusetts?
        Mr. Delahunt. I move to strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Delahunt. I will be very brief. I wanted to associate
    myself with the remarks by the gentleman from North Carolina.
    And I guess my question is what is there, and I would direct it
    to the former Chair of the subcommittee, what is there in the
    language that he objects to at this particular point in time?
        Again, there seems to be rhetoric that would prioritize
    clearly the payment of child support. I think this makes it
    very clear and very unequivocal, and as the gentleman from
    North Carolina stated, it gives it a priority so that it is not
    competing with other priorities that the bill, in large, now
    creates as priorities.
        Mr. Gekas. Does the gentleman want me to yield?
        Mr. Delahunt. No, I'm yielding to the gentleman, in terms
    of responding.
        Mr. Gekas. I might yield an answer to you.
        Mr. Delahunt. I have the time----
        Mr. Gekas. I say----
        Mr. Delahunt. Yes?
        Mr. Gekas. I say to the gentleman that we've already
    established the mechanisms, in and out of bankruptcy, to
    guarantee the primacy of support. When a debtor is about to
    declare bankruptcy, the bankruptcy--the lawyer who will be
    representing or the court that will be representing the spouse
    or the custodial parent will make certain that support is
    forthcoming through the regular channels of support----
        Mr. Delahunt. Outside of the bankruptcy court.
        Mr. Gekas. Yes, as part and as part and parcel----
        Mr. Delahunt. We----
        Mr. Gekas. In fact, our bill, our bill creates the----
        Mr. Delahunt. Reclaiming my time, the avenues that the
    gentleman alludes to outside of the bankruptcy court is when an
    individual who is responsible for child support payment has the
    ability to pay. That has nothing at all to do with bankruptcy,
    whether it be a family court or a criminal court. Those avenues
    are available when an individual is not in bankruptcy. It is
    those particular courts that calculate the level of support. It
    has nothing whatsoever to do with an individual who finds
    himself in bankruptcy. So it really--they are absolutely,
    totally unrelated.
        I yield back to the gentleman.
        Mr. Gekas. The gentleman fails to connect dots here. Here's
    an individual who is under an obligation by another court to
    pay $50 a week support. All of a sudden he decides he is going
    to go bankrupt because of the overwhelming burden of debts
    otherwise accumulated. What in the world does the gentleman
    believe will happen to that support matter, that it dissolves
    in favor of creditors? It stays in place. And throughout the
    bankruptcy proceeding----
        Mr. Delahunt. Reclaiming my time. That support payment
    comes into competition with other priorities that are created
    by the bill before us.
        Mr. Gekas. Well, if that's the problem----
        Mr. Delahunt. I yield to the gentleman from North Carolina.
        Mr. Watt. Let me, let me point out to the members of the
    committee exactly what this is all about. Look at where this
    amendment is proposed to be inserted. It's inserted behind a
    provision dealing with luxury goods. We're spend--we're giving
    priority up to $250 to luxury goods on the same basis that
    we're giving the child support. That's crazy. That is insane.
    We are extending, and that has never been in the bankruptcy
    bill before. I mean, that wasn't the law. We are adding to the
    people that we are giving a preference to under this bill.
        The same section, on page 144, gives priority up to $750 to
    extensions of consumer credit under an open-end credit plan.
    That's money that you get out of an ATM machine. I mean, you
    don't even know what it's going for. Basically, what you said,
    if the bank or you got some money out of an ATM machine, up to
    $750, we're going to give you the same priority that we give to
    children. This is crazy. It is counterproductive to the exact
    objectives that the sponsors and supporters of this bill, and
    why is that? It's because all of these people have come forward
    and said, ``Hey, put us on the gravy train.'' It's kind of like
    this tax bill. They just--this is the train that's moving out,
    and everybody wants priority, and we've given everybody
    priority----
        Chairman Sensenbrenner. The time of the gentleman from
    Massachusetts has expired.
        Mr. Watt [continuing]. Now on the same basis that children
    have priority.
        Chairman Sensenbrenner. The time of the gentleman from
    Massachusetts has expired.
        The question is on the adoption of amendment no. 1 offered
    by the gentleman from Michigan.
        Mr. Conyers. Recorded vote, sir.
        Chairman Sensenbrenner. All of those in favor will signify
    by saying aye, as your names are called; those opposed, no, and
    the clerk will call the roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. I----
        The Clerk. Mr. Gekas, aye.
        Pardon me?
        Mr. Gekas. I am here voting no. [Laughter.]
        The Clerk. Mr. Gekas, no. Mr. Coble?
        [No response.]
        The Clerk. Mr. Smith?
        Mr. Smith. No.
        The Clerk. Mr. Smith, no. Mr. Gallegly?
        [No response.]
        The Clerk. Mr. Goodlatte?
        Mr. Goodlatte. No.
        The Clerk. Mr. Goodlatte, no. Mr. Chabot?
        Mr. Chabot. No.
        The Clerk. Mr. Chabot, no. Mr. Barr?
        Mr. Barr. No.
        The Clerk. Mr. Barr, no. Mr. Jenkins?
        [No response.]
        The Clerk. Mr. Hutchinson?
        Mr. Hutchinson. No.
        The Clerk. Mr. Hutchinson, no. Mr. Cannon?
        [No response.]
        The Clerk. Mr. Graham?
        Mr. Graham. No.
        The Clerk. Mr. Graham, no. Mr. Bachus?
        Mr. Bachus. No.
        The Clerk. Mr. Bachus, no. Mr. Scarborough?
        [No response.]
        The Clerk. Mr. Hostettler?
        Mr. Hostettler. No.
        The Clerk. Mr. Hostettler, no. Mr. Green?
        Mr. Green. No.
        The Clerk. Mr. Green, no. Mr. Keller?
        Mr. Keller. No.
        The Clerk. Mr. Keller, no. Mr. Issa?
        [No response.]
        The Clerk. Ms. Hart?
        Ms. Hart. No.
        The Clerk. Ms. Hart, no. Mr. Flake?
        [No response.]
        The Clerk. Mr. Conyers?
        Mr. Conyers. Aye.
        The Clerk. Mr. Conyers, aye. Mr. Frank?
        [No response.]
        The Clerk. Mr. Berman?
        [No response.]
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        Mr. Nadler. Aye.
        The Clerk. Mr. Nadler, aye. Mr. Scott?
        [No response.]
        The Clerk. Mr. Watt?
        Mr. Watt. Aye.
        The Clerk. Mr. Watt, aye. Ms. Lofgren?
        Ms. Lofgren. Aye.
        The Clerk. Ms. Lofgren, aye. Ms. Jackson Lee?
        Ms. Jackson Lee. Aye.
        The Clerk. Ms. Jackson Lee, aye. Ms. Waters?
        [No response.]
        The Clerk. Mr. Meehan?
        Mr. Meehan. Aye.
        The Clerk. Mr. Meehan, aye. Mr. Delahunt?
        Mr. Delahunt. Aye.
        The Clerk. Mr. Delahunt, aye. Mr. Wexler?
        [No response.]
        The Clerk. Ms. Baldwin?
        Ms. Baldwin. Aye.
        The Clerk. Ms. Baldwin, aye. Mr. Weiner?
        Mr. Weiner. Aye.
        The Clerk. Mr. Weiner, aye. Mr. Schiff?
        [No response.]
        The Clerk. Mr. Chairman?
        Chairman Sensenbrenner. No.
        The Clerk. Mr. Chairman, no.
        Chairman Sensenbrenner. Are there other members who wish to
    cast their votes? The gentlewoman from California?
        The Clerk. Ms. Waters?
        Chairman Sensenbrenner. The gentlewoman from California,
    the clerk did not get your vote. The gentlewoman from
    California?
        Ms. Waters. Aye.
        The Clerk. Ms. Waters, aye.
        Chairman Sensenbrenner. The gentleman from Utah?
        Mr. Cannon. No.
        Chairman Sensenbrenner. Are there other members who wish to
    record their vote or to change their votes?
        [No response.]
        Chairman Sensenbrenner. Hearing none, the clerk will
    report.
        The Clerk. Mr. Chairman, there are 10 ayes and 14 nays.
        Chairman Sensenbrenner. The amendment is not agreed to.
        Are there further amendments? The gentleman from Michigan?
        [No response.]
        Mr. Watt. Mr. Chairman?
        Chairman Sensenbrenner. The gentleman from North Carolina.
        Mr. Watt. Mr. Chairman, I have an amendment at the desk.
        Chairman Sensenbrenner. The clerk will report the
    amendment.
        Mr. Watt. It's Watt No. 4.
        The Clerk. Amendment to H.R. 333 offered by Mr. Watt of
    North Carolina.
        Page 144, after line 14, insert the following [and make
    such technical and conforming changes as may be appropriate]:
        Chairman Sensenbrenner. Without objection, the amendment is
    considered as read, and the gentleman from North Carolina is
    recognized for 5 minutes.
        Mr. Watt. Thank you, Mr. Chairman.
        This is not the order that I would plan to offer my
    amendments in, but I think this relates really to the same
    point that the last amendment did and illustrates the point
    that I was trying to make to the members of the committee about
    how this bill has become, in many ways, counterproductive to
    the purposes that many have said that they were setting out to
    achieve.
        On page 143, section 310, of the bill starts to define the
    limitations on luxury goods and other items that basically are
    given priority in a bankruptcy proceeding. It limits to $250
    luxury goods, which I think is appropriate. I don't think it
    ought to be on the same basis as child support, but at least it
    makes some sense to have a limitation, but--and it makes an
    exception at the end for luxury goods that are necessary for
    the support or maintenance of the debtor or a dependent of the
    debtor, which I think is good language. That's all the way over
    on page 144.
        The next part of this, though, talks about cash advances
    aggregating more than $750. That means that up to $750 you get
    the priority if those advances were obtained within 70 days
    before the order for relief is granted, and unfortunately there
    is no similar exemption for that $750 that subordinates it to
    payments for support or maintenance of the debtor or a
    dependent of the debtor because if you look on page 144, lines
    11 through 14, the limitation that subordinates luxury goods up
    to $250 to reasonably necessary support and maintenance of the
    debtor, there is no similar limitation for the $750 that's been
    advanced. Even if I went to the ATM and got the $750 to try to
    pay child support, there is no recognition of that.
        Basically, what the credit card companies have succeeded in
    doing, and I'm not an opponent of credit card companies, I just
    think we've got to be reasonable in the approach we are using
    here, and what this amendment would do is make that $750-credit
    card advance, that cash advance of extension of consumer credit
    under an open-end credit plan subject to the same limitation
    that we have placed on luxury goods if a person can come into
    the bankruptcy court and show that that advance, that credit
    card extension was for the purpose of support and maintenance
    of their children.
        So this further illustrates how we have gotten this whole
    thing out of whack. And if you can't support the general
    language that gets everything subject to providing child
    support for children who need it, at least we ought to make
    luxury goods and these cash advances subject to that child
    support payment.
        And I would, therefore, encourage my colleagues to support
    and vote for this amendment, and I yield back the balance of my
    time.
        [The Amendment to H.R. 333 Offered by Mr. Watt follows:]

        Chairman Sensenbrenner. The gentleman from Pennsylvania?
        Mr. Gekas. I rise to state my opposition to the amendment.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Gekas. Again, it's difficult to explain, I believe, or
    it's my failure, but the current law in these luxury item
    provisions to which the gentleman refers, the current law gives
    primacy to support payments, the current law, which we leave
    untouched, absolutely untouched in our bill. All we do in the
    sections that you are corresponding here is change the amounts
    that would constitute fraud if perpetrated within a certain
    number or period of days before bankruptcy. That's all we do.
    We do not affect the obligation to make sure that those items
    do not include goods or services reasonably acquired for the
    support or maintenance of the debtor or dependent of the
    debtor.
        So the rhetoric which is accused handily by the members of
    the minority as to--or the proponents of this bill is the
    rhetoric that you're using. You're using rhetoric to say, ``Oh,
    my gosh, how can we take support and put it behind luxury
    items?'' That's, that's what is inane.
        Mr. Watt. Would the gentleman yield?
        Mr. Gekas. It's my time.
        Mr. Watt. I'm asking if the gentleman would yield.
        Mr. Gekas. Let me finish my statement.
        I'm saying to you, and I repeat, for the benefit of all of
    the members, we do not, I repeat, we do not harm the current
    law which gives primacy to support payments vis-a-vis the 60--
    the prior to bankruptcy period of time, when someone goes to
    the extreme to try to defraud the system, to game the system.
        The gentleman from North Carolina is an opponent of
    individuals who game the system. These provisions are there to
    prevent gaming the system, and they are accompanied by strong
    language that says when they do try to game the system, even if
    they do try to game the system, if they use part of that money,
    which they have gamed, for support payments, then that will not
    be dischargeable.
        So I am saying that this is rhetoric, unaccompanied by
    logic, that you are attending to this provision.
        Mr. Watt. Will the gentleman yield?
        Mr. Gekas. Yes, I'll yield.
        Mr. Watt. I thank the gentleman for yielding.
        First of all, let me clear I have never said that you have
    elevated these things above support payment. What I said is
    that you put them on the same basis. You expanded the number of
    things you put on the same basis as support payment, and in the
    process of doing that, unless you make it clear that if you
    have to come to a choice between these things and support
    payments, that support payments take priority, then you have
    done a disservice to support payments.
        Now, if the gentleman would just look at lines 11 through
    14, where you make luxury goods or services subject to support
    payments. Why is it not logical to make the $750-credit card
    advance subject to the same support payments if they come into
    conflict with each other? Just--that's the only, only time at
    which this would be applicable. Why would you not make that
    same exception for credit card advances? You've made it for
    luxury goods.
        Mr. Gekas. Reclaiming my time. I do not want to venture on
    the same treadmill as the gentleman from North Carolina in
    repeating and repeating what is--happens not to be the case.
    The current law, I repeat, on this luxury items is unaffected.
    It is unaffected except for the numerical figure that is now
    applied in our bill to supplant that which currently exists.
        Therefore, the primacy of support payments, if an
    individual contemplates bankruptcy, so he is going to game the
    system, he immediately goes out and gets cash advances for
    $750. All of a sudden the red light goes up when he files for
    bankruptcy. If he did this within a short period of time before
    filing bankruptcy, it should be disallowed. But on second
    thought, if he used part of that money for support of the
    dependent or the spouse or someone relying on that support,
    then there is no penalty. It does not constitute fraud. That's
    the current law, and all we do is substitute different money
    figures.
        Mr. Nadler. Would the gentleman yield for questions?
        Mr. Gekas. I yield back the balance of my time.
        Mr. Nadler. Would the gentleman yield for questions?
        Mr. Gekas. Yes. Yes, I'll----
        Mr. Nadler. I don't understand what you just said, George.
        If you used part of that for the----
        Chairman Sensenbrenner. The time of the gentleman has
    expired.
        Mr. Nadler. Mr. Chairman?
        Chairman Sensenbrenner. For what purpose does the gentleman
    from New York seek recognition?
        Mr. Nadler. Strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Nadler. Mr. Chairman, what this amend--what the bill
    does is to change--what's the time period of it?--is to change
    $1,075 within 60 days to $750 within 70 days. So it's a much
    smaller amount of money. It's $10 a day.
        But second of all what it does is--let me ask a question.
    Let's assume, let's assume that this person is not fraudulent,
    that this person is in very good faith, that this person has a
    dozen different credit card debts at 6- or 7- or 8- or 10-
    percent interest or whatever it is, and in an attempt to avoid
    bankruptcy, gets in the mail one of these promotions that says,
    ``Consolidate your debts. Join up on First Card, National
    Citibank, for 2.99 percent,'' and he consolidates his debts. He
    takes that credit card, and he takes a thousand dollars on the
    credit card, all of which is existing debt. He transfers it
    from five different credit cards to one just to get a lower
    interest rate.
        It seems to me that he's taking cash advances aggregating,
    that he meets the definition here, and he's presumptively
    fraudulent.
        Mr. Gekas. Would the gentleman yield?
        Mr. Nadler. Yes, I will yield.
        Mr. Gekas. I haven't the slightest idea of what you just
    described in your hypothetical.
        Mr. Nadler. Well, I described it very simply.
        Mr. Gekas. And it's a--what I, for the purpose of this
    debate and for the purpose of getting on with the process of
    this committee, I reassert that the changes that were made in
    the bill with respect to the 70 days prior, 90 days prior and
    so forth, were chiefly monetary in aspect, and they did not
    affect at all the current demand by the language----
        Mr. Nadler. Reclaiming my time. I don't understand, if it
    doesn't affect it, why it's in here. But let me give a better
    example, perhaps, that will be more understandable.
        Seven hundred and fifty dollars in 70 days is about $10 a
    day. So a person who is spending $10 a day on Pampers and baby
    food, and milk for the baby, is presumed to be a fraud--and is
    using a credit card to buy it--is presumed to be having so much
    credit card within that 70 days that he's obviously doing this
    in contemplation of bankruptcy, and it's fraudulent. And,
    frankly, that doesn't make a heck--and then he's got to hire a
    lawyer to defend himself, and it doesn't make a heck of a lot
    of sense to me. I just hope we pass this amendment so this bill
    is a little less egregiously unfair, though still egregiously
    unfair in most of the----
        Mr. Watt. Would the gentleman yield?
        Mr. Nadler. I'll yield.
        Mr. Watt. Let me be clear to Mr. Gekas and to the members
    of the committee. We are not trying to do away with the luxury
    goods exception. We're not trying to do away with the $750. I
    actually think you have--I agree with you. You have moved the
    bill in a good direction. The problem is that what you have
    done, in the process, is put luxury goods up to $250 and $750
    worth of cash advances on the same basis that child support is
    being put if they--and I don't have any problem with that if
    a--if a debtor can pay all three of those things, it's fine.
        But when you come to a fork in a road and that debtor's
    money is not enough to pay but one of those things, all we're
    saying--we're not trying to do away with the language. I mean,
    I didn't move--the amendment doesn't take the language out. All
    it says is when they come into competition with each other,
    child support ought to take priority, and that's exactly what
    you have said in lines 11 through 14 about luxury goods up to
    $250. Why wouldn't the same rationale apply to credit card
    debt?
        Mr. Nadler. Reclaiming my time.
        The key point that the gentleman from Pennsylvania misses
    on this whole question of child support priority, he said again
    a few minutes ago, we give priority to child support. Sure, you
    do, but the priority given in this bill to child support is
    only in bankruptcy court. Once you make these other debts
    nondischargeable, as child support already is, the competition
    for the mother to collect, the competition between the mother
    and the Chemical Bank lawyer to collect between child support
    and nondischargeable debt is after the debt is discharged, you
    are no longer in bankruptcy court. You are in State court, and
    there is no such thing as a priority----
        Chairman Sensenbrenner. The time of the gentleman from New
    York----
        Mr. Nadler [continuing]. In State court----
        Chairman Sensenbrenner [continuing]. Has expired.
        Mr. Nadler. So it's all irrelevant.
        I yield back the balance of my time.
        Chairman Sensenbrenner. The question is on the amendment
    offered by the gentleman from North Carolina, Mr. Watt.
        Those in favor will say aye.
        Those opposed will say no.
        The noes appear to have it.
        Mr. Watt. Mr. Chairman, I request a recorded vote.
        Chairman Sensenbrenner. Roll call is ordered. Those in
    favor of the Watt amendment will vote aye, as your names are
    called; those opposed will vote no, and the clerk will call the
    roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. I am present, voting no. [Laughter.]
        The Clerk. Mr. Coble?
        [No response.]
        The Clerk. Mr. Smith?
        Mr. Smith. No.
        The Clerk. Mr. Smith, no. Mr. Gallegly?
        [No response.]
        The Clerk. Mr. Goodlatte?
        Mr. Goodlatte. No.
        The Clerk. Mr. Goodlatte, no. Mr. Chabot?
        Mr. Chabot. No.
        The Clerk. Mr. Chabot, no. Mr. Barr?
        Mr. Barr. No.
        The Clerk. Mr. Barr, no. Mr. Jenkins?
        [No response.]
        The Clerk. Mr. Hutchinson?
        Mr. Hutchinson. No.
        The Clerk. Mr. Hutchinson, no. Mr. Cannon?
        Mr. Cannon. No.
        The Clerk. Mr. Cannon, no. Mr. Graham?
        Mr. Graham. No.
        The Clerk. Mr. Graham, no. Mr. Bachus?
        [No response.]
        The Clerk. Mr. Scarborough?
        [No response.]
        The Clerk. Mr. Hostettler?
        Mr. Hostettler. No.
        The Clerk. Mr. Hostettler, no. Mr. Green?
        Mr. Green. No.
        The Clerk. Mr. Green, no. Mr. Keller?
        Mr. Keller. No.
        The Clerk. Mr. Keller, no. Mr. Issa?
        [No response.]
        The Clerk. Ms. Hart?
        Ms. Hart. No.
        The Clerk. Ms. Hart, no. Mr. Flake?
        [No response.]
        The Clerk. Mr. Conyers?
        Mr. Conyers. Aye.
        The Clerk. Mr. Conyers, aye. Mr. Frank?
        [No response.]
        The Clerk. Mr. Berman?
        [No response.]
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        Mr. Nadler. Aye.
        The Clerk. Mr. Nadler, aye. Mr. Scott?
        [No response.]
        The Clerk. Mr. Watt?
        Mr. Watt. Aye.
        The Clerk. Mr. Watt, aye. Ms. Lofgren?
        Ms. Lofgren. Aye.
        The Clerk. Ms. Lofgren, aye. Ms. Jackson Lee?
        Ms. Jackson Lee. Aye.
        The Clerk. Ms. Jackson Lee, aye. Ms. Waters?
        Ms. Waters. Aye.
        The Clerk. Ms. Waters, aye. Mr. Meehan?
        [No response.]
        The Clerk. Mr. Delahunt?
        [No response.]
        The Clerk. Mr. Wexler?
        [No response.]
        The Clerk. Ms. Baldwin?
        [No response.]
        The Clerk. Mr. Weiner?
        Mr. Weiner. Aye.
        The Clerk. Mr. Weiner, aye. Mr. Schiff?
        Mr. Schiff. Aye.
        The Clerk. Mr. Schiff, aye. Mr. Chairman?
        Chairman Sensenbrenner. No.
        The Clerk. Mr. Chairman, no.
        Chairman Sensenbrenner. Are there members in the room who
    wish to record their vote or change their vote?
        The gentleman from California, Mr. Gallegly?
        Mr. Gallegly. No.
        Chairman Sensenbrenner. The gentleman from Alabama, Ms.
    Bachus?
        Mr. Bachus. No.
        Chairman Sensenbrenner. Any further members who wish to
    record their vote or change their vote? If not, the clerk will
    report.
        The Clerk. Mr. Chairman, there are 8 ayes and 15 nays.
        Chairman Sensenbrenner. And the amendment is not agreed to.
        Are there further amendments?
        Mr. Conyers. Mr. Chairman?
        Chairman Sensenbrenner. The gentleman from Michigan, Mr.
    Conyers?
        Mr. Conyers. Mr. Chairman, I'd like to call up my business
    amendment now.
        Chairman Sensenbrenner. Is there a number on your amendment
    so the clerk is----
        Mr. Conyers. No, it's known as the business amendment.
        Chairman Sensenbrenner. The clerk will report the Conyers
    business amendment.
        Mr. Conyers. It's Conyers and Nadler, by the way.
        It's the one that begins, ``Page 181, line 3.'' On the top
    is ``Conyers 002.''
        Chairman Sensenbrenner. The clerk will report the
    amendment.
        The Clerk. Amendment to H.R. 333 offered by Mr. Conyers,
    page 181, line 3, strike the close----
        Chairman Sensenbrenner. Without objection, the amendment
    will be considered as read, and the gentleman from Michigan
    will be recognized for 5 minutes.
        Mr. Conyers. Thank you, Mr. Chairman.
        I'd like to ask unanimous consent to have this amendment
    denominated the Conyers and Nadler amendment.
        Chairman Sensenbrenner. Without objection.
        Mr. Conyers. Thank you.
        Ladies and gentlemen, this amendment amends several
    provisions of the bill that provides for strict new deadlines
    and allows them to be extended where it can be shown that the
    reason for the delay is due to circumstances beyond the
    debtor's control. It also specifies that the new provisions
    exempting asset-backed securities from bankruptcy only apply to
    true sales.
        Now, as it presently stands, the legislation before us
    would completely alter the manner in which small businesses and
    real estate concerns may reorganize under the bankruptcy laws.
    In particular, it imposes a whole host of arbitrary deadlines
    designed to speed up the bankruptcy process. These provisions
    have drawn the strong opposition of the Small Business
    Administration Office of Advocacy and organized labor. The AFL-
    CIO has correctly warned that the small business provisions
    will threaten jobs by placing substantial procedural barriers
    in the way of small business's access to the protections of
    chapter 11.
        Now, I've stated before that I agree that we need to
    streamline and expedite small business cases, but what's
    happened again is that in our haste, we have made new
    requirements that are now onerous in their own regard. Thus, if
    the reason a deadline can't be met is because of a regulatory
    process which the bankrupt applicant can't control; for
    example, a hearing on an environmental claim which must take
    place before a plan can be developed, we want to merely give
    the court the discretion to waive the deadline, for goodness
    sake, not a big deal. The last thing we want to do--the last
    thing we want to do is to worsen the current situation the
    applicant is in by forcing businesses to liquidate or layoff
    workers to comply with some arbitrary deadline.
        Now it's one thing to tighten the bankruptcy rule where the
    only parties involved are the borrower and lender, but where
    the changes will harm innocent third parties, namely, employees
    and their families, I think most of us believe we have an
    obligation to give the business a reasonable chance to
    reorganize in bankruptcy. And so I urge the members of the
    committee to join with me and Mr. Nadler in supporting this
    idea of protecting American jobs by giving the court discretion
    to waive the deadline. This is all this amendment is, not a
    horribly big deal. I urge its support and return any time that
    may be remaining.
        [The Amendment to H.R. 333 Offered by Mr. Conyers and Mr.
    Nadler follows:]

        Chairman Sensenbrenner. For what purpose does the gentleman
    from Pennsylvania rise?
        Mr. Gekas. Move to strike the last word, Mr. Chairman.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Gekas. Mr. Chairman and members, we should recognize
    part of the history of how we arrived at this juncture in
    bankruptcy reform. Several years ago the Congress authorized
    the Commission, the well-known Bankruptcy Commission, to look
    at, particularly to look at the business provisions of the
    current bankruptcy law. They concluded, and it was part of
    Congress's rationale in the first place that the reorganization
    features under chapter 11 were not working. Why? Because there
    was too much delay, too many extensions, too much time granted
    over a period of time guaranteeing the failure of a business
    more than giving it time to resuscitate its business
    activities.
        I repeat, it promoted failure on the part of a business to
    continue to extend times without regard to deadlines of
    established law. So the Bankruptcy Commission, in its wisdom,
    came up with recommendations that said we've got to more
    tightly fit the reorganization features of bankruptcy into time
    tables to allow the business to make certain that it can
    survive by doing X, Y, and Z, in consultation with the
    creditors and with the bankruptcy court so that, although we do
    still allow and have the courts given discretion to extend
    deadlines in some quarters on the whole process, we do not have
    the abject open-ended discretion that led to the failures about
    which the Bankruptcy Commission made so much commentary in
    their recommendations.
        So, for those reasons, mainly the reason that the Conyers
    amendment in this regard takes us back to the time before the
    Bankruptcy Commission looked at this very set of features as
    being a cause of failure of reorganization, we want
    reorganization to work, we want to do it in a speedy and in
    deliberate time, and we want all of the parties involved to
    know what's facing them in the form of time tables so that they
    can make appropriate----
        Mr. Weiner. Would the gentleman yield on that point?
        Mr. Nadler. Mr. Chairman?
        Mr. Weiner. Would the gentleman yield on that point?
        Mr. Gekas. Yes, I'll yield.
        Chairman Sensenbrenner. Which gentleman from New York are
    you yielding to?
        Mr. Gekas. To both of them at the same time. [Laughter.]
        To the gentleman, Mr. Weiner.
        Chairman Sensenbrenner. I'm sorry. I saw the gentleman's
    hand up.
        Mr. Nadler. I was seeking recognition, but not for
    yielding.
        Mr. Weiner. I just want to clarify something that you said
    that is, in fact, not correct.
        In the Conyers amendment, they have to show by clear and
    convincing evidence, it's a new standard that's been inserted,
    that will put quite a burden on the debtor to show that there
    is something beyond his control. I mean, it seems to me that if
    you trust even a modicum of the judgment of the judge in the
    case to be able to take the case that can't be anticipated by
    us here--very often my colleagues on that side talk about us
    setting rules here in Washington that are unnecessarily strict,
    unnecessarily dictatorial and not giving enough discretion to
    localities--it seems to me that Mr. Conyers strikes a balance
    by putting this, this clear and convincing evidence test, into
    his amendment. Doesn't that satisfy your concern about having
    extraneous delays and delays that are simply for the purpose--
    --
        Mr. Gekas. Reclaiming my time.
        Mr. Weiner. Certainly, sir.
        Mr. Gekas. I believe it's in the eyes of the beholder. I
    believe that the additional extension of time that you're
    referring to, even with clear and convincing evidence, takes us
    back to the Never-Never Land of never-ending reorganization,
    which the Bankruptcy Commission felt had to come to an end for
    justice in bankruptcy. So I am relying on the tighter set of
    deadlines that seem to be, in a unanimous way, felt would best
    serve the reorganization of bankruptcies.
        I yield back the balance of my time. I yield to the other
    gentleman from New York.
        Mr. Nadler. I move to strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Nadler. Thank you, Mr. Chairman. I find it remarkable
    that the gentleman from Pennsylvania is citing the work of that
    lamented Bankruptcy Commission. If the gentleman would
    introduce a bill simply incorporating all of the
    recommendations of that Bankruptcy Commission and nothing else,
    we'd pass that bill unanimously in about 3 minutes. But as you
    know, this bill rejects about 95 percent of what the Bankruptcy
    Commission recommended. The Bankruptcy Commission was against
    means tests, the Bankruptcy Commission rejected everything on
    taxes. The fact is that this is the only thing that this bill
    seems to do that goes along with the Bankruptcy Commission.
        Let me say this: It is a mischaracterization of this
    amendment to talk about abject and open-ended. It's clear and
    convincing evidence, circumstances beyond the debtor's control,
    not foreseeable the date of the order for relief. You don't get
    back into a Never-Never Land of unending reorganization unless
    you assume that all of our judges are incompetent, and I
    certainly wouldn't assume that the judges to be appointed by
    President Bush are all incompetent. Some may be competent.
        The fact is that what this bill seeks to do is to remove
    all discretion from a judge here, and I guarantee you that by
    putting these severe and inflexible deadlines, you are going to
    cause a lot of businesses that could have been reorganized and
    could have been saved, you're going to put them into
    liquidation. And even at the hearing last week, when I asked
    the gentleman, I think his name was Fosten from the Chamber of
    Commerce, the question about wouldn't these provisions of
    inflexible deadlines put more--force more businesses out of
    business and into liquidation, he essentially said, yes, but it
    was worth it because of the balance of other good things in the
    bill, but we can amend the bill. We don't have to balance
    terrible provisions that are going to destroy lots of small
    businesses.
        We may be heading into, I hope not, the President says we
    are, heading into a recession. If we go into a recession,
    you're going to get a lot of small businesses going into
    chapter 11 just in time to meet this provision that will force
    many of them to be liquidated instead of being able to be saved
    and lay off a lot of people. To simply say that if a debtor can
    show, by clear and convincing evidence, which is a high burden
    of proof, that the extension is justified by unforeseen
    circumstances beyond his control and let the judge decide that,
    not the debtor, if he can prove that, that you can get an
    extension, that's reasonable. But, of course, this bill is not
    designed to be reasonable, so I know this amendment is forlorn.
        I withdraw the balance of my time.
        Chairman Sensenbrenner. The question is on the amendment
    offered by the gentleman from Michigan, Mr. Conyers, and the
    gentleman from New York, Mr. Nadler.
        Those in favor will signify by saying aye.
        Opposed, no.
        The noes appear to have it. The noes have it, and the
    amendment----
        Mr. Nadler. Recorded vote, sir.
        Chairman Sensenbrenner. A recorded vote will be ordered.
    The question is on the Conyers-Nadler amendment. Those in favor
    will signify by saying aye, as your names are called; those
    opposed, no, and the clerk will call the roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. No.
        The Clerk. Mr. Gekas, no. Mr. Coble?
        [No response.]
        The Clerk. Mr. Smith?
        Mr. Smith. No.
        The Clerk. Mr. Smith, no. Mr. Gallegly?
        [No response.]
        The Clerk. Mr. Goodlatte?
        Mr. Goodlatte. No.
        The Clerk. Mr. Goodlatte, no. Mr. Chabot?
        [No response.]
        The Clerk. Mr. Barr?
        Mr. Barr. No.
        The Clerk. Mr. Barr, no. Mr. Jenkins?
        [No response.]
        The Clerk. Mr. Hutchinson?
        Mr. Hutchinson. No.
        The Clerk. Mr. Hutchinson, no. Mr. Cannon?
        Mr. Cannon. No.
        The Clerk. Mr. Cannon, no. Mr. Graham?
        [No response.]
        The Clerk. Mr. Bachus?
        Mr. Bachus. No.
        The Clerk. Mr. Bachus, no. Mr. Scarborough?
        Mr. Scarborough. No.
        The Clerk. Mr. Scarborough, no. Mr. Hostettler?
        Mr. Hostettler. No.
        The Clerk. Mr. Hostettler, no. Mr. Green?
        Mr. Green. No.
        The Clerk. Mr. Green, no. Mr. Keller?
        Mr. Keller. No.
        The Clerk. Mr. Keller, no. Mr. Issa?
        Mr. Issa. No.
        The Clerk. Mr. Issa, no. Ms. Hart?
        Ms. Hart. No.
        The Clerk. Ms. Hart, no. Mr. Flake?
        Mr. Flake. No.
        The Clerk. Mr. Flake, no. Mr. Conyers?
        [No response.]
        The Clerk. Mr. Frank?
        [No response.]
        The Clerk. Mr. Berman?
        [No response.]
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        Mr. Nadler. Aye.
        The Clerk. Mr. Nadler, aye. Mr. Scott?
        [No response.]
        The Clerk. Mr. Watt?
        [Aye.]
        The Clerk. Ms. Lofgren?
        [No response.]
        The Clerk. Ms. Jackson Lee?
        Ms. Jackson Lee. Aye.
        The Clerk. Ms. Jackson Lee, aye. Ms. Waters?
        Ms. Waters. Aye.
        The Clerk. Ms. Waters, aye. Mr. Meehan?
        [No response.]
        The Clerk. Mr. Delahunt?
        [No response.]
        The Clerk. Mr. Wexler?
        [No response.]
        The Clerk. Ms. Baldwin?
        [No response.]
        The Clerk. Mr. Weiner?
        Mr. Weiner. Aye.
        The Clerk. Mr. Weiner, aye. Mr. Schiff?
        Mr. Schiff. Aye.
        The Clerk. Mr. Schiff, aye. Mr. Chairman?
        Chairman Sensenbrenner. No.
        The Clerk. Mr. Chairman, no.
        Chairman Sensenbrenner. Are there additional members who
    wish to record their vote?
        The gentleman from California, Mr. Gallegly?
        Mr. Gallegly. No.
        Chairman Sensenbrenner. The gentleman from South Carolina,
    Mr. Graham?
        Mr. Graham. No.
        Chairman Sensenbrenner. Are there any members who wish to
    change their vote? If not--Mr. Jenkins of Tennessee, do you
    wish to record your vote?
        Mr. Jenkins. No.
        Chairman Sensenbrenner. Further members? Clerk will report.
        The Clerk. There are 6 yeas and 18 nays.
        Chairman Sensenbrenner. And the amendment is not agreed to.
        Are there further amendments? The gentleman from New York,
    Mr. Nadler?
        Mr. Nadler. Mr. Chairman, I have an amendment at the desk,
    No. 001.
        Chairman Sensenbrenner. The clerk will report .001.
        The Clerk. Amendment to H.R. 333 offered by Mr. Nadler,
    page 178, after line 4, insert the following [and make such
    technical----
        Chairman Sensenbrenner. Without objection, the reading of
    the amendment is dispensed with, and the gentleman from New
    York is recognized for 5 minutes.
        Mr. Nadler. Thank you, Mr. Chairman.
        Mr. Chairman, I offered this amendment in this committee
    last year, and in the Senate it was offered by Mr. Schumer and
    passed the Senate last year with 80 votes.
        As Senator Hatch pointed out in the confirmation hearings
    on Attorney General Ashcroft a couple of years ago, even
    Senator Ashcroft, former Senator Ashcroft, voted for this
    amendment, for this exact language, not because Senator
    Ashcroft is pro-choice, but because he believes that the law
    must be respected.
        This amendment would deal with an ongoing and highly
    publicized abuse of the Bankruptcy Code involving people who
    violate the legal rights of Americans to receive medical care,
    and intimidate their health care providers and to then file for
    bankruptcy for the express purpose of having the debts incurred
    in judgments of courts because of their torts against people
    seeking interest in these clinics, they then seek to have these
    judgments discharged in bankruptcy.
        There are several cases currently in lengthy and costly
    litigation on this question. In one case, a $107-million
    verdict was rendered in the case of the so-called Nuremberg
    files, which was implicated in the murder, murder of at least
    one doctor.
        Randall Terry has filed for bankruptcy to avoid payment of
    over $1.6 million in legal fines and related fees. He said, ``I
    cannot in good conscience permit the National Organization for
    Women, Planned Parenthood and others who have profited from
    abortion to harass my wife and family and possibly get money
    from me to continue their crusade against unborn life.''
        These are bold words, but as Senator Ashcroft pointed out
    during the hearings, opposing abortion does not give you a
    license to break the law, and it certainly should not translate
    into a license to abuse the Bankruptcy Code to avoid the lawful
    payment of legal judgments awarded by courts to compensate
    victims of deliberate violations of the law.
        Although no debt has actually been discharged, this
    widespread and growing pattern of using bankruptcy to avoid
    payment of judgments in these cases have proved extremely
    burdensome to the individuals who are awarded these judgments
    because their legal rights have been violated.
        The victims have been chasing these lawbreakers through the
    courts for years, going through discovery, being forced to
    engage in further costly litigation, seeking assets and
    litigating in bankruptcy courts across the country. We should
    settle any uncertainty in the law by making clear that the
    Bankruptcy Code cannot be used a shield against judgments for
    these lawbreakers. We make debts for drunk boating accidents
    nondischargeable in this bill, we penalize a parent who uses
    cash advances at the rate of little more than $10 a day to
    purchase necessities for the family, including baby food and
    Pampers, by making those debts nondischargeable.
        I think we should preserve the integrity of the Code and
    take a tremendous burden off our bankruptcy courts and off the
    victims of this wrongdoing with the simple clarification that
    these judgments, awarded by a court for torts, are not
    dischargeable in bankruptcy.
        I yield back.
        [The Amendment to H.R. 333 Offered by Mr. Nadler follows:]

        Chairman Sensenbrenner. The gentleman from Pennsylvania,
    Mr. Gekas?
        Mr. Gekas. I move to strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Gekas. I ask the members to vote no on this amendment.
    The current law in bankruptcy, which we preserve in our reform
    measure, already calls for nondischargeability of debts
    incurred as a result of violence or willful misconduct, such as
    murder, which was referred to by the gentleman, and any other
    kind of willful damage caused at an abortion clinic or any
    other institution, so that willful misconduct and damages,
    willful criminal conduct, so to speak, willful conduct of that
    nature, is already covered by the current law. We gain nothing
    by specifying violence in an abortion clinic, except to allow
    the pro-abortion factions to make a statement, and so we oppose
    the amendment, certifying and asserting that these kinds of
    measures taken by demonstrators at an abortion clinic are
    already covered by our law.
        In addition, the Nadler amendment, if it--and I'm only
    guessing now--if it follows the same language as the Schumer
    amendment----
        Mr. Nadler. It's identical.
        Mr. Gekas. It's identical. Who followed whom, I don't know
    for sure.
        Mr. Nadler. He followed me.
        Mr. Gekas. He followed you, all right. Thank you.
        It goes a little farther and puts in nebulous criteria
    about intent or--let me find the exact language that I'm
    referring to. Actual or potential actions alleging the
    violation of any Federal, State or local statutory or common
    law. You're talking about establishing 20 new courts to
    determine the definition of those particular portions of the
    amendment. It's bad enough to repeat already stated law about
    violence and misconduct, but now you extend it to curious
    language about alleging the violation of any Federal, State or
    local statutory or common law.
        I ask the members to reject this amendment. I yield back
    the balance of my time.
        Mr. Weiner. Mr. Chairman?
        Chairman Sensenbrenner. For what purpose does the gentleman
    from New York, Mr. Weiner, seek recognition?
        Mr. Weiner. Strike the last word, Mr. Chairman.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Weiner. What the sponsor of the legislation in his
    explanation fails to point out is there is ambiguity or at
    least inasmuch as the bankruptcy law and the bankruptcy courts
    have been a place where people who are guilty of these crimes,
    people who are having or who are--or are being forced to pay
    these civil penalties and other penalties, they are using the
    bankruptcy courts currently to get out from under in a clearly
    stated strategy.
        And I would remind the gentleman, also, that this is not a
    question of your views on a woman's right to choose. In the
    Senate this passed with 80 votes because this is simply a
    question about whether or not someone should be allowed to use
    the bankruptcy courts in an effort to get out from under the
    responsibilities they would otherwise have which, from the
    gentleman's own explanation of this bill for the course of the
    last 2 years, is exactly what he says he seeks to do with this
    bankruptcy reform law, which is to make sure that people that
    have the ability to pay don't use the bankruptcy law as a way
    to get out from paying.
        So all that the Nadler amendment does is seek to clarify
    that, and it's clearly a necessity because it has become a
    strategy of those that violate the clinic access laws to use
    the bankruptcy laws. In jurisdictions throughout this Nation,
    it's been part of their strategy. There is zero harm and a
    great deal of benefit to clearing up the ambiguity that
    apparently exists. You may not see it, I certainly don't see
    it. I believe it's a matter, it's a matter of moral certainty
    and a matter of certainty under the law, but the fact of the
    matter is that bankruptcy courts throughout the Nation are
    having to wrestle with this exact case, and we have an
    opportunity now----
        Mr. Hutchinson. Would the gentleman yield?
        Mr. Weiner [continuing]. To clarify that point.
        Mr. Hutchinson. Would the gentleman yield for a question?
        Mr. Weiner. I would certainly yield.
        Mr. Hutchinson. My experience in having a judgment against
    someone for willful misconduct, I simply filed a petition with
    the court to have that debt nondischargeable because of willful
    misconduct, and the court ruled in my favor, and it is exactly
    what should have happened, and it was very similar to this.
        The current law, as Mr. Gekas indicated, does protect
    against the dischargeability of cases which you cite would
    involve violence against a clinic. And you indicated that it's
    a strategy out there to use the bankruptcy as protection. Are
    there any cases in which an individual had the debt discharged
    by a court which involved violence against a clinic?
        Mr. Weiner. If I can reclaim my time, I think it's
    fascinating that in this amendment the folks in the majority
    party are saying, well, we can trust judges to make the correct
    decisions, and look, this is a ground-ball judgment call that
    they can make. In the last amendment, we didn't even trust the
    judges to make the decisions about whether something was
    outside the control of one of the parties in the case.
        And in answer to your question, yes, it's going on now. You
    know, the people trying to, trying to recover have to go
    through discovery, they have to go through the different
    jurisdictions. This is an opportunity for us to clarify the
    state of the law in a very obvious way, and I would yield to
    Mr. Nadler.
        Mr. Nadler. Thank you.
        Mr. Chairman, first of all, the language from the amendment
    that the gentleman from Pennsylvania wrote that he said was
    vague, et cetera, that's language describing an action. This
    amendment only applies to a judgment order consent decree or
    decree entered in a Federal or State court in various types of
    actions. It's got to be a judgment. You don't have to speculate
    about what it is, number one. It's a judgment or decree.
        Number two, it talks about malicious and willful. Already
    malicious and willful is already nondischargeable. True, but
    you don't have to be malicious and willful to violate the law.
    The law which these people violate makes it prohibited by force
    or threat of force, or by physical obstruction, intentionally
    injures, intimidates or interferes or attempts to injure,
    intimidate or interfere with any person, et cetera. It doesn't
    say it has to be willful or malicious. So you're establishing a
    new standard.
        Number three, right now, yes, there has not been a
    discharge yet, but according to a statement from the hearing
    last year, ``My firm, to date, has expended over 3,200 attorney
    hours in litigating these bankruptcy proceedings, in addition
    to the time spent by local counsel in each jurisdiction and the
    substantial expense of filing fees, service fees, and travel
    around the country. Thus far, after extensive litigation and
    considerable expense, we have won the willful and malicious
    injury issue in four of the bankruptcy courts. Despite these
    victories, enactment of the proposed amendment to the
    Bankruptcy Code is necessary because defendant should not have
    been given the opportunity to litigate the issue of the
    discharge in bankruptcy when they have been judged guilty of
    violating the faith statute, as intended by Congress.''
        In other words, the tort fees, the people who violated the
    law----
        Chairman Sensenbrenner. The gentleman's time has expired.
        Ms. Jackson Lee. Mr. Chairman?
        Chairman Sensenbrenner. For what purpose does the
    gentlewoman from Texas, Ms. Jackson Lee, seek recognition?
        Ms. Jackson Lee. To strike the last word.
        Chairman Sensenbrenner. The gentlewoman is recognized for 5
    minutes.
        Ms. Jackson Lee. Thank you very much, Mr. Chairman.
        Let me just define what I think is the appropriate role of
    this room and this body. Often we are described as problem
    solvers. I hope we can be described as doing no harm.
        The issue that Mr. Nadler raises in his amendment is an
    issue that raises the specter of confusion. Just about 3 years
    ago we sat and listened to a nurse from Birmingham, Alabama, if
    my recollection serves me well, that was horrifically mutilated
    by a bombing incident at an abortion clinic--visibly mutilated,
    emotionally mutilated, the victim of a very terrible and
    devastating crime to this date has not been solved.
        As a basis of study, we can utilize the approach that many
    in the segregated South, Ku Klux Klan, took to avoid
    compensating those whose civil rights they violated. It is well
    known that individuals of this propensity have used the
    bankruptcy courts or have used the concept of bankruptcy to
    suggest that when a judgment has been rendered against them,
    the KKK or them individually, they would not pay.
        It seems to me, Mr. Chairman, and to my colleagues, with an
    80-vote support in the Senate, that it would be beneficial for
    an overhaul of the Bankruptcy Code, of which we are doing, and
    reasonable minds can disagree because I certainly think that
    this is an unnecessary process, an unneeded process, but we are
    in the midst of it, that clarification and specificity is the
    route to go; specificity meaning that it clarifies that you
    cannot utilize the Bankruptcy Code, under H.R. 333, to avoid
    the just judgment rendered against you.
        In my sense, Mr. Chairman, this is doing no harm, based
    upon proceeding evidence and actual incidences where
    organizations have taken to the bankruptcy courts to blatantly
    try to overcome just judgments against them, where they have
    mutilated, where they have violated, where they have destroyed
    the property and the lives of others.
        Now, it seems to me a benign amendment. It does not harm.
    It helps. And I am at a loss as to why the opposition, the
    Republican majority, finds the necessity to oppose
    clarification because if the bankruptcy courts are saying that
    there is potential for confusion, why not narrow the need for
    them to furry around in trying to make a decision, when they
    can turn to what may be potentially a past legislation. This
    looks like it's on the route to be law. Why can't this
    amendment simply clarify that you cannot avoid, you cannot
    negate, you cannot usurp, you cannot ignore, you cannot abuse,
    you cannot utilize the Bankruptcy Code to avoid the just
    judgment rendered against you in an instance of violence
    against clinics?
        And I have yet to hear any argument by the esteemed
    gentleman from Pennsylvania and others that would make any
    sense as to why a simple point of clarification cannot be
    added. Do we need to bring in more mutilated victims? Do we
    need to bring in the relatives of deceased doctors who rightly
    deserve to recover against those who perpetrated the heinous
    crimes of which the lives cannot be brought back? But certainly
    in the scheme of our justice system, some compensation
    obviously is warranted, some monetary penalty. And it is well
    known that the trickery of those who are in their minds
    violently opposed to abortion, violently exercising their
    opposition, that they will likewise use any tactic, which
    includes the bankruptcy code, to avoid the just rendering of
    this heinous act where families and loved ones and those who
    have been violated and abused and frightened and intimidated
    cannot recover.
        This is simple language, the non-dischargeability of debts
    incurred through the commission of violence at clinics,
    supports by an 80-vote margin in the Senate. And I guess I am--
    I am--I'm simply at a loss----
        Chairman Sensenbrenner. The woman's time has expired.
        Ms. Jackson Lee [continuing]. That unfortunately the
    bipartisanship----
        Chairman Sensenbrenner. For what purpose does the gentleman
    from Ohio seek recognition?
        Ms. Jackson Lee [continuing]. Has disintegrated. I ask my
    colleagues to support the amendment.
        [The prepared statement of Ms. Jackson Lee follows:]
      Prepared Statement of Hon. Sheila Jackson Lee, a Representative in
                        Congress from the State of Texas
        Good morning Mr. Chairman, as you know, the issue of bankruptcy
    reform has been a heated topic of debate in this body since the first
    session of the 105th Congress, when shortly before the National
    Bankruptcy Review Commission issued its report recommending changes to
    the current bankruptcy laws; legislation was introduced to dramatically
    change the way in which consumer bankruptcies are administered under
    the U.S. Code, 11 U.S.C. sec. 101 et seq. Both the House and Senate
    enacted different versions of the bill in the second session of the
    105th Congress and a conference report was filed shortly after. The
    House agreed to the conference report version of the bill by a vote of
    300 to 25 on October 9, 1998, but this bill which then, President
    Clinton threatened to veto, was not brought before the Senate for a
    vote prior to adjournment.
        This legislation was again reintroduced in the 106th Congress and
    was passed by voice vote in the House and passed in the Senate by a
    vote of 70 to 28. Then, President Clinton withheld his approval,
    Congress adjourned sine die, and bill was ``pocket'' vetoed.
        Mr. Chairman, in yesterday's hearing, I questioned Philip J.
    Strauss who was representing the California District Attorney's
    Association and the California Family Support Council on the fact that
    H.R. 333 places economically vulnerable women and children who are
    forced into bankruptcy, and those who are owed support by men who file
    for bankruptcy at greater risk by increasing the rights of many
    creditors, including credit card companies, finance companies, auto
    lenders and others over that of the women and children. Mr. Strauss,
    however, appeared shocked at these facts and affirmatively stated that
    women and children's child support payments from former spouses are
    protected because the states collect money from people who owe child
    support and make payments to mothers.
        Mr. Chairman, I was not able to finish my point yesterday, however,
    in the interest of justice for the thousands of women and children who
    will be held hostage by H.R. 333. However, I will correct this gross
    misrepresentation today. While it is true that states collect money
    from people who owe child support to make payments to mothers, H.R. 333
    would effectively bottle this money in the coffers of the state because
    it increases the rights of creditors over these vulnerable women and
    children, and sets up a competition for scarce resources between
    parents and children owed support and commercial creditors both during
    and after bankruptcy. Therefore, single parents facing financial crises
    often caused by divorce, nonpayment of support, loss of a job,
    uninsured medical expenses or domestic violence would find it harder to
    regain their economic stability through the bankruptcy process.
        Mr. Chairman, this fact is not something new whose light has
    recently been cast over the dark future of bankruptcy reform that would
    follow H.R. 333. The fact that H.R. 333 would effectively place women
    and children in a gladiator's arena with creditors to do battle for
    child support money owed by former spouses who file bankruptcy has been
    articulated by national organizations such as the National Women's Law
    Center, the National Association of Consumer Bankruptcy Attorney's, the
    National Organization for Women, a coalition of bankruptcy professors
    and bankruptcy judges and the National Association of Attorney's
    General's to name but a few. How, anyone could argue against the
    drastic effects and hardships that the language in this bill will cause
    on the vulnerable women and children in this country is beyond me.
        I have consistently said that the greatest challenge before us in
    the bankruptcy reform efforts is solving the widely recognized
    inadequacies of the law in the area of consumer bankruptcy. As it has
    always been in the Congress, the key to this process, is, of course,
    successfully balancing the priorities of creditors, who desire a
    general reduction in the amount of debtor filing fraud, and debtors,
    who desire fair and simple access to bankruptcy protections when they
    need them. H.R. 333 does not accomplish this goal.
        Once again, however, the bankruptcy reform bill has been
    introduced, now in the 107th Congress. As with the bills introduced in
    the 105th and 106th Congress's, I cannot in good faith support H.R. 333
    introduced in the 107th Congress, because it:

             will weaken important credit card disclosure
            provisions that will help ensure consumers understand the debt
            they are incurring;

             will eliminate protections for reasonable retirement
            pensions that reflect years of contributions by workers and
            their employers; and

             will include an anti-consumer provision eliminating
            existing law protections against inappropriate collection
            practices when collecting from people who bounce checks.

        For H.R. 333 to accomplish its intended goals, I believe that it
    must include provisions that will:

             ensure families who need Chapter 7 relief are able to
            get it, including the preservation of appropriate judicial
            discretion;

             ensure women and children seeking to collect child
            support from a debtor do not have to compete with other
            creditors;

             contain adequate protection for families against
            abusive reaffirmation practices of creditors;

             enhance, not detract from, the viability of Chapter
            13 plans; and

             require adequate and accurate disclosure of credit
            repayment terms.

    In addition, given the recent turn in the economy, resulting in major
    corporations laying off workers by the thousands, it is even more
    important for Congress to carefully consider the impact of H.R.333.
        Mr. Chairman, colleagues, ladies and gentlemen, I am for bankruptcy
    reform, but I believe that it must be equitable and fair to all
    interested parties. I am for bankruptcy reform that recognizes the
    financial interest at stake for the debtor, his or her family and the
    creditors.
        As I have already mentioned, in assessing bankruptcy reform we must
    balance two key principles. First, debtors must not be allowed to use
    the law to avoid repaying loans when they can actually afford to do so;
    and; Second, debtors should not be forced into serious hardship.
    Efforts to implement these two ideas have been made for a long time.
    The statute of Anne, enacted in 1705, was the first such effort. It
    introduced the idea of the fresh start into our law and punished those
    who abused the bankruptcy with death by hanging. In the bill before us
    today, the sponsors sought to draw the line by separating those who are
    worthy of a fresh start from those who abuse the system, but it is this
    very goal that they have failed to accomplish.
        In reviewing H.R. 333, I was reminded of a hypothetical given by
    Douglas Baird, a law professor at the University of Chicago on H.R.
    333's predecessor's in the 105th and 106th Congress's stating that
    those bankruptcy reform bills would fail to balance the two competing
    goals that are the base of bankruptcy reform. The same is the case with
    H.R. 333 today.
        Professor Baird's hypothetical considers an elderly woman living in
    Florida who returned to the workforce several years after her husband
    became ill and died. She makes $30,000 annually as a secretary and she
    has not taken a vacation in several years. She rents a one-bedroom
    apartment and owes $60,000, much of which stems from medical bills for
    the care of her late husband. Most of the remaining debt consists of
    unpaid credit card bills, most of it spent on household goods and
    groceries. Interest runs at 15%. The widow is behind in her payments,
    collection agencies call at home and at work, and they are threatening
    to garnish her wages.
        The hypothetical then considers a 45-year-old businessman, also
    living in Florida. He works for a large corporation and makes $95,000 a
    year. He previously had his own business but it failed. Though single,
    he lives in a 5-bedroom house worth $500,000. He owes $60,000 in debt
    from his 10 credit cards, which he used to pay for vacations, clothes
    and meals in restaurants. In addition, he is personally liable for
    $200,000 in debt from his failed business venture.
        The current bankruptcy law would allow both the elderly widow and
    the businessman to file Chapter 7 bankruptcy petitions and receive a
    fresh start. However, under H.R. 333, only the businessman would be
    allowed a fresh start because the widow's use of Chapter 7 would be
    presumed abusive. The widow might be eligible for relief under Chapter
    13 but only if she commits all of her income for the next five years to
    the repayment of her debts, apart from monthly living expenses.
        In contrast, under H.R. 333, the businessman will be eligible for
    Chapter 7 relief, and be able to discharge all of his debt and keep his
    house.
        The reform laid out in H.R. 333, will also increase hardship on
    debtors because it toughens the rules for ordinary debtors, most of
    whom declare bankruptcy not out of irresponsibility but because of
    catastrophic medical bills, unemployment or divorce.
        Mr. Chairman, women are the fastest growing and largest group
    filing bankruptcy today. In 1999, over half a million women filed for
    bankruptcy by themselves--more than men filing by themselves or married
    couples. Of this number, over 200,000 women who filed for bankruptcy in
    1999 tried to collect child support or alimony. The domestic support
    provisions of H.R. 333 does not solve the problems faced by women in
    bankruptcy and does nothing address the additional problems it would
    cause to the hundreds of thousands of women forced into bankruptcy each
    year, including the single mothers forced into bankruptcy because they
    are unable to collect child support.
        Furthermore, the National Association of Attorneys General has
    already warned that increasing the claims of partially secured
    creditors as H.R. 333 would do would make it more difficult to collect
    child support because credit card companies would treat all debts as
    secured, resulting in credit card debt being elevated to the same or a
    higher level than domestic support claims, and thus, make it more
    difficult to ensure that debtors are able to satisfy their obligations
    to their spouses and children.
        H.R. 333, also creates a new priority for support debts owed to
    government units over that of a spouse, former spouse or child, which
    must be paid in full in a chapter 13 plan. Mr. Chairman, this bill does
    not provide further protections to vulnerable women and children facing
    creditors, instead, the points I have outlined today show that H.R. 333
    gives priority in many cases to the creditors over the vulnerable women
    and children.
        H.R. 333 also fails in its attempt to encourage chapter 13 filings
    by debtors, resulting in many families who currently save their homes
    and cars through chapter 13 being no longer able to do so. Under
    current law, a chapter 13 case can be filed after a chapter 7 or 13
    discharge, or after a dismissed case. This is important to families who
    might incur large medical expenses a few years after a prior discharge
    or whose chapter 13 plans fail for circumstances beyond their control.
        H.R. 333, however, prohibits a new chapter 7 case within 8 years,
    rather than the current 6 years, after a petition resulting in a prior
    chapter 7 discharge, and a new chapter 13 case within 5 years.
    Furthermore, it is unclear whether the 5 years runs from the prior
    petition or the discharge. If the 5 years begin to run from the prior
    petition, it would mean that a chapter 13 case could be prohibited for
    up to 10 years after a prior chapter 13 petition.
        H.R. 333 will also place many new obstacles in the path of
    bankruptcy debtors, which would decrease access to the system,
    especially for those with the least income, primarily by raising costs.
    for filing motions, defending dischargeability litigation, obtaining
    stays in repeat filings and other added administrative costs in the
    area of several hundred dollars which could be prohibitive for many
    families. This will greatly increase the already significant number of
    consumers who cannot afford attorney representation in bankruptcy and
    who would therefore have only the choices of filing pro se, going to an
    unqualified non-attorney petition preparer, or not filing at all.
        In addition, H.R. 333 not only restricts the circumstances that
    families can file for chapter 13, it also significantly reduces the
    scope of the chapter 13 discharge making many of the debts that are
    currently dischargeable, non-dischargeable under the full compliance
    discharge. This would effectively hurt debtors who can presently pay
    all they can afford.
        Mr. Chairman, many of the provisions that are the base of H.R. 333
    were designed for the sole purpose of reducing bankruptcy debtor filing
    fraud. As I stated at the out-set of my statement, I applaud and
    support this goal. However, the facts at hand tell us decisively that
    this goal will not be achieved under H.R. 333 because it is not
    narrowly tailored and does not provide fair and equal treatment in
    cases like homestead exemption. Furthermore, the goal of curbing
    bankruptcy debtor filing fraud is in serious question due to the sharp
    decline in bankruptcy filings overall. Statistics provided by the VISA
    Bankruptcy Notification Service, which compiles weekly reports on
    bankruptcy filings show a continued sharp decline in the bankruptcy
    rate which dropped by more than 9 % in 1999, continuing to decline at
    an 8% annual rate in the first five months of the year 2000.
    Bankruptcies are now running at a lower level than in 1997, 1998 or
    1999. The per capita growth rate in personal bankruptcies was up by
    25.2% in 1997, up by 3.1 % in 1998, down by 7.9% in 1999 and down by
    7.7% in 2000. In addition, the growth rate in personal bankruptcies was
    up by 26.1% in 1997, up by 4.0% in 1998, down by 7.0% in 1999 and down
    by 6.8% in 2000. In addition to the VISA Bankruptcy Notification
    Service, these numbers are also consistent with those compiled by the
    Chicago Mercantile Exchange in connection with the Quarterly Bankruptcy
    Index contract. These numbers that show a continuing decline in
    bankruptcies supports the view that many of the provisions provided in
    H.R. 333 are unnecessary and counterproductive.
        Mr. Chairman, as elected officials for the American people we must
    protect America's families. Most individuals who file petitions in the
    bankruptcy courts are usually experiencing turbulent times. Financial
    hardship is a serious matter that deserves legislative reform that is
    the product of a deliberative process. This bill, is an extreme bill
    undertaken at the direction of special interest groups. We must protect
    working-class families. We must work to find a viable solution that
    deters abuse of the bankruptcy system while preserving the fresh start
    for discharged debtors. It is ironic that the consumer lending industry
    actively solicits unsuspecting consumers through the mail with terms of
    easy credit, buy now--pay later rhetoric. After addicting debtors to
    this ``financial crack'' lenders are advocating for reform. Of course
    debtors are responsible for financial obligations that they incur;
    however, lenders must assume responsibility for their actions in
    creating the precarious financial crisis we are discussing.
        In the 105th Congress, I served as a member of the Subcommittee on
    Commercial and Administrative law and as a conferee on H.R. 3150, the
    precursor to the bill before us today. As a member of that subcommittee
    in the 105th Congress, I signed onto the dissenting views of the
    accompanied the report from the committee. The dissents' conclusion is
    appropriate in this context:
        For nearly 100 years, Congress has carefully considered the
    bankruptcy laws and legislated on a deliberate and bipartisan basis. In
    the past, Congress has elected also to carefully preserve an insolvency
    system, that provides for a fresh start for honest, hard-working
    debtors, protects ongoing businesses and jobs, and balances the rights
    of and between debtors and creditors.
        Because H.R. 333 departs from these historical principles, and
    tramples on the preservation of the American people, I oppose this
    legislation in the interest of all that is just and fair.
        Thank you.

        Mr. Chabot. Mr. Chairman, I move to strike the last word.
        Chairman Sensenbrenner. The gentleman from Ohio is
    recognized for 5 minutes.
        Mr. Chabot. Thank you. I won't take all that time, and I'll
    also yield to the gentleman from Georgia, Mr. Barr. But I'd
    just note that I keep hearing the term ``mutilated'' thrown
    around here pretty freely, and there's absolutely no excuse for
    anybody who takes action against a person or any of these
    abhorrent bombings or anything else, it's absolutely
    outrageous. But I'd just note that the little babies who go
    into these abortion facilities come out in a pretty darn
    mutilated state as well. And the language in this particular
    amendment is totally unnecessary. The amendment's unnecessary,
    because malicious and willful tort awards are non-dischargeable
    under existing bankruptcy law. So the amendment is unnecessary
    and----
        Ms. Jackson Lee. Would the gentleman yield?
        Mr. Barr. Would the gentleman yield?
        Mr. Chabot. [continuing]. I would urge my colleagues----
        Mr. Barr. Would the gentleman yield?
        Ms. Jackson Lee. Would the gentleman yield?
        Mr. Chabot [continuing]. To oppose this amendment. I've
    already indicated I'd yield to the gentleman from Georgia, Mr.
    Barr. I yield.
        Mr. Barr. Thank you. Well, I think we have here the same as
    we had in prior Congresses with the Schumer amendment, which
    essentially is what we're talking about here today. It is
    simply an effort to inject a debate over abortion into a
    bankruptcy bill, Mr. Chairman. This amendment was defeated as
    the red herring that it is previously, and I would ask our
    colleagues, again, based on the eloquent statements made by the
    former chairman of the committee, the subcommittee with
    jurisdiction, as well as the gentleman from Ohio, that this
    amendment is unnecessary. It is simply an effort by pro-
    abortion proponents to interject a debate over abortion into a
    bill that has and should have nothing to do with abortion.
        As the gentleman from Ohio indicated, the current
    bankruptcy code makes a debt for willful and malicious injury
    to a person or property non-dischargeable in an individual
    debtor's chapter 7 or chapter 11 bankruptcy case.
        I yield back.
        Mr. Nadler. Would the gentleman from Ohio now yield for a
    question?
        Mr. Chabot. In the interest of time, I'm going to yield
    back the time, and the folks are welcome to get their own time.
        Chairman Sensenbrenner. The gentleman has yielded back his
    time. For what purpose does the gentlewoman from California
    seek recognition?
        Ms. Waters. I move to strike the last word.
        Chairman Sensenbrenner. The gentlewoman is recognized for 5
    minutes.
        Ms. Waters. Mr. Chairman and members----
        Chairman Sensenbrenner. And the machine is working.
        Ms. Waters. [continuing]. I am a bit embarrassed by this
    debate. I'm embarrassed because I recognize that we are in the
    minority and that we are going to lose most of our attempts to
    amend this legislation, and I expect that. But there is a point
    where partisanship should not enter into the debate.
        This amendment is a reasonable amendment that speaks to an
    issue that I don't believe anyone can really, really disagree
    with. The fact of the matter is we can argue all day long about
    when life begins or when does it start, and those debates will
    go on forever. But human beings who are sitting inside that
    clinic, working inside that clinic, are living. They're live
    human beings. It's not debatable whether or not they are put at
    great risk, whether or not they can be killed, whether or not
    they could be harmed, and it has happened. And I suppose it
    will continue to happen.
        And I dare say that I would like to believe that no matter
    what you feel about abortion, that there's not one person here
    on this committee who would support the bombing of a clinic. I
    would like to believe that, no matter what you feel about
    abortion.
        Now, the argument can be made that everybody knows, because
    somewhere in law these obligations are not dischargeable. But
    what harm does it do to send that public policy message right
    from here? Right from here. So it's no question about whether
    or not it's a decision of a--of a judge somewhere down the line
    but, rather, we make it very clear in this law that we are
    passing that you cannot discharge an obligation, a judgment, or
    an order that has been rendered to have someone pay for damages
    incurred because of that kind of an act.
        So I would simply say to you, no matter what you feel,
    again, the person sitting in that clinic, whether you like it
    or not, could be your daughter. It could be your wife. It could
    be your neighbor. And as a woman, I'm terribly offended and
    embarrassed that we have to argue this case, that we have to
    take this time to talk about striking a blow on behalf of
    protection for women, even if you disagree with the decision
    that they have made.
        I would simply ask that we support this amendment. Let's
    not even bring abortion into this argument. It's about whether
    or not we will support or whether or not you will allow public
    policy to roll out of this committee showing that you support a
    criminal who has been judged to have been guilty of an act that
    is so horrendous that it is just hard to imagine.
        So I would ask support for this amendment, and I would
    yield the balance of my time to Mr. Nadler.
        Mr. Nadler. Thank you, Mr. Chairman. I will say again,
    since Mr. Chabot apparently didn't hear when it was said
    earlier, yes, malicious and willful torts are not
    dischargeable. But violating the FACE act in a deliberate way
    to harass or intimidate people does not have to be malicious
    and willful, and it is dischargeable, and that is what this
    amendment seeks to get at. That's point one.
        Point two, I will paraphrase Mr. Barr in a different
    context. This amendment is not about abortion. It's about the
    rule of law. The law says you can't intimidate and harass
    people going into a clinic. We didn't bring--we're not trying
    to bring abortion into a bankruptcy bill. Randall Terry and
    Operation Rescue and others who are using the bankruptcy courts
    to try to avoid judgments and fines levied by courts for their
    violation of the law, they brought the bankruptcy code into
    this question.
        Now, maybe ultimately when appellate courts rule on this
    question, they will rule that you--that these things are all
    undischargeable. But we've already had thousands and thousands
    and thousands of hours of litigation in bankruptcy court
    costing millions of dollars. The real purpose of this
    amendment----
        Chairman Sensenbrenner. The gentleman's time has expired.
        For what purpose does the gentleman from Virginia seek
    recognition?
        Mr. Scott. Move to strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Scott. Mr. Chairman, I support the amendment and yield
    the balance of my time to the gentleman from New York.
        Mr. Nadler. Thank you.
        This amendment is about eliminating frivolous litigation
    designed to help people--frivolous litigation by people who
    have been adjudged in violation of the law. If you think people
    should be able to violate the law and then engage in thousands
    of hours of litigation over whether to bother paying the fine
    or the judgment, then vote against this amendment. That's what
    this is about. This has nothing to do with willful or
    malicious. That's a red herring raised by a few people. What
    this amendment says is if you violate the FACE law, if the
    court finds that you violated the FACE law--it's not if someone
    thinks you did or your intention. The court finds you violated
    the law and issues a judgment against you and says you should
    pay X dollars, you shouldn't then be able to waste the
    bankruptcy court's time and the victim--the tort victim's money
    and time by a frivolous action in bankruptcy court to avoid
    paying the find or the judgment. That's all this amendment
    says.
        And I hope that Republicans are still opposed to excessive
    and frivolous litigation, which is all this amendment seems
    to--I'm sorry, seeks to curtail.
        I yield back.
        Mr. Scott. I yield back.
        Chairman Sensenbrenner. The question is on the amendment
    number four offered by Mr. Nadler of New York. Those in favor
    will say aye. Opposed, say no.
        The noes appear to have it.
        Mr. Nadler. Roll call.
        Chairman Sensenbrenner. A roll call is requested. The
    question is on the Nadler amendment. Those in favor will say
    aye as your names are called. Those opposed, say no. And the
    clerk will call the roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. No.
        The Clerk. Mr. Gekas, no.
        Mr. Coble?
        Mr. Coble. No.
        The Clerk. Mr. Coble, no.
        Mr. Smith?
        Mr. Smith. No.
        The Clerk. Mr. Smith, no.
        Mr. Gallegly?
        Mr. Gallegly. No.
        The Clerk. Mr. Gallegly, no.
        Mr. Goodlatte?
        Mr. Goodlatte. No.
        The Clerk. Mr. Goodlatte, no.
        Mr. Chabot?
        Mr. Chabot. No.
        The Clerk. Mr. Chabot, no.
        Mr. Barr?
        Mr. Barr. No.
        The Clerk. Mr. Barr, no.
        Mr. Jenkins?
        Mr. Jenkins. No.
        The Clerk. Mr. Jenkins, no.
        Mr. Hutchinson?
        Mr. Hutchinson. No.
        The Clerk. Mr. Hutchinson, no.
        Mr. Cannon?
        Mr. Cannon. No.
        The Clerk. Mr. Cannon, no.
        Mr. Graham?
        Mr. Graham. No.
        The Clerk. Mr. Graham, no.
        Mr. Bachus?
        Mr. Bachus. No.
        The Clerk. Mr. Bachus, no.
        Mr. Scarborough?
        Mr. Scarborough. No.
        The Clerk. Mr. Scarborough, no.
        Mr. Hostettler?
        Mr. Hostettler. No.
        The Clerk. Mr. Hostettler, no.
        Mr. Green?
        Mr. Green. No.
        The Clerk. Mr. Green, no.
        Mr. Keller?
        [No response.]
        The Clerk. Mr. Issa?
        Mr. Issa. No.
        The Clerk. Mr. Issa, no.
        Ms. Hart?
        Ms. Hart. No.
        The Clerk. Ms. Hart, no.
        Mr. Flake?
        Mr. Flake. No.
        The Clerk. Mr. Flake, no.
        Mr. Conyers?
        [No response.]
        The Clerk. Mr. Frank?
        [No response.]
        The Clerk. Mr. Berman?
        [No response.]
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        Mr. Nadler. Aye.
        The Clerk. Mr. Nadler, aye.
        Mr. Scott?
        Mr. Scott. Aye.
        The Clerk. Mr. Scott, aye.
        Mr. Watt?
        Mr. Watt. Aye.
        The Clerk. Mr. Watt, aye.
        Ms. Lofgren?
        Ms. Lofgren. Aye.
        The Clerk. Ms. Lofgren, aye.
        Ms. Jackson Lee?
        Ms. Jackson Lee. Aye.
        The Clerk. Ms. Jackson Lee, aye.
        Ms. Waters?
        Ms. Waters. Aye.
        The Clerk. Ms. Waters, aye.
        Mr. Meehan?
        [No response.]
        The Clerk. Mr. Delahunt?
        [No response.]
        The Clerk. Mr. Wexler?
        [No response.]
        The Clerk. Ms. Baldwin?
        Ms. Baldwin. Aye.
        The Clerk. Ms. Baldwin, aye.
        Mr. Weiner?
        Mr. Weiner. Aye.
        The Clerk. Mr. Weiner, aye.
        Mr. Schiff?
        Mr. Schiff. Aye.
        The Clerk. Mr. Schiff, aye.
        Mr. Chairman?
        Chairman Sensenbrenner. No.
        The Clerk. Mr. Chairman, no.
        Chairman Sensenbrenner. Are there additional members in the
    room who wish to cast their vote and change their vote? The
    gentleman from Florida?
        The Clerk. Mr. Keller?
        Mr. Keller. No.
        The Clerk. Mr. Keller, no.
        Chairman Sensenbrenner. Any other additional members. If
    not, the clerk will report.
        The Clerk. Mr. Chairman, there are 9 ayes and 20 nays.
        Chairman Sensenbrenner. And the amendment is not agreed to.
        Are there further amendments? And for what purpose does the
    gentlewoman from Texas seek recognition?
        Ms. Jackson Lee. Strike the last word, offer an amendment,
    Mr. Chairman.
        Chairman Sensenbrenner. The clerk will report the
    amendment.
        Ms. Jackson Lee. The amendment is dealing with credit card
    abuse of underage voters, number 6, Jackson Lee.
        Chairman Sensenbrenner. The clerk will report Jackson Lee
    amendment number 6.
        The Clerk. Mr. Chairman, there is no amendment number 6
    here at the desk.
        Chairman Sensenbrenner. For what purpose does the gentleman
    from California seek recognition?
        Ms. Jackson Lee. Excuse me, Mr. Chairman. It's there, 015
    at the top.
        Chairman Sensenbrenner. Has the clerk found the amendment
    that is referred to by the gentlewoman from Texas? The clerk
    will report the amendment.
        The Clerk. Amendment to H.R. 333, offered by Ms. Jackson
    Lee. Page 120, after line 16, insert the following: ``(and make
    such technical and conforming changes''----
        Chairman Sensenbrenner. Without objection, the amendment is
    considered as read, and the gentlewoman from Texas is
    recognized for 5 minutes.
        Ms. Jackson Lee. Thank you very much, Mr. Chairman.
        Some years ago there was a very popular movie that had the
    phrase that was very quotable: ``Show me the money.'' Young
    people quoted it, and it got to be sort of a familiar
    Americana, if you will.
        This bill causes reasonable minds to disagree, and I would
    hope in this instance we could get reasonable minds to agree.
    This is a simple amendment that restores the language to
    prevent the language that would protect the abuse of underage
    creditors or users of credit.
        When we debated this over the last two sessions of
    Congress, our interest was--if we could ever find a compromise,
    it was in working with the credit card companies to realize
    that abuse is a two-way street. I offer for the consideration
    of my colleagues the proliferation of mail that comes to all of
    us, and I show one of these constant barrages that comes to
    everyone's mailbox.
        This happens to be Visa Gold, and it says, ``Send for your
    card now.'' Gleaming, bold letters reaching out and screeching
    to the innocent. Send the card now. No restraint, no
    understanding of how you balance a checkbook, but just send me
    the card.
        [The Amendment offered by Ms. Jackson Lee follows:]

        Ms. Jackson Lee. I would ask, Mr. Chairman, as well to
    submit into the record an article in the USA Today, Tuesday,
    February 13, 2001.
        [The article follows:]

        Ms. Jackson Lee. The headline said, ``Debt Smothers Young
    Americans: Undergraduates pile on credit cards and debt.''
    Young people having credit cards in 1998, 67 percent; in 2000,
    now 78 percent. Young people having four or more credit cards
    in 1998, 27 percent; 2000, 32 percent. Average credit card debt
    in 1998, $1,879; the year 2000, $2,748.
        It seems ludicrous, Mr. Chairman, that previous language
    had protection against the abuse of underage creditors, but
    H.R. 333 saw either the light that none of us could see or had
    some vision that others of us did not have, and this language
    is not in it.
        So my amendment is extremely simple and straightforward,
    what it does is it protects the underage creditor from the
    screeching sound of ``take me now.''
        This is a travesty when young people from 18 to 35--and
    obviously 35-year-olds are certainly adults. But it is well
    known that through this credit system and this constant barrage
    from the credit card companies we live from paycheck to
    paycheck, young people using credit cards for restaurant meals
    and high-tech toys, as noted in this article, and a $3,000 debt
    constantly at their doorstep.
        I believe that if we are to do no harm but as well to have
    reasonable minds, assessing the fact that maybe there is a
    recession--we have heard the President talk us into it. We know
    that growth is about 3 percent. Even though the economy is
    rumbling along, we do know that we will have to face some
    organizing of our debt, if you will.
        You have language in this legislation that means testing,
    literally blocking people from getting into the bankruptcy
    court, standing in the wayside, locking the key, and yet every
    single day you have a barrage of credit card mailing to college
    campuses, to young people with first-time jobs, to unemployed
    young people, to unemployed Americans talking about send the
    credit card now. Show me the money.
        And I think it's irresponsible, if we had the credit card
    industry sitting in here and saying give me the benefits but
    don't give me the burdens. Why we can't find an opportunity for
    a meeting of the minds to provide language that protects these
    underage----
        Chairman Sensenbrenner. The gentlewoman's time has expired.
        Ms. Jackson Lee. I would ask my colleagues to be
    reasonable----
        Chairman Sensenbrenner. The gentlewoman----
        Ms. Jackson Lee [continuing]. And support this amendment.
        Chairman Sensenbrenner. The gentlewoman's time has expired.
        For what purpose does the gentleman from Pennsylvania seek
    recognition?
        Mr. Gekas. I move to strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Gekas. The amendment at hand is one on which I would
    ask the members to vote no. The--it's a little bit confusing to
    me as to the aim of the lady from Texas. But I have to assert
    that if a creditor violates the existing provisions of the
    Consumer Credit Protection Act, then the claim of that creditor
    falls of its own weight, and the bankruptcy provisions already
    in place and the ones which will be addressed by our bill will
    already impose sanctions on that kind of creditor. So this is a
    simple restatement, it seems to me, of the obvious. A creditor
    who violates the Consumer Credit Protection Act shall not have
    a valid claim against a debtor. Therefore, I ask for a simple
    no to a simple amendment.
        Chairman Sensenbrenner. The question----
        Mr. Gekas. I yield back the balance of my time.
        Chairman Sensenbrenner. The question is on the amendment
    number 5 offered by the gentlewoman from Texas, Ms. Jackson
    Lee. Those in favor will signify by saying aye. Opposed, no.
        Ms. Jackson Lee. Roll call.
        Chairman Sensenbrenner. The noes appear to have it. Roll
    call is requested and ordered. The question is on the adoption
    of the amendment offered by the gentlewoman from Texas, Ms.
    Jackson Lee. Those in favor will, as your names are called,
    answer aye, those opposed, no, and the clerk will call the
    roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. No.
        The Clerk. Mr. Gekas, no.
        Mr. Coble?
        Mr. Coble. No.
        The Clerk. Mr. Coble, no.
        Mr. Smith?
        Mr. Smith. No.
        The Clerk. Mr. Smith, no.
        Mr. Gallegly?
        [No response.]
        The Clerk. Mr. Goodlatte?
        [No response.]
        The Clerk. Mr. Chabot?
        Mr. Chabot. No.
        The Clerk. Mr. Chabot, no.
        Mr. Barr?
        Mr. Barr. No.
        The Clerk. Mr. Barr, no.
        Mr. Jenkins?
        Mr. Jenkins. No.
        The Clerk. Mr. Jenkins, no.
        Mr. Hutchinson?
        Mr. Hutchinson. No.
        The Clerk. Mr. Hutchinson, no.
        Mr. Cannon?
        Mr. Cannon. No.
        The Clerk. Mr. Cannon, no.
        Mr. Graham?
        Mr. Graham. No.
        The Clerk. Mr. Graham, no.
        Mr. Bachus?
        Mr. Bachus. No.
        The Clerk. Mr. Bachus, no.
        Mr. Scarborough?
        Mr. Scarborough. No.
        The Clerk. Mr. Scarborough, no.
        Mr. Hostettler?
        Mr. Hostettler. No.
        The Clerk. Mr. Hostettler, no.
        Mr. Green?
        Mr. Green. No.
        The Clerk. Mr. Green, no.
        Mr. Keller?
        [No.]
        The Clerk. Mr. Issa?
        [No response.]
        The Clerk. Ms. Hart?
        Ms. Hart. No.
        The Clerk. Ms. Hart, no.
        Mr. Flake?
        Mr. Flake. No.
        The Clerk. Mr. Flake, no.
        Mr. Conyers?
        [No response.]
        The Clerk. Mr. Frank?
        [No response.]
        The Clerk. Mr. Berman?
        [No response.]
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        [No response.]
        The Clerk. Mr. Scott?
        Mr. Scott. Aye.
        The Clerk. Mr. Scott, aye.
        Mr. Watt?
        Mr. Watt. Aye.
        The Clerk. Mr. Watt, aye.
        Ms. Lofgren?
        [No response.]
        The Clerk. Ms. Jackson Lee?
        Ms. Jackson Lee. Aye.
        The Clerk. Ms. Jackson Lee, aye.
        Ms. Waters?
        Ms. Waters. Aye.
        The Clerk. Ms. Waters, aye.
        Mr. Meehan?
        [No response.]
        The Clerk. Mr. Delahunt?
        [No response.]
        The Clerk. Mr. Wexler?
        [No response.]
        The Clerk. Ms. Baldwin?
        Ms. Baldwin. Aye.
        The Clerk. Ms. Baldwin, aye.
        Mr. Weiner?
        [No response.]
        The Clerk. Mr. Schiff?
        Mr. Schiff. Aye.
        The Clerk. Mr. Schiff, aye.
        Mr. Chairman?
        Chairman Sensenbrenner. No.
        The Clerk. Mr. Chairman, no.
        Chairman Sensenbrenner. Are there additional members who
    wish to cast their vote or change their vote? The gentleman
    from California, Mr. Gallegly?
        Mr. Gallegly. No.
        Chairman Sensenbrenner. Any additional members? If not, the
    clerk will report.
        The Clerk. Mr. Chairman, there are 6 ayes and 18 nays.
        Chairman Sensenbrenner. The amendment is not agreed to.
        Are there further amendments?
        Ms. Jackson Lee. Parliamentary inquiry, Mr. Chairman.
        Chairman Sensenbrenner. State your inquiry.
        Ms. Jackson Lee. Mr. Chairman, you noted at the beginning
    of this session, as you began your chairmanship, that you would
    be adhering to the rules. Let me acknowledge the fact that I
    respect your attention to the detail of the rules and will work
    very hard during these next 2 years to do so.
        I do believe, however, in the sense of comity that a hard-
    hitting gavel is over the edge----
        Chairman Sensenbrenner. Well----
        Ms. Jackson Lee [continuing]. When someone is finishing
    their sentence. I believe that if we can work with less
    hostility in this room, we can all do a better job. I was
    concluding my sentence and had no intention to disrespect the
    clock. But I would appreciate it--I heard your voice, and I
    would appreciate it if we can work more in comity and with less
    hostility. And I thank the chairman.
        Chairman Sensenbrenner. The gentlewoman was not stating a
    parliamentary inquiry. You know, let me say that the clock runs
    at the same rate for both sides of the aisle.
        Ms. Jackson Lee. I appreciate it, Mr. Chairman, and I will
    do my best to adhere to it.
        Chairman Sensenbrenner. For all members----
        Ms. Jackson Lee. But the heavy-handed gavel does nothing
    but antagonize an already----
        Chairman Sensenbrenner. The gentlewoman----
        Ms. Jackson Lee [continuing]. Antagonized minority.
        Chairman Sensenbrenner [continuing]. From Texas is
    interrupting once again. The machine is operating properly.
    Every member has a yellow light notice when there is 1 minute
    to go. The Chair told the gentlewoman that her time had
    expired----
        Ms. Jackson Lee. And I was completing my sentence, Mr.
    Chairman.
        Chairman Sensenbrenner [continuing]. And she continued--she
    continued speaking, and the Chair will enforce the rules, and
    when the red light goes on, that means----
        Ms. Jackson Lee. And I appreciate it----
        Chairman Sensenbrenner [continuing]. Your time is up.
    That's the way it works----
        Ms. Jackson Lee. Since we have to spend 2 years together, I
    would appreciate it if we could do it in comity. I thank the
    chairman.
        Chairman Sensenbrenner. Okay, and comity means we don't
    interrupt each other.
        For what purpose does the gentlewoman from California----
        Ms. Jackson Lee. I agree, and I would appreciate if you
    wouldn't heavy-handle on this gavel. All you're going to do is
    break the gavel, keep going on and on and on. We can----
        Mr. Scarborough. Regular order, Mr. Chairman.
        Ms. Jackson Lee [continuing]. Work together. We are
    professionals----
        Mr. Scarborough. Regular order, Mr. Chairman. Regular
    order, Mr. Chairman.
        Chairman Sensenbrenner. Would the gentlewoman from Texas
    kindly follow the rules?
        For what purpose does the gentlewoman from California, Ms.
    Waters, seek recognition?
        Ms. Waters. Prior to seeking recognition, I have a
    parliamentary inquiry. Do you wish us--if I may, Mr. Chairman--
    to----
        Chairman Sensenbrenner. The gentlewoman will state her
    inquiry.
        Ms. Waters. I have multiple amendments. Do you wish us just
    to take up one so that you can go around----
        Chairman Sensenbrenner. What the----
        Ms. Waters [continuing]. The room? Will you have a second
    round?
        Chairman Sensenbrenner. What the Chair has been doing is he
    has been conferring with the Democratic staff and following
    their advice into which order they wish me to recognize members
    of the minority. So I guess I would say please consult with
    your staff, and which amendment do you wish to offer now?
    Because they told me to recognize you next.
        Ms. Waters. Well, that was not my question. I was inquiring
    whether or not I should do multiple amendments, but I will just
    go ahead. I have an amendment at the desk----
        Chairman Sensenbrenner. Would you like to do them en bloc?
        Ms. Waters. No, I would not. I have an amendment at the
    desk.
        Chairman Sensenbrenner. Which amendment does the
    gentlewoman wish to offer?
        Ms. Waters. It is not numbered. It is--it is referred to
    under section 102, page 12, beginning on line 18.
        Chairman Sensenbrenner. Has the clerk found the proper
    amendment? If so, the clerk will report the amendment.
        The Clerk. Amendment to H.R. 333, offered by Ms. Waters.
    Page 12, beginning on line 18, insert----
        Chairman Sensenbrenner. Without objection, the amendment
    will be considered as read, and the gentlewoman from California
    will be recognized for 5 minutes.
        [The Amendment offered by Ms. Waters follows:]

        Ms. Waters. Thank you very much.
        Mr. Chairman and members, this amendment would amend
    section 102, dismissal or conversion, so that debtors who
    establish that their income falls below a specified threshold
    do not have to comply with all of the reporting requirements
    included in the means test. The threshold should be based on
    the Federal income poverty guidelines for the current year.
        The means test is a burdensome test requiring debtors to
    gather a great deal of information for presentation to the
    bankruptcy court. Under proposed section 102, all persons
    filing for bankruptcy would have all of these requirements for
    reporting and documenting monthly expenses, rent,
    transportation, food, clothing, and necessary expenses to
    maintain safety, on and on and on. And it actually requires an
    attorney to be able to put all of this in order for
    presentation.
        We're talking about people who are below the poverty
    guidelines and they can show proof of that, of their income. We
    would simply ask that they not be put in the position of hiring
    an attorney. Not only do they not have the resources to do so,
    we have cut back on legal aid so much until they cannot
    accommodate these kinds of requests, even when people have no
    way of being able to comply with the requirements of bankruptcy
    court.
        So we need to recognize some minimal threshold below which
    debtors do not need to comply with the reporting requirements
    of the means test.
        Specifically, individuals with incomes below the Federal
    poverty guidelines would be exempt. To be below the guidelines
    for 2000, for a family of four, for example, the household
    income must be below $17,000. They are least--people filing in
    that category are least able to afford an attorney to assist
    them in gathering the necessary information.
        So, Mr. Chairman and members, I would ask that we support
    this amendment, give poor people an opportunity to not have to
    comply with these burdensome requirements, not clog up the
    system, and simply give proof of their earnings. And if they
    fall below the poverty guidelines, that should be enough.
        Chairman Sensenbrenner. Does the gentlewoman yield back the
    balance of her time?
        Ms. Waters. I yield back the balance of my time.
        Chairman Sensenbrenner. For what purpose does the gentleman
    from Pennsylvania seek recognition?
        Mr. Gekas. I move to strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Gekas. The answer to the gentlelady from California is
    apparent in the language of her proposed amendment. On the one
    hand, she says that the person under the poverty level
    shouldn't have to prove anything, and then in the amendment
    says the debtors who establish that their income falls below
    the Federal income poverty guidelines. So we can only imagine
    that there are just a few ways in which one can establish that
    the income falls below the Federal income poverty.
        One is that the debtor can simply say I'm below the Federal
    income--Federal income poverty guideline, therefore, grant me
    bankruptcy. We can't allow that, can we?
        So the second step is--to establish means to provide income
    tax returns or slips, bank slips, or an array of bills, et
    cetera, or somehow that individual still has to establish. You
    have gone thus far, even in this second step, toward what we
    are attempting to do in this bill, and that is to make certain
    that everyone who comes before the bankruptcy court is entitled
    to relief. It is not a burden in any way on anyone to prove
    that they come within a certain guideline----
        Ms. Waters. Will the gentleman yield?
        Mr. Gekas [continuing]. In the bankruptcy provisions.
        Ms. Waters. Will the gentleman yield?
        Mr. Gekas. And it will become readily available and readily
    recognizable if a person is in a poverty guideline with the
    initial filing that that person----
        Ms. Waters. Will the gentleman yield?
        Mr. Gekas [continuing]. Is entitled to chapter 7 discharge.
    I would yield.
        Ms. Waters. Thank you very much, and in my presentation, I
    attempted to distinguish between establishing and giving simple
    proof. For example, under this section, all persons filing for
    bankruptcy will be required to do the following: they would
    have to show the monthly expenses, rent, transportation, food,
    clothing, and all necessary expenses to maintain safety, actual
    expenses paid for reasonably necessary care to support the
    elderly, chronically ill, the disabled household member, a
    member of debtor's immediate family, actual expenses for each
    dependent child under the age of 18 years, and up to $1,500 per
    year for private--on and on and on.
        What I'm saying to you is if you fell below the poverty
    guideline, you are poor, and you come in and you show proof--
    your income tax statement, your payment slips, simple proof of
    how much money you earn, if you fall below the guidelines, that
    you don't put this person in the position of having to go out
    and try and find an attorney to do all of this documentation
    when, in fact, they're poor, they have nothing. And you're
    clogging up bankruptcy court with this, and you're asking them
    to meet certain kind of standards that they can't very well
    meet. I mean, it's--it's about having a little mercy. It's
    about simply recognizing that someone who falls below the
    poverty guidelines should not have to go and gather and try and
    put together all of this documentation. It really doesn't make
    good sense.
        Mr. Gekas. Recovering some of my time here, I simply
    reiterate that it is not a great burden for an individual to
    demonstrate by what we require under this law that they come
    under the median income level, let alone the poverty levels.
    It's not that great a burden.
        As a practical matter, looking at it from a lawyer's
    standpoint, I believe that once the income level is stated and
    proved to be under the median income--forget the poverty for
    just a moment--but it might also be obvious that they're under
    the poverty level, that that ends the case right then and
    there, and that that individual will be accorded the protection
    of chapter 7.
        I ask the members to vote----
        Ms. Waters. Would the gentleman yield? Then you agree with
    me? Are you agreeing that----
        Chairman Sensenbrenner. The time belongs to the gentleman
    from Pennsylvania. Do you yield?
        Mr. Gekas. Yes, I yield. What is the question?
        Ms. Waters. The latter part of your statement was a bit
    confusing. What you--what you said was that if you fall below
    the median or if you are poor that you should not have to do
    anything else to prove or to meet all of the requirements of
    this legislation. Is that what you said?
        Mr. Gekas. I did not say that. I said that the requirements
    that we do place in the bill do not exert a great burden on the
    debtor, and as a practical matter, if the individual is already
    declared and is proved to be under the median----
        Chairman Sensenbrenner. The gentleman's time has expired.
        Mr. Gekas [continuing]. Guidelines for the poverty lines,
    they'll be discharged.
        Chairman Sensenbrenner. The question----
        Mr. Watt. For what purpose does the gentleman from North
    Carolina, Mr. Watt, seek recognition?
        Mr. Watt. I move to strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Watt. Thank you, Mr. Chairman. I'm somewhat frustrated
    because it--it does sound to me like what Ms. Waters and what
    Mr. Gekas are saying puts them on the same side of this issue
    philosophically. Unfortunately, the bill has no exemption from
    all of these onerous paperwork requirements for people who
    clearly fall below the median income.
        Mr. Gekas. Would the gentleman yield?
        Mr. Watt. I'm happy to yield. I hope I can yield to him for
    the purpose of showing me where in this bill, once somebody
    demonstrates they fall below the median income and would be
    exempt from--should be exempt from the rest of the onerous
    provisions, where it says they really are exempt, because I've
    been looking for it and a number of experts in this field have
    looked rigorously for the provision and say that that is a
    serious, serious problem. I can't find it.
        Mr. Gekas. Would the gentleman yield----
        Mr. Watt. People who have testified here who are experts in
    this field can't find it. Not advocates. I'm talking about
    people from the National Bankruptcy Conference, which has
    people from Republicans and Democrats, conservatives and
    liberals, all of them are in this organization. They can't find
    the provision----
        Mr. Gekas. Would the gentleman yield?
        Mr. Watt [continuing]. That you say does this. And maybe
    Ms. Waters' amendment doesn't artfully do it, either. I don't
    know. But if you all agree, I don't know why we're protecting
    the integrity of a bill that doesn't say what you all agree on.
        Mr. Gekas. Would the gentleman yield?
        Mr. Watt. I think the appropriate individual to engage in
    this debate on this particular provision is the gentleman from
    North Carolina, because he very carefully articulated the
    notion and the fact that even a person under the median level,
    or even under the poverty levels, can game the system. That is
    a fact. But----
        Mr. Watt. No, no, but----
        Mr. Gekas. Let me----
        Mr. Watt. Let me just seize back my time here. I'm going to
    yield back to you. But that person then goes--it doesn't go out
    of bankruptcy. They still flip over into another bankruptcy.
    They're not gaming the system. What they are--what they are
    doing--I mean, what if all the parties in the bankruptcy court
    come in and stipulate that this person meets the income,
    there's no controversy about it whatsoever, there's nothing in
    this bill that allows that person to be exempted from filing
    all of these documents, going through all this process. You
    know, and that may be your intent. It sounds like it is. That's
    what I'm saying. But there's nothing in the bill that does
    that, Mr. Gekas, and perhaps Ms. Waters' amendment doesn't do
    it artfully either. But somewhere in this bill that ought to be
    addressed.
        Mr. Scott. Would the gentleman yield?
        Mr. Watt. I'd be happy to--well, I told Mr. Gekas I'd yield
    back to him. He's going to tell me where the provision is,
    maybe.
        Mr. Gekas. It's out there--what I----
        Mr. Watt. Well, I think that's where it is, is out there.
    I'm trying to find it in this bill. It's out there in
    cyberspace somewhere in a notion that you have about equity,
    which Ms. Waters has about equity, which I think everybody on
    this committee has about equity, and all we're saying is
    please, if we--if we found something we agree about, put it in
    the bill.
        Mr. Gekas. Would the gentleman yield?
        Mr. Watt. Yes, sir.
        Mr. Gekas. The current law requires for the purpose of
    making certain that individuals qualify, to have their debts
    discharged, to be able to prove their expenses, their income,
    the whole gamut of things. The current law requires that. So we
    don't change that portion of it.
        If an individual is to be scrutinized to determine whether
    or not they're trying to game the system or somehow to avoid
    their responsibilities to repay some of the debt, it's only a
    necessary and proper requirement to have them list their
    expenses, et cetera. What I'm saying----
        Mr. Watt. But what happens if everybody in the bankruptcy
    agrees that----
        Chairman Sensenbrenner. The time of the gentleman has
    expired.
        Mr. Scarborough. Mr. Chairman?
        Chairman Sensenbrenner. For what purpose does the gentleman
    from Florida, Mr. Scarborough, seek recognition?
        Mr. Watt. Would Mr. Scarborough yield----
        Mr. Scarborough. To strike----
        Mr. Watt. So I can at least----
        Chairman Sensenbrenner. I'd recognize him first, please.
    For what purpose do you seek recognition?
        Mr. Scarborough. To strike the last word.
        Chairman Sensenbrenner. The gentleman from Florida is
    recognized for 5 minutes.
        Mr. Scarborough. I will yield to you, Mr. Watt, but let me
    yield to you asking you a question, too, because I'm
    sympathetic to Ms. Waters' concern, because I think most of us
    here would be sympathetic, not wanting to strap those that are
    truly impoverished with a lot of these requirements that would
    require an attorney.
        But let me ask you, Mr. Watt or Ms. Waters, just to throw
    this out there, how do we stop, let's say, somebody worth $10
    million or somebody that's making, you know, hundreds of
    thousands of dollars or millions of dollars a year from 1 year
    deciding to report that they made $13,000 in income a year or
    move their money around so they don't game the system? So
    instead of having a single mother with three kids who has run
    up some credit card bills that she can't pay, having somebody
    else game the system?
        Mr. Watt. See, what happens, Mr. Scarborough, is this: This
    bill only takes that person and flips them over into another
    form of bankruptcy. Okay? They've still got to go through all
    of the requirements. You know, if there's some question about
    that, that can be determined in that bankruptcy proceeding, and
    they can come back over--they can be sent back over here.
    That's one of the--one of the concerns we've expressed about
    this bill, is it really doesn't have a provision that kicks
    people back if they've--if they've done it either. But the
    problem is----
        Mr. Scarborough. Reclaiming real quick with one more quick
    question, do you agree with Ms. Waters that there are onerous
    requirements that would require the hiring of an attorney for
    somebody in poverty?
        Mr. Watt. Yes.
        Mr. Scarborough. You can keep talking now and just talk
    about whatever you wanted to talk about.
        Mr. Watt. Oh, I thought you were yielding--you asked me a
    question, and I answered the question.
        Mr. Scarborough. Okay. You want me to take my time back?
        Mr. Watt. That's unusual----
        Mr. Scarborough. Yeah, that is. Okay, Mr. Gekas, do you
    agree with Ms. Waters that--that the requirements are so
    onerous that, let's say, a single mother under the poverty line
    would have to hire an attorney to be able to meet these
    requirements? I'm just curious. I'm not----
        Mr. Gekas. I don't think--yes. If the gentleman would
    yield, I don't think it's going to be absolutely necessary for
    a person under the poverty level to hire a lawyer. I really
    don't. I can be proved otherwise there, but there are many
    other reasons that we require the expenses to be outlined for a
    person claiming poverty or under the median income.
        For instance, the creditor has a right to determine from
    these--these accounts as to whether or not they extended credit
    in the first place on a reasonable basis or were they defrauded
    or were they misled by the debtor when they obtained credit in
    the first place. They're entitled to know that.
        Secondly, in the question of reaffirming--reaffirmation,
    the creditor is required or should know whether or not to give
    this person a chance to reaffirm what these expenses are and
    whether they're regular and proper and necessary. So it's not
    an undue burden for anyone claiming bankruptcy to be able to
    supply these kinds of----
        Ms. Waters. Would the gentleman yield?
        Mr. Gekas [continuing]. This information. That's all I'm
    saying. Philosophically, we agree. And as a practical matter,
    this is the only thing that I was trying to say in accord with
    Ms. Waters, that in the practice of bankruptcy, it may be
    apparent, as Mr. Watt implied in one of his statements, from
    all the circumstances--and everybody agrees that even in a
    recounting of the expenses, which are still a part of the
    record, that we agree that that person should be discharging
    debt. But they'll still be scrutinizing these expenses.
        Mr. Watt. Would the gentleman yield?
        Mr. Scarborough. Well, Ms. Waters, did you ask----
        Ms. Waters. Yes.
        Mr. Scarborough. Ms. Waters?
        Ms. Waters. I--I--you asked the question about whether or
    not you believe it is necessary to hire an attorney, and what
    Mr. Gekas did not answer was all of the requirements that are
    in the bill that have to be addressed by somebody. And when you
    look at these requirements, for documentation, for everything,
    I think you will concur that the average person is unable to do
    it without an attorney and poor people simply don't have the
    resources to do it.
        If he would but read the legislation and look at how it is
    delineated here, I think he cannot--he cannot reasonably
    conclude that this poor person won't need an attorney in order
    to compile all of this documentation, to depreciate, to do a
    lot of things, in order to have an accurate picture.
        So if they're poor and they don't have anything, a family
    of four meeting the poverty guidelines, under $17,000, for
    God's sake, if that's your proof, that's all they have, let
    them go.
        Chairman Sensenbrenner. The time of the gentleman from
    Florida has expired.
        Mr. Delahunt. Mr. Chairman?
        Chairman Sensenbrenner. For what purpose does the gentleman
    from Massachusetts seek----
        Mr. Delahunt. I move to strike the last word.
        Chairman Sensenbrenner. The gentleman's recognized for 5
    minutes.
        Mr. Delahunt. And point out to--to Mr. Scarborough that I
    dare say there are not many on this particular panel, unless
    they have practiced in the bankruptcy courts, that had--would
    have the experience and the ability to fill out what would be--
    what be required to fill out.
        In fact, at the only--at one of the hearings that this
    committee had, there was testimony from an individual professor
    from Utah who--I don't know whether I'm accurate in saying
    this, but he is a member of the National Bankruptcy Conference
    that I believe is considered a neutral--a neutral party. And he
    indicated that he agreed with the import of Ms. Waters'
    amendment, that you'd have to have a lawyer.
        In response to a question by Mr. Nadler, he indicated that
    in most cases it would be hundreds of dollars' worth of legal
    fees, but in some cases thousands of dollars' worth of legal
    fees, even when the debtor would qualify for chapter 7.
        Mr. Scarborough. Would the gentleman yield for a second?
    And I think we agree on that point. Let me ask you this very
    quickly, Mr. Delahunt. Looking at Ms. Waters' amendment, let me
    ask you what I asked Mr. Watt. I mean, do you think it's overly
    broad and is susceptible to being gamed by people? We all agree
    with this concept, I think. Most of us do. But are you
    comfortable with this language?
        Mr. Delahunt. I--I just walked in and I haven't read the--
    --
        Mr. Scarborough. You don't read any bills, so just--just
    fake it.
        Mr. Delahunt. Well, my guess is, since we're----
        Mr. Watt. Would the gentleman yield?
        Chairman Sensenbrenner. If the Chair can interrupt, the
    author of the amendment has suggested that we might bring this
    amendment to a vote before we break for lunch. The committee
    members can be advised and the gentleman can proceed.
        Mr. Delahunt. And I will be very brief, but I just want to
    direct my comments to my colleagues on the other side, that
    this particular bill as drafted now is a dream for lawyers. If
    you want to make lawyers active and busy and prosperous, reject
    the Watt--reject, rather, the Waters amendment.
        Mr. Watt. Would the gentleman yield?
        Mr. Delahunt. I yield to Mr. Watt.
        Mr. Watt. Let me--and I appreciate you yielding to somebody
    who actually has read the bill and the amendment, because I've
    been looking for this--this phantom cyberspace amend--
    provision. I mean, this is a serious problem. And it's even
    more a problem because there's no provision in the bill that
    allows you to get out of this process even if everybody agrees
    that you qualify.
        Now, does--does the Waters language leave something to be
    desired? Yes, it does. But the point I'm making is that if we
    all agree that there's a certain category of cases where it is
    absolutely clear that the person shouldn't be there, that
    they--that they're exempted, why couldn't we come up with some
    language to at least put that exception in the bill to keep
    people from having to go through all of these onerous
    requirements when we all agree that that shouldn't be
    necessary?
        Mr. Scott. Would the gentleman yield?
        Mr. Scarborough. Would the gentleman yield?
        Mr. Watt. And I would say to the gentleman that Ms. Waters'
    amendment----
        Mr. Delahunt. I yield to Mr. Scarborough.
        Mr. Watt [continuing]. Gets a lot closer to where--where
    the gentleman is than the bill does.
        Mr. Delahunt. I yield to Mr. Scarborough.
        Mr. Scarborough. And I thank you. If that's the case, would
    Ms. Waters consider withdrawing the amendment so we could see
    if we couldn't work on language that Mr. Watt and others would
    be more comfortable with and bring it up for a vote later on?
        Ms. Waters. I appreciate the consideration that you're
    giving to this, and if the language is imprecise and does not
    get to satisfying Mr. Gekas and others, I'm very happy to work
    on it.
        Chairman Sensenbrenner. Does the gentlewoman withdraw the
    amendment?
        Mr. Watt. Would the gentleman yield? Would the gentleman
    yield? Let me suggest to him that a better way to proceed,
    since there is nothing in the bill--I mean, it would be--it
    would make more sense on this--on this point to withdraw the
    bill, because Ms. Waters' amendment----
        Mr. Scarborough. Don't push your luck. I'm----
        Mr. Watt. I say that with tongue in cheek. The reason I say
    that is because----
        Chairman Sensenbrenner. The time of gentleman from
    Massachusetts----
        Mr. Watt. I ask unanimous consent for 30 additional
    seconds.
        Chairman Sensenbrenner. Well, there's a vote on. The
    gentleman from Massachusetts is recognized for 30 additional
    seconds.
        Mr. Watt. I just--we ought to put this provision in the
    bill and then continue to work on this provision to clean up
    the language, not just leave the bill alone and hope that
    some--somewhere cyberspace comes in----
        Chairman Sensenbrenner. The gentleman's time has once
    again----
        Ms. Waters. Excuse me. If I may, unanimous consent, if I
    need it, to address the concerns of Mr. Scarborough.
        Chairman Sensenbrenner. Well----
        Ms. Waters. I'd be happy over the lunch break to work with
    him so that we can come back and see if we can have language
    that we agree on.
        Chairman Sensenbrenner. Okay. The committee is recessed
    until 1:30. Members should be present promptly.
        [Whereupon, at 12:27 p.m., the committee was recessed, to
    reconvene at 1:30 p.m., this same day.]
        AFTERNOON SESSION [1:43 p.m.]
        Chairman Sensenbrenner. The committee will be in order.
    Pending at the time the committee recessed earlier today was
    amendment number 6 by the gentlewoman from California, Ms.
    Waters. All those in favor of the Waters amendment will----
        Mr. Watt. Mr. Chairman?
        Chairman Sensenbrenner. For what purpose does the gentleman
    from North Carolina seek recognition? He has already spoken
    once on this amendment.
        Mr. Frank. Mr. Chairman?
        Chairman Sensenbrenner. Yes?
        Mr. Frank. I seek to strike the last word.
        Chairman Sensenbrenner. The gentleman from Massachusetts is
    recognized----
        Mr. Frank. I yield to the gentleman from North Carolina.
        Chairman Sensenbrenner [continuing]. For 5 minutes.
        Mr. Frank. I yield to the gentleman from North Carolina.
        Mr. Watt. I thank the gentleman for yielding.
        As the chairman is well aware, at the end of the discussion
    we had been talking with Mr. Scarborough about the possibility
    of--of trying to get to some language that everybody could
    agree upon to accomplish what it appeared that both Mr. Gekas
    and Ms. Waters and Mr. Scarborough and apparently a substantial
    majority of the committee agreed to.
        I have some language here. Unfortunately, Ms. Waters is not
    here. Ms. Scar--Mr. Scarborough is not here. And I don't have
    the authority to withdraw Ms. Waters' amendment, but I would
    request that that amendment be deferred until we have a chance
    to----
        Chairman Sensenbrenner. If the gentleman from Massachusetts
    would yield, you know, unfortunately, the rules do not allow us
    to defer amendments. And only the offeror of the amendment can
    have it withdrawn. So I would--the defeat of the Waters
    amendment would not prejudice any other member offering an
    amendment on the same subject that was significantly similar to
    the Waters amendment.
        Mr. Watt. Mr. Chairman, I think in light of that, I mean,
    since we're going to be rigid about this, I would offer my
    amendment, offer this language as an amendment to the Waters
    amendment, if that would be in order.
        Chairman Sensenbrenner. Well, the Chair doesn't know what
    is in this amendment on whether it would be germane or not. But
    the clerk will report the amendment to the amendment.
        The Clerk. An amendment to an amendment to H.R. 333,
    offered by Mr. Watt of California. Page 12, insert after line
    17, ``2(B)(v), a debtor whose current monthly income is equal
    to''----
        Mr. Watt. Mr. Chairman, I ask unanimous consent the
    amendment be considered as read.
        Chairman Sensenbrenner. Without objection.
        [The Amendment offered by Mr. Watt follows:]

        Mr. Gekas. Mr. Chairman, I reserve the right to object.
        Mr. Frank. Point of order, Mr. Chairman. Isn't it too late,
    the reading having already been completed?
        Chairman Sensenbrenner. No, the reading has not been
    completed, and the Chair hasn't recognized the gentleman for 5
    minutes. You know, that's--that's when reservation of a point
    of order does not become timely.
        Do you reserve the right to object to waiving the reading
    of the amendment, or are you going to reserve a point of order?
        Mr. Gekas. I'm reserving the right to object----
        Chairman Sensenbrenner. Okay.
        Mr. Gekas [continuing]. To a point of order.
        Chairman Sensenbrenner. Well----
        Mr. Gekas. To raise a point of order.
        Mr. Watt. I'll withdraw my motion that the--my unanimous
    consent request and allow the clerk to read.
        Chairman Sensenbrenner. Okay. The clerk will read.
        The Clerk. ``2(B)(v), a debtor whose current monthly income
    is equal to or less than the amount set forth in paragraph 7
    and has been for the 1-year period preceding the date of the
    filing of the petition may, in lieu of the requirements of
    clauses 4 and 5 of section 521(a)(1)(B) and subsections (e),
    (f), and (g) of section 521''----
        Chairman Sensenbrenner. Without objection, further----
        Mr. Watt. I object, Mr. Chairman.
        Chairman Sensenbrenner. If the gentleman from North
    Carolina could allow the Chair to state that the Chair has
    reviewed the amendment and it is germane and a point of order
    wouldn't lie.
        Mr. Watt. Well, I thought he was objecting to the reading,
    in which case, I--you know, I don't--I----
        Chairman Sensenbrenner. We have worked it out on this side
    of the aisle. I'm afraid we haven't worked--the clerk will
    continue to read.
        Mr. Watt. Okay. I'll withdraw--I'll withdraw my objection.
    I thought he was objecting to--to the fact that the amendment
    was not being read.
        Chairman Sensenbrenner. That was not the objection. The
    gentleman from North Carolina is recognized for 5 minutes.
        Mr. Watt. Thank you, Mr. Chairman.
        Mr. Chairman and members, at the end of the--before we
    broke for the votes, we had been engaged in a discussion with
    Mr. Scarborough and I thought also with Mr. Gekas about how we
    might satisfy the concern that the--that the system not be
    gamed, but still not require people who met the criteria to get
    out of the bankruptcy--out of chapter 7 and into 13 to go ahead
    and do that without an onerous paperwork burden and legal
    burden, how we could accomplish that, which every--everybody
    seemed to be intent on accomplishing.
        Over the break, our staff has come up with this wording. In
    the haste of things, they indicated that I'm from the State of
    California, and I ask unanimous consent to revise that to make
    it clear that I'm from North Carolina still.
        Chairman Sensenbrenner. Without objection.
        Mr. Watt. But beyond that, I think we have the makings of
    something that would--hopefully would satisfy what I think
    everybody is trying to achieve. And basically what that would
    require is if somebody met the criteria, felt that they met the
    criteria, they could simply file with the court written
    evidence showing their income for a 1-year period before the
    date of the filing of the petition, and file with that a
    declaration under penalty of perjury that the debtor's income
    meets the test of this clause for that period.
        Now, you know, I--I think everybody is trying to achieve
    the same thing. We're working in good faith. And what I would
    like to see, since Ms. Waters hadn't seen this amendment, Mr.
    Scarborough hadn't seen it, but I think all of us are saying
    the same thing, is let's put this amendment in the bill, and if
    we can figure out a better way or if somebody has a problem
    with it, between now and the floor, Mr. Gekas and the chairman
    of this committee have full control over this bill between now
    and the floor, so, I mean, it's not going to be the end of
    their world--although it might be the end of our world if we
    don't get some language in here on this, because as I think Mr.
    Gekas has already acknowledged, except in cyberspace somewhere,
    there is nothing that even when everybody agrees the criteria
    are met, to get somebody exempted from this bill that will get
    you out of court without filing mountains and mountains of
    paper. And that's all we're trying to achieve.
        I yield back.
        Mr. Gekas. Mr. Chairman?
        Chairman Sensenbrenner. The gentleman from--the gentleman
    from Pennsylvania.
        Mr. Gekas. Yes, I thank the Chair. I move to strike the
    last word.
        Chairman Sensenbrenner. The gentleman's recognized for 5
    minutes.
        Mr. Gekas. I still oppose the amendment because in the
    final analysis the whole purpose of bankruptcy is to allow
    those people who deserve a fresh start to gain that fresh
    start, but the opposite still applies, namely, that those who
    are able to repay even a portion of the debt should be
    compelled to do so. We have to examine that, and that's the
    purpose of the entry-level submission of documentation, et
    cetera, so that the court can be satisfied as to the real
    status of that individual.
        The language of this amendment does not take into account
    the questions of reaffirmation. It does not take into account
    the questions of bad faith, except to say the penalty of
    perjury, et cetera. Well, that's always there. Even under our
    language, that penalty of perjury is still a constant. You're
    not adding anything or showing your toughness or anything like
    that by putting in the penalty of perjury when that already
    exists.
        What we're saying is that it is not a burden, contrary to
    the general thinking of the debate that has thus far been held,
    to ask an individual to show what income is derived, what
    expenses apply to that and so forth. The totality of
    circumstances which the bankruptcy court looks at, a question
    of bad faith, a question of reaffirmation, all of those depend
    upon this full exposition of the--the details of a person's
    financial status.
        Now, having shown why I believe we should vote no, I still,
    contrary John Conyers' peroration of my intentions in the past,
    am willing to--to meet, once this is voted down, I am--you
    don't know what peroration means.
        Mr. Frank. No. If the gentleman would yield, we're just
    afraid you thought you were getting paid per oration, and we
    didn't want you to get into that.
        Mr. Gekas. Peroration. You really don't know what it means,
    then. But I am willing, once this is defeated--I hope it is
    defeated--to again join with Mr. Watt and Mr. Conyers, if he
    deigns to meet with me, having heard my pledge to do so, to try
    to work something out before the floor. But for now I ask the
    members to vote now.
        Mr. Scott. Would the gentleman yield?
        Chairman Sensenbrenner. Does the gentleman yield back the
    balance of his time?
        Mr. Gekas. I do.
        Chairman Sensenbrenner. For what purpose does the gentleman
    from Virginia seek recognition?
        Mr. Scott. The gentleman is recognized for 5 minutes.
        Mr. Scott. Mr. Chairman, maybe I'm missing something. I
    thought this reporting that was under paragraph 2 and now is
    under clauses 4 and 5 was for the purpose of determining what
    you could pay under chapter 13. What this says is if you're not
    going to chapter 13 because you are clearly eligible for
    chapter 7, all of that reporting doesn't serve--all of that
    reporting serves no useful purpose. And the question is: If
    there's no purpose to be served with the filing, why should
    anyone have to incur all of the expense of filing it?
        Mr. Gekas. Would the gentleman yield?
        Mr. Scott. I would yield.
        Mr. Gekas. I believe the gentleman is begging the question.
    To look at the items of expense and so forth is to determine
    whether or not that individual is in any way exercising bad
    faith or trying to game the system. And once we look at that,
    it may well be that the solution is to go to chapter 13, or it
    may be to discharge, or it may be to--to not allow discharge.
    There are a lot of options available. But having the evidence
    and the facts before us is a prerequisite.
        Mr. Scott. Reclaiming my time, as I understand it, if you
    are under the median income, are you or are you not entitled to
    file chapter 7? I yield.
        Mr. Gekas. If you would yield again, yes. But not if it is
    determined that the filing has occurred, even with a
    demonstration prima facie that they're under the median income.
    It does not prima facie mean that they are not trying to game
    the system, to use that phrase again. And, therefore, the
    investigation into totality of circumstances could yield a
    rejection of chapter 7, even when the median income is shown--
    is shown to be the top level of this person's income.
        Mr. Scott. I yield back.
        Mr. Frank. Mr. Chairman?
        Mr. Hutchinson. Mr. Chairman?
        Chairman Sensenbrenner. The gentleman from Arkansas, Mr.
    Hutchinson.
        Mr. Hutchinson. I thank the chairman and I move to strike
    the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Hutchinson. The purpose of me seeking this time is to
    make a couple of points and ask some questions. I would agree
    with the gentleman from Florida that there is a legitimate need
    that we all have or desire to minimize the paperwork
    requirement for those people who are below the poverty line,
    those people who are not making sufficient money that they
    could ever repay any of the debts. We don't want them to have
    an onerous burden of--of filing.
        But I'm just relying upon my recollection. I don't know of
    anybody who's filed bankruptcy that hasn't had an attorney
    under the present system. I just went through the University of
    Arkansas Legal Clinic, and under the present system they
    provide legal counsel to indigents who need assistance in
    preparing their petition for bankruptcy. And I know that the
    Legal Services do that to the extent that they can. So under
    the present system, people need assistance, legal assistance.
        Mr. Watt. Would the gentleman yield?
        Mr. Hutchinson. In a moment, because I have some questions
    for you. The--I think it's an admonition to us all that
    whenever Legal Services comes up for funding, we should be
    mindful of that. And so if someone's going to make that point,
    I will join with you in that. I think this is an instance in
    which, you know, if we expect people to have access to the
    bankruptcy court and we're going to put on some burdensome
    filing requirements, we need to adequately fund Legal Services
    so that they can have that assistance.
        But in regard to the amendment that's being offered by the
    gentleman from North Carolina----
        Mr. Watt. Would the gentleman yield so I can respond to
    those two issues that he just raised?
        Mr. Hutchinson. Well----
        Chairman Sensenbrenner. The gentleman from Arkansas has the
    time.
        Mr. Hutchinson. I'd like to--let me ask some questions,
    then I'll give you some time. In your amendment you refer to
    monthly income equal to or less than the amount set forth in
    paragraph 7. I'm not sure where paragraph 7 is. I need some
    assistance as to where that is. Second--let me finish. And,
    secondly, it talks about in the third line, in lieu of the
    requirements of clauses 4 and 5 of section 521(A)(1)(b), I want
    to know what are the burdensome requirements that we're putting
    on that we want to have waived. Obviously, they need to put out
    their income. They need to sign it under oath. So what more are
    we concerned about here?
        Mr. Watt. Would the gentleman yield?
        Mr. Hutchinson. Yes, I would yield.
        Mr. Watt. Okay. First of all, there are a number of debtors
    still who go into bankruptcy court unrepresented. But even if
    that were not the case, I think we, in addition to imposing a
    massive and useless burden on poor debtors, you're--you're
    imposing a tremendous paperwork burden on the bankruptcy courts
    because the documents that you're talking about, the ones that
    are required under paragraph 7, could get voluminous. There's
    no place to store these things. We talked about that last year
    when we--when we debated this bill. It adds to the paperwork
    burden of the court----
        Mr. Hutchinson. Reclaiming my time, I would like to be
    pointed to specifically the paperwork burden. You mentioned
    paragraph 7. Are these tax returns that must be furnished?
    Where are we----
        Mr. Watt. Paragraph 7 is the--is the income criteria that
    triggers you out of chapter 7 into chapter 13. That's what
    paragraph 7 is. The burdensome requirements--let's see if I can
    get somebody to help me with that one so I can--it might take
    me a little bit to zero in on them. They are in paragraph----
        Mr. Hutchinson. Well, in order to move along here, let me
    reclaim the time, and if the gentleman could identify that or
    have some staff person identify those provisions, I'd like to
    be able to examine what is necessary to be waived. But I would
    just--I believe that whatever we do, anyone who goes into
    bankruptcy is going to have to set forth their income, their
    expenses, which is currently under the present system. If
    there's a burden to provide tax returns, many of these people
    are not going to have tax returns and probably have to certify
    they don't have copies of them. And I think it will be a little
    bit more minimal, and regardless, I think you're going to have
    to have legal counsel. And I----
        Mr. Watt. Would the gentleman yield again?
        Mr. Hutchinson. Yes.
        Mr. Watt. First of all, those requirements would be
    applicable if they are going to stay in--if they're going to--
    if they're going to stay in chapter 7, as opposed to----
        Chairman Sensenbrenner. The gentleman's time has expired.
        Mr. Frank. Mr. Chairman? Mr. Chairman? Mr. Chairman?
        Chairman Sensenbrenner. What purpose does the gentleman
    from Massachusetts----
        Mr. Frank. Strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized.
        Mr. Frank. I yield to the gentleman from North Carolina.
        Mr. Watt. So the purpose of this inquiry is to determine
    whether they are eligible--whether they meet the income
    criteria, and all of these other standards don't relate to the
    income criteria. If you meet the income criteria, you are
    automatically allowed to stay in 7 and--and these things will
    take place anyway. The--the gathering of the information will
    take place anyway in that chapter 7 proceeding. But there's no
    reason to have to file it with the court. Chapter 7 has its own
    set of requirements about what you've got to do and expenses
    and income and the whole scenario, but it does not have the--
    the list of steps that are outlined starting--if you--if you
    take a look at page 151, starting with debtor's duties, and you
    keep going--how far does this goes?--157 I think is where all
    this madness finally ends. And what we're saying is if somebody
    clearly meets the income criteria, why are you going to do all
    of this stuff?
        Mr. Delahunt. Would the gentleman yield?
        Mr. Frank. Who asked me to yield? Oh, yes, you're easy.
        Mr. Delahunt. Thank you, Mr. Frank. And I'd like to just
    make these observations for the benefit of my friend from
    Arkansas. At the hearings that have been held during the course
    of the consideration of this particular proposal, the estimates
    of the cost to the taxpayers were an additional $200 to $300
    million over a 5-year period in the implementation because of
    the additional paperwork and burdens that would be imposed, the
    additional trustees, the additional bankruptcy court judges,
    and the personnel. I think that's really important to remember.
    And I don't know if you were here earlier, Asa, but at the--at
    the hearing that we did have, there was testimony from a
    representative of the Bankruptcy Conference that to insist that
    everyone, even an individual who clearly was going to stay in
    7, fill out the necessary--the paperwork that the bill as
    presently constituted would require, would mean additional
    hundreds if not thousands of dollars in legal fees per case. I
    mean, these are monies that could, you know, go to creditors,
    could go to debtors, and wouldn't cost the taxpayers.
        I mean, I think that, you know, the gentleman from North
    Carolina has explained rather clearly the rationale for the--
    for this particular amendment. There's nothing--there's nothing
    here that should come as a surprise to anyone, and I think it's
    important.
        Mr. Frank. Let me again yield to the gentleman from North
    Carolina.
        Mr. Watt. Let me just point out to the gentleman from
    Arkansas, if you start at (3)(i) on page 152--I mean, it starts
    before that, but look--take a look at what you--a statement of
    the debtor's financial affairs and, if applicable, a
    certificate of an attorney whose name is on the petition, if no
    attorney for the debtor is indicated and no bankruptcy preparer
    signed the petition of the debtor, such notice was obtained and
    read by the debtor, 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, statement of the amount of monthly income. I
    mean, you just go on and on and on with things that if you have
    all--if you meet the criteria and you are going to stay in 7,
    you ought not have to do that. That's all I'm saying.
        Mr. Frank. Mr. Chairman, I think I've made my point, so I
    yield back.
        Chairman Sensenbrenner. The question is on adoption of the
    amendment of the gentleman from North Carolina, Mr. Watt, to
    the amendment of the gentlewoman from California, Ms. Waters.
    All those in favor will signify by saying aye. Opposed, no? The
    noes appear to have it.
        Mr. Watt. Mr. Chairman, I ask for a roll call vote.
        Chairman Sensenbrenner. A roll call is requested.
        Mr. Watt. My hearing is a little bit different than yours.
        Chairman Sensenbrenner. Those in favor of the Watt
    amendment to the Waters amendment will, as your names are
    called, answer aye, those opposed, no, and the clerk will call
    the roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. No.
        The Clerk. Mr. Gekas, no.
        Mr. Coble?
        Mr. Coble. No.
        The Clerk. Mr. Coble, no.
        Mr. Smith?
        [No response.]
        The Clerk. Mr. Gallegly?
        [No response.]
        The Clerk. Mr. Chabot?
        Mr. Chabot. No.
        The Clerk. Mr. Chabot, no.
        Mr. Goodlatte?
        [No response.]
        The Clerk. Mr. Barr?
        [No response.]
        The Clerk. Mr. Jenkins?
        [No response.]
        The Clerk. Mr. Hutchinson?
        Mr. Hutchinson. No.
        The Clerk. Mr. Hutchinson, no.
        Mr. Cannon?
        [No response.]
        The Clerk. Mr. Graham?
        [No response.]
        The Clerk. Mr. Bachus?
        Mr. Bachus. No.
        The Clerk. Mr. Bachus, no.
        Mr. Scarborough?
        Mr. Scarborough. No.
        The Clerk. Mr. Scarborough, aye.
        Mr. Hostettler?
        Mr. Hostettler. No.
        The Clerk. Mr. Hostettler, no.
        Mr. Green?
        Mr. Green. No.
        The Clerk. Mr. Green, no.
        Mr. Keller?
        Mr. Keller. No.
        The Clerk. Mr. Keller, no.
        Mr. Issa?
        Mr. Issa. No.
        The Clerk. Mr. Issa, no.
        Mr.--Ms. Hart?
        [No response.]
        The Clerk. Mr. Flake?
        Mr. Flake. No.
        The Clerk. Mr. Flake, no.
        Mr. Conyers?
        Mr. Conyers. Aye.
        The Clerk. Mr. Conyers, aye.
        Mr. Frank?
        Mr. Frank. Aye.
        The Clerk. Mr. Frank, aye.
        Mr. Berman?
        [No response.]
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        [No response.]
        The Clerk. Mr. Scott?
        Mr. Scott. Aye.
        The Clerk. Mr. Scott, aye.
        Mr. Watt?
        Mr. Watt. Aye.
        The Clerk. Mr. Watt, aye.
        Ms. Lofgren?
        [No response.]
        The Clerk. Ms. Jackson Lee?
        [No response.]
        The Clerk. Ms. Waters?
        Ms. Waters. Aye.
        The Clerk. Ms. Waters, aye.
        Mr. Meehan?
        [No response.]
        The Clerk. Mr. Delahunt?
        Mr. Delahunt. Aye.
        The Clerk. Mr. Delahunt, aye.
        Mr. Wexler?
        [No response.]
        The Clerk. Ms. Baldwin?
        Ms. Baldwin. Aye.
        The Clerk. Ms. Baldwin, aye.
        Mr. Weiner?
        [No response.]
        The Clerk. Mr. Schiff?
        Mr. Schiff. Aye.
        The Clerk. Mr. Schiff, aye.
        Mr. Chairman?
        Chairman Sensenbrenner. No.
        The Clerk. Mr. Chairman, no.
        Chairman Sensenbrenner. Are there additional members in the
    room who wish to cast their vote or change their vote? The
    gentlewoman Pennsylvania?
        Ms. Hart. No.
        The Clerk. Ms. Hart, no.
        Chairman Sensenbrenner. Any other members who wish to cast
    their vote and change their vote? The gentleman from Virginia?
        Mr. Goodlatte. No.
        The Clerk. Mr. Goodlatte, no.
        Chairman Sensenbrenner. Anybody else? If not, the clerk
    will report.
        The Clerk. Mr. Chairman, there are 9 ayes and 13 nays.
        Chairman Sensenbrenner. The question now is on the
    amendment offered by the gentlewoman from California, Ms.
    Waters. Those in favor will say aye. Opposed, no? The noes
    appear to have it. The noes have it and the amendment is not
    agreed to.
        Further amendments? The gentleman from Michigan, for what
    purpose do you seek recognition?
        Mr. Conyers. I have an amendment, a technical correction.
        Chairman Sensenbrenner. The clerk will report the Conyers
    technical correction amendment.
        The Clerk. Amendment to H.R. 333, offered by Mr. Conyers.
    Page 13, line 14, strike----
        Mr. Conyers. Mr. Chairman, I ask unanimous consent the
    amendment be considered as read.
        Chairman Sensenbrenner. Without objection, so ordered. The
    gentleman from Michigan is recognized for 5 minutes.
        Mr. Conyers. Thank you very much.
        [The Amendment offered by Mr. Conyers follows:]

        Mr. Conyers. Members of the committee, this amendment
    provides for two technical corrections, and I think you'll find
    that they are genuine corrections. The first would clarify that
    in calculating the debtor's income in chapter 13 that we should
    use his actual income, not the figure based on a job that he
    had been laid off from. The problem arises because in
    calculating chapter 13 payments the bill uses a defined term
    based on previous income. That definition was meant to apply in
    the chapter 7 means test only, and that's why I think that this
    is a technical correction, that it may not have been intended.
    It was inadvertently brought over into chapter 13 where it
    could also apply to persons with income below the median.
        The second technical amendment clarifies that lawyers who
    are bankruptcy petition preparers need not file a document
    stating that they are not lawyers. As the bill is presently
    written, it does this unusual thing, it states that all
    bankruptcy lawyers or bankruptcy petition preparers, even
    though part of the petition preparer's obligation is to
    disclose that he or she is not a lawyer. The drafters may not
    have intended this result, and I believe that both these
    matters are simple drafting oversights that may be easily
    corrected. I hope that this will enjoy the support of the
    entire committee.
        Chairman Sensenbrenner. Will the gentleman yield back?
        Mr. Conyers. Yes.
        Chairman Sensenbrenner. Gentleman from Pennsylvania, Mr.
    Gekas.
        Mr. Gekas. Mr. Chairman, I seek to strike the last----
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Gekas. I believe that the gentleman may intend to
    correct some matters here on a technical basis, but even if he
    is correct, the better way to proceed would be--and I am
    willing to look at, if he is willing to meet with me after this
    session and before we go to the floor--to amend section 221 and
    its definition of ``bankruptcy petition preparer'', rather than
    his immediate aim to try to change the definition of
    ``attorney, et cetera.'', or that it incorrectly applies to
    attorneys rather than to non-attorneys. So it is the question
    of the definition of ``bankruptcy petition preparer'' the may
    require some technical amendment. I am willing to ask first
    that the members vote no on this amendment, and then pledge to
    him, to Mr. Conyers, that I will meet with him to try to work
    this out before we go to the floor on the technical changes
    that he seeks.
        Chairman Sensenbrenner. The gentleman yield back?
        Mr. Scott. Mr. Chairman----
        Chairman Sensenbrenner. For what purpose, the gentleman
    from Virginia?
        Mr. Scott. Move to strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Scott. I didn't hear the gentleman from Pennsylvania
    comment on the amendment page 23, line 14, on that part of the
    amendment, which is a fairly important part of the amendment,
    and I didn't hear a commitment to try to work that out too.
        Mr. Gekas. Is this the one that has to do with the current
    monthly income you are saying?
        Mr. Scott. Right.
        Mr. Gekas. We have been using the words of art, ``current
    monthly income'', and we believe that serves the purpose of
    what we are trying to do. I am not prepared to accept a
    substitute for that at this juncture.
        Mr. Scott. Well, reclaiming my time, the point that the
    gentleman from Michigan was making was that it makes very
    little sense to calculate what you can pay on your bills if in
    fact that is not your income. If you lost your job, you can't
    calculate what you can pay based on the job that you lost, and
    that is why the words ``projected disposable income.'' If you
    file, knowing that you have lost your job, your projected
    disposable income will be what you actually have available. The
    definition of ``current monthly income'' is calculated as what
    you made the last 6 months, which, in fact, may not be
    realistic.
        Mr. Goodlatte. Would the gentleman yield?
        Mr. Gekas. I would yield.
        Chairman Sensenbrenner. Who has the time? The gentleman
    from Virginia has the time.
        Mr. Scott. I yield to my colleague from Virginia.
        Mr. Goodlatte. I thank the gentleman for yielding. I see
    what you are getting at, but I don't think this change gets us
    there, because it would then read, ``For the purpose of this
    subsection the term 'disposable income' means projected
    disposable income less reasonable amounts necessary to be
    expended.'' But the rest of this section defines what
    disposable income is. This simply sets the benchmark of current
    monthly income less disposable, and there would be
    circumstances where somebody wouldn't be employed and might
    nonetheless still qualify under the provisions of this. And I
    think it needs some more work, but I don't think this language
    gets us there.
        Mr. Scott. I will yield back.
        Chairman Sensenbrenner. The question is on the amendment
    offered by the gentleman from Michigan, Mr. Conyers. Those in
    favor will say aye.
        Opposed, no.
        The noes appear to have it. The noes have it, and the
    amendment is not agreed to.
        For what purpose does he gentlelady from California, Ms.
    Waters, seek recognition?
        Ms. Waters. I have an amendment at the desk.
        Chairman Sensenbrenner. The clerk will report the
    amendment, and is the clerk sure this is the amendment that the
    gentlewoman----
        Ms. Waters. 001.
        Chairman Sensenbrenner. Waters, 001.
        Ms. Waters. Section 311, page 144, line 16, insert
    exceptions to automatic stay. Do you have it?
        Chairman Sensenbrenner. The clerk will report the
    amendment.
        The Clerk. Amendment to H.R. 333, offered by Ms. Waters,
    page 14, line 16, insert ``(a) Exceptions to Automatic Stay''
    before----
        Chairman Sensenbrenner. Without objection, the amendment
    will be considered as read, and the gentlewoman from California
    is recognized for 5 minutes.
        Ms. Waters. Thank you very much, Mr. Chairman and members.
    This would amend section 311, Automatic Stay, that allows
    landlords to evict debtors outside of the bankruptcy court, and
    to continue eviction even after debtors have obtained an
    automatic stay. This would amend the provision to exempt the
    following groups of people: victims of domestic violence,
    elderly persons on fixed incomes, debtors with minor children
    who will fall below the median of the means test. Currently,
    debtors can remain in a property after declaring bankruptcy, so
    long as they can stay current from the date of filing or catch
    up on arrears and stay current. Even if they don't, the
    landlord can seek to evict them, but the landlord must do so
    through the bankruptcy court. This creates an additional burden
    on the landlord, but is viewed as necessary to provide the
    debtor a chance to get on his or her feet.
        The bill proposes allowing evictions through the regular
    eviction process, and permits landlords to proceed with
    evictions that had been started before the debtor filed for
    bankruptcy.
        The provision should be amended to exempt, again, that
    group of persons that I just indicated. And for further
    explanation, the victims of domestic violence are dealing with
    a number of traumas simultaneously. They may need a little
    extra time to reorient themselves and figure out how to manage
    their financial affairs. Elderly persons on fixed incomes also
    require more time to reorganize their finances. They do not
    have the same opportunities for gainful employment at the same
    time they have increased medical costs. Debtors who have minor
    children and who fall below the median specified by the
    proposed legislation should similarly be exempted. Such debtors
    do not have the financial wherewithal to find other housing,
    and an eviction could result in more minor children becoming
    homeless.
        Members, I don't know why we are changing this in this
    bill. In the previous legislation, the landlords had to go
    through the bankruptcy court in order to do the eviction, and
    you are changing that in this legislation, and it will wreak
    havoc on the most vulnerable of our society. And I do believe
    that if we give these automatic stays, that we will not be
    harming landlords in any way, because the people that I am
    trying to protect would still have the responsibility to be
    current, to pay current. And I would ask that you support these
    amendments in the interest of, again, protecting the most
    vulnerable in our society in this bankruptcy bill.
        [The Amendment offered by Ms. Waters follows:]

        Chairman Sensenbrenner. Will the gentlewoman yield back the
    balance of her time?
        Ms. Waters. Yield back the balance of my time.
        Chairman Sensenbrenner. The gentleman from Pennsylvania,
    Mr. Gekas.
        Mr. Gekas. Yes, I move to strike the last word. It appears
    that the amendment offered by the gentlelady from California,
    in effect, substitutes her versions of people who should have
    the benefit of an automatic stay to the detriment of those
    articulated in section 362(b). In other words, her language
    vitiates, removes, erases what we have put in as combatants to
    the automatic stay in the previous portion of the statute. On
    that basis alone we have to reject the amendment.
        But beyond that, on the philosophical question, her
    amendment would say that without any boundaries that a senior
    citizen, with whom we have total sympathy, and we have worked
    assiduously in many different ways to protect senior citizens
    in every aspect of their lives, this senior citizen could
    remain in a landlord-owned property indefinitely without paying
    rent. Just a moment. The better way it seems to approach these
    societal problems of inadequate assets on the part of senior
    citizens to pay rent, is to provide as fast as we could,
    alternative housing or additional forms of public assistance in
    order to pay the rent, not to find ways and means to allow the
    landlord to go months and months and months on an investment
    that would be jeopardized by allowing a senior citizen or
    anybody else continuing to stay rent free. That is against all
    the tenets of the laws of property and of enterprise and of the
    freedoms that we have in our country, the whole basis of our
    fiscal system, so----
        Ms. Waters. Will the gentleman yield?
        Mr. Gekas. [continuing]. I would ask members to vote no on
    this amendment.
        Ms. Waters. Will the gentleman yield?
        Mr. Gekas. Yes.
        Ms. Waters. Would you please identify the persons that you
    give an automatic stay to in the legislation? Who am I
    replacing that you have already protected? Who am I
    substituting for in the bill?
        Mr. Gekas. It says ``an eviction based on endangerment to
    property or person, or the use of illegal drugs'', just for one
    example.
        Ms. Waters. I beg your pardon?
        Mr. Gekas. Under 311, section 3, just to give you one
    example, ``An eviction action based on endangerment to property
    or person, or the use of illegal drugs.''
        Ms. Waters. That is not what I am talking about at all.
        Mr. Gekas. I know that is not what you intended.
        Ms. Waters. But you are not protecting drug dealers. I
    asked who is it you are protecting?
        Mr. Gekas. The tenants--the property and the tenants from
    the illegal drug----
        Ms. Waters. Well, I am sorry. We are not on the same track
    here.
        Mr. Gekas. That is true.
        Ms. Waters. We are not talking about the same thing.
        Mr. Gekas. That is true.
        Ms. Waters. What I----
        Mr. Scott. Will the gentlelady yield?
        Chairman Sensenbrenner. The time belongs to the gentleman
    from Pennsylvania.
        Mr. Scott. Excuse me.
        Mr. Gekas. Did somebody ask?
        Chairman Sensenbrenner. Does the gentleman yield?
        Mr. Gekas. Yes.
        Mr. Scott. The amendment appears to me to be adding, not
    replacing language. Is that your understanding?
        Mr. Gekas. I think it replaces it.
        Ms. Waters. No.
        Mr. Scott. It says----
        Mr. Gekas. I don't think that was the intent.
        Mr. Scott. No, it adds language. It doesn't replace any
    language, according to the way I read the amendment.
        He thought you were knocking this out.
        Ms. Waters. No, we are not. We are talking about two
    different things.
        Mr. Gekas. That is true.
        Ms. Waters. If the gentleman would yield. If I may, I am
    asking that a particular category of people be protected. I am
    not asking that they be able to stay rent free, and I do not
    want my amendment to be misunderstood that way. I am asking
    that this category of vulnerable persons be granted an
    automatic stay, and that if the landlord wishes to evict, they
    have to go through the bankruptcy court in order to do that.
    And I am additionally saying that these people are responsible
    for paying their rent while they are in bankruptcy.
        Chairman Sensenbrenner. Does the gentleman yield back?
        Mr. Gekas. I yield back the balance of my time.
        Mr. Frank. Mr. Chairman?
        Chairman Sensenbrenner. The gentleman from Massachusetts.
    For what purpose do you seek recognition?
        Mr. Frank. To strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Frank. I join with my colleague from California in
    being puzzled by one of the assertions of the gentleman from
    Pennsylvania. I understood him to say that he objected in part
    to the gentlewoman's amendment because it vitiated, removed and
    excised, which is a pretty powerful triple threat. Even lawyers
    generally only go two words. You used three. But he said that
    it was removing some exceptions that were in there. The
    gentlewoman's amendment clearly says amended by inserting,
    after the last paragraph. So it is hard to see how an amendment
    which consists entirely of an additional set of words, removes,
    vitiates, excises, diminishes, belittles, criticize or
    perorates anything. So I would be glad to yield to the
    gentleman, but I think he may have a point in mind other than
    the one he expressed.
        Mr. Gekas. Would the gentleman yield to the peroration?
        Mr. Frank. With resignation.
        Mr. Gekas. Line 5 of the amendment that is offered by the
    lady says, ``This subsection shall not apply'', meaning all the
    three previous----
        Mr. Frank. But only--oh, in that case then, I understand
    what the gentleman is saying, but I don't think it is what he
    said before. It does not remove exceptions. It does state
    exceptions to them.
        Mr. Gekas. It nullifies them.
        Mr. Frank. No. Only in certain very limited cases, the
    single parent, et cetera, so it does modify the exceptions. But
    I think the gentleman gave the impression, when he spoke, that
    this was going to entirely replace that section. It does say
    that those exceptions in the section wouldn't apply if you had
    these particular categories. So then I think the legitimate
    debate is should you or shouldn't you carve out an exception
    here for the battered spouse or the senior citizen. I yield to
    the gentleman.
        Ms. Waters. Will the gentleman yield?
        Mr. Gekas. In order to vitiate the impression, then I
    repeat, what we are saying here is that what we took careful
    time and effort in the past to put in with regard to reform of
    automatic state provisions, is modified unduly by the----
        Mr. Frank. Okay. Well, let me just say--I haven't--there is
    a policy difference here, and that is okay. I do not think that
    the gentlewoman means any disrespect to the gentleman's care.
    There is a policy difference, and that is what she is trying to
    do. But it does not, as we said, remove it. And let me yield
    now. The gentlewoman from California wanted me to yield to her.
        Ms. Waters. Would the gentleman yield?
        Mr. Frank. Yes.
        Ms. Waters. If it makes it clearer to you, we just looked
    at a way by which we can state it so perhaps it is clearer to
    you. Under line 5----
        Mr. Frank. If the gentlewoman would yield, I would not get
    my hopes up unduly on that particular point. [Laughter.]
        Ms. Waters. This elimination of the automatic stay set
    forth in the subsection shall not apply if the debtor certifies
    in the debtor's petition that the debtor is senior citizen or a
    single parent with minor children whose incomes is less than
    the median income applicable to the debtor, or is a battered
    spouse, and on and on and on. You see what we are saying? I
    want to make sure that you understand that we are not in any
    way eliminating any protections that you think that you have.
    We are not substituting. What we are doing is we are inserting
    this category of vulnerable citizens that we think should be
    protected.
        Mr. Frank. Would the gentlewoman yield? Let me just say I
    think it is clear now that what the gentlewoman would do would
    modify that list, and I think there was a confusion. It
    wouldn't entirely remove it. The list would still be there in
    the original legislation, but the gentlewoman's legislation is
    a modification of that and says the provision he says doesn't
    apply in these limited class of cases.
        Mr. Gekas. If the gentleman would yield?
        Mr. Frank. I yield.
        Mr. Gekas. It means that we have to look at trying to
    accommodate what the lady is trying to do by redrafting this to
    make certain that----
        Mr. Frank. No, I think it is fairly clear.
        Mr. Gekas. Well, if----
        Mr. Frank. I am taking back my time.
        Mr. Gekas. Yes.
        Mr. Frank. We have technical corrections to deal with this.
    What you are talking about here is a policy statement. The
    gentleman's proposal says there are these cases in which the
    automatic stay doesn't apply, et cetera. The gentlewoman has
    proposed a policy modification. I think we understand that. It
    is a modification of the language. The technical wording, as I
    said, that is why we have technical and conforming amendments
    done at the end. I don't think the gentleman's objection to the
    amendment is in fact technical; it is substantive. He does not
    think that there should be exceptions carved out that way. That
    is what we ought to be voting on.
        Chairman Sensenbrenner. The gentleman's time has expired.
        Mr. Scott. Mr. Chairman?
        Chairman Sensenbrenner. For what purpose does the gentleman
    from Virginia seek recognition?
        Mr. Scott. Move to strike the last word.
        Chairman Sensenbrenner. The gentleman's recognized for 5
    minutes.
        Mr. Scott. Mr. Chairman, I would ask to speak in favor of
    the amendment. We are changing the law in terms of a stay on
    evictions. The Waters' Amendment says that we ought not change
    the law for these--for this category of people, senior
    citizens, single parent with minor children whose income is
    less than the median income. You know, it just seems to me that
    that category of people, if you allow the eviction to go
    forward and not allow the bankruptcy to take place, while they
    may be able in fact to catch up with back rent, you are kicking
    these people out in the street.
        Now, the question is whether or not we want the change of
    the law to apply to them, or whether you want just that
    category. Change the law for everybody else, but not for them.
    The bankruptcy law has been in effect for hundreds of years,
    and it has always been the case that you get a stay of all
    proceedings. If you are going to change that, we are just
    asking, very simply, that you not kick senior citizens out in
    the street under this new law, at least exempt them and single
    parents with minor children, and not kick them out in the
    street, not change the law for them. I yield back.
        Chairman Sensenbrenner. The question is on the amendment
    offered by the gentlewoman from California, Ms. Waters. Those
    in favor will signify by saying aye.
        Opposed, no.
        The noes appear to have it. Roll call?
        Ms. Waters. Roll call, please.
        Chairman Sensenbrenner. Roll call is ordered. The question
    is on the Waters' Amendment. Those in favor will, as your names
    are called, answer aye. Those opposed, no, and the clerk will
    call the roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. No.
        The Clerk. Mr. Gekas, no. Mr. Coble?
        [No response.]
        The Clerk. Mr. Smith?
        Mr. Smith. No.
        The Clerk. Mr. Smith, no. Mr. Gallegly?
        [No response.]
        The Clerk. Mr. Goodlatte?
        [No response.]
        The Clerk. Mr. Chabot?
        Mr. Chabot. No.
        The Clerk. Mr. Chabot, no. Mr. Barr?
        Mr. Barr. No.
        The Clerk. Mr. Barr, no. Mr. Hutchinson?
        Mr. Hutchinson. No.
        The Clerk. Mr. Hutchinson, no. Mr. Jenkins?
        [No response.]
        The Clerk. Mr. Cannon?
        [No response.]
        The Clerk. Mr. Graham?
        Mr. Graham. No.
        The Clerk. Mr. Graham, no. Mr. Bachus?
        [No response.]
        The Clerk. Mr. Scarborough?
        [No response.]
        The Clerk. Mr. Hostettler?
        [No response.]
        The Clerk. Mr. Green?
        Mr. Green. No.
        The Clerk. Mr. Green, no. Mr. Keller?
        Mr. Keller. No.
        The Clerk. Mr. Keller, no. Mr. Issa?
        Mr. Issa. No.
        The Clerk. Mr. Issa, no. Ms. Hart?
        Ms. Hart. No.
        The Clerk. Ms. Hart, no. Mr. Flake?
        [No response.]
        The Clerk. Mr. Conyers?
        Mr. Conyers. Aye.
        The Clerk. Mr. Conyers, aye. Mr. Frank?
        Mr. Frank. Aye.
        The Clerk. Mr. Frank, aye. Mr. Berman.
        [No response.]
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        [No response.]
        The Clerk. Mr. Scott?
        Mr. Scott. Aye.
        The Clerk. Mr. Scott, aye. Mr. Watt?
        [No response.]
        The Clerk. Ms. Lofgren?
        [No response.]
        The Clerk. Ms. Jackson Lee?
        Ms. Jackson Lee. Aye.
        The Clerk. Ms. Jackson Lee, aye. Ms. Waters?
        Ms. Waters. Aye.
        The Clerk. Ms. Waters, aye. Mr. Meehan?
        Mr. Meehan. Aye.
        The Clerk. Mr. Meehan, aye. Mr. Delahunt?
        [No response.]
        The Clerk. Mr. Wexler?
        [No response.]
        The Clerk. Ms. Baldwin?
        Ms. Baldwin. Aye.
        The Clerk. Ms. Baldwin, aye. Mr. Weiner?
        Mr. Weiner. Aye.
        The Clerk. Mr. Weiner, aye. Mr. Schiff?
        Mr. Schiff. Aye.
        The Clerk. Mr. Schiff, aye. Mr. Chairman?
        Chairman Sensenbrenner. No.
        The Clerk. Mr. Chairman, no.
        Chairman Sensenbrenner. Are there----
        Mr. Bachus. Mr. Chairman?
        Chairman Sensenbrenner. The gentleman from Alabama.
        Mr. Bachus. No.
        The Clerk. Mr. Bachus, no.
        Chairman Sensenbrenner. The gentleman from Indiana.
        Mr. Hostettler. No.
        The Clerk. Mr. Hostettler, no.
        Chairman Sensenbrenner. Are there additional members in the
    chamber who wish to record their vote or change their vote? If
    not, the clerk will report.
        The Clerk. Mr. Chairman, there are 9 ayes and 13 nays.
        Chairman Sensenbrenner. The amendment is not agreed to. For
    what purposes does the gentleman from Massachusetts, Mr.
    Meehan, seek recognition?
        Mr. Meehan. Mr. Chairman, I have an amendment at the desk.
        Chairman Sensenbrenner. The clerk will report the
    amendment, and if there are more than one by you, please inform
    the clerk which one you want.
        Mr. Meehan. It's Meehan.002.
        Chairman Sensenbrenner. The clerk will report the
    amendment.
        The Clerk. Amendment to H.R. 333, authored by----
        Mr. Meehan. Mr. Chairman, I ask unanimous consent----
        Chairman Sensenbrenner. Without objection. And the
    gentleman is recognized for 5 minutes.
        Mr. Meehan. Mr. Chairman, I offer this amendment to correct
    what I think is an unintended but nonetheless significant
    problem with the bill's various safe harbors for low-income
    debtors. Under the bill, debtors of certain size households
    were exempt from the chapter 7's mean test, and exempt from
    having IRS expense standards used to judge their proposed
    chapter 13 plans if their incomes are less than the median
    family income of their states last reported by the Bureau of
    Census for a family of the same size as their household.
        The problem is, from what I can see and tell, the Bureau of
    Census currently publishes State by State median family income
    adjusted for variations in family size only once a decade,
    following the decennial census, and based on the data collected
    in that census. The Census Bureau doesn't publish State by
    State median household income on a yearly basis based on the
    annual surveys of 50,000 randomly selected households
    nationwide. But the statistics published on a yearly basis is
    not adjusted for variations in family size.
        In any event, median household income is entirely different
    from median family income. If I am wrong or if someone can
    demonstrate to the contrary, this isn't correct. If I am right,
    and I think I am, this means that the bill's safe harbor
    provisions may become quickly outdated as the years elapse,
    since the once-a-decade publication of the state by state
    median family income figure is adjusted for various variations
    in family size.
        So, basically what my amendment says is the State by State
    median family income figures are counting for variations in
    family size last published by the Bureau of Census, which is
    what the bill sets as a basis for its safe harbors, should be
    indexed for inflation for each year, since their publication
    that the--since their publication that the Census Bureau has
    not published new figures on State by State median family
    income adjusted for these variations in family size. This is
    not an automatic inflation adjustment. Inflation adjustment
    would happen only when the Bureau of Census had not published
    new figures on a yearly basis.
        As I suggested earlier, the Census Bureau does not do
    annual data collection and annual publication of income
    statistics. My understanding is that they could readily State
    by State median family income figures accounting for variations
    in family size on a yearly basis. Now, it would be my hope that
    that is exactly what they would do, but there is no way to be
    assured that they will do it that way. So I think there is an
    adjustment that needs to be made, and I thank the chairman and
    yield back the balance of my time.
        [The Amendment offered by Mr. Meehan follows:]

        Chairman Sensenbrenner. For what purpose does the gentleman
    from Pennsylvania seek recognition?
        Mr. Gekas. To strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Gekas. Mr. Chairman and members, I ask for a no vote on
    this proposition. We want the record to indicate that when
    these sections were drafted, it was after full consultation, as
    I understand it, by the conferees and those who were helping to
    draft the legislation, led by Senator Torricelli, I might add,
    who had conferences or consultations at least with the Bureau
    of Census to which you have referred, to the Department of
    Labor, to all concerned to craft what could be extrapolated
    finally by way of these statistics to which you refer into use
    in the bankruptcy code. And so we have adopted what seems to be
    a consensus among those people who were drafting it at that
    time. This does not prohibit a review of all of these things
    next year, or with new census figures or amended census figures
    or amended labor standards or anything. But for the time being,
    this represents the best effort of those involved in drafting
    this set of provisions on a bipartisan basis, and with due
    consultation with the entities to which the gentleman has
    referred. I yield back the balance of my time.
        Chairman Sensenbrenner. The question is on the----
        Mr. Frank. Mr. Chairman?
        Chairman Sensenbrenner. The gentleman from Massachusetts.
        Mr. Frank. To strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Frank. I appreciate the fact that the people who
    originally voted didn't include this, because by definition, if
    they had, it wouldn't have been in order as an amendment. But I
    didn't get the policy reasons why it wasn't included. It would
    seem to me if you agree that there should be an income level
    adjusting it, particularly when we're talking about individuals
    adjusting it for this inflation factor, or to just be routine,
    and other than the fact that they didn't do it, we didn't know
    why they didn't do it. The gentleman said it was on a
    bipartisan basis. Certainly nobody on this side of the
    committee was involved in that decision. So I would yield to
    the gentleman. What is the policy reason for not doing this, I
    mean, other than the fact that you didn't do it? I would yield.
        Mr. Gekas. We understand that the Census Bureau is in the
    ongoing process all the time of filling in the blanks, as it
    were, of bringing in the data to which the gentleman has
    referred. We do not prohibit them from promulgating these
    changes in the Census Bureau that would accommodate what the
    gentleman is referring to.
        Mr. Frank. I yield to the gentleman from Massachusetts.
        Mr. Meehan. I am not suggesting that you don't prohibit
    them from doing it, but the fact is, if that is going to be the
    basis for these safe harbors, they ought to do it every year if
    you want it to be accurate. Presently they do it once every 10
    years, so how are these figures for a family income by the size
    of family, in some cases could be 7, 8, 9-years old, they are
    not really relevant any more. So what you could--all we are
    saying is you put it in the legislation so you either index it
    for inflation or you get the Census Bureau to do it every year,
    if you are going the rely on that for safe harbors.
        Mr. Frank. Let me just add my understanding, and maybe
    there is a question--surely, the Bureau of Labor Statistics,
    that is, the--yes, it is the Department of Labor. So what we
    are saying is those figures are there, and why not update them
    every year when there is a danger in the eighth and ninth year
    of it being too long? And the gentleman says we don't prohibit
    it. Well, we think it is a good idea. It would seem to me non-
    prohibition isn't enough. If we think it is a good policy idea,
    why don't we simply incorporate it? I don't understand why it I
    controversial. I yield to the gentleman.
        Mr. Gekas. We don't believe it is controversial. The Census
    Bureau can and does, on a periodic basis, change its figures
    and----
        Mr. Frank. No. The gentleman is contradicting himself. If
    you didn't think it was controversial, you would have accepted
    this a couple of debates ago, and we would have had it. When it
    is offered, as a general--on the principle of saying, ``Well,
    we have no objection to this. We just don't want it in the
    bill, and the Census Bureau can do it if it wants to or not.''
    We are the policy-making body. We are setting an important
    number here. Leaving it to the discretion of the agency seems
    to me not to be doing our job. I would ask the gentleman from
    Pennsylvania, does he think it would be a bad thing in policy
    terms if this was done every year?
        Mr. Gekas. We do believe that we have the right to and are
    satisfied with relying on the regular work of the Census Bureau
    throughout the 10 years, who will be able to adjust----
        Mr. Frank. Well, the gentleman didn't answer my question.
        Mr. Gekas [continuing]. And they do regularly adjust----
        Mr. Frank. The gentleman didn't answer my question. You
    know, arguing--I have to say, as a general legislative
    principle, when people tell me that they are against an
    amendment solely because it is redundant and unnecessary, I am
    always skeptical, because if it is only unnecessary, it doesn't
    do any harm. And I asked the gentleman does he have any policy
    objection. He is saying, ``Well, the Census Bureau may well do
    this anyway.''
        Mr. Gekas. Not may well, will.
        Mr. Frank. Well, why not put it in the legislation? What
    harm will it do to have it in the legislation if the gentleman
    thinks it is going to happen anyway? And I will yield to him.
        Mr. Gekas. And there is the controversy. You want to
    introduce a controversial amendment to put in solid language,
    when we know that the process agreed to by the Treasury
    Department, the administration, the Census Bureau, all the
    people who were involved in the reform measure, who will
    recognize that the Census Bureau, in its ongoing figure
    creation, will be doing that next year----
        Mr. Frank. Mr. Chairman, I must say, the argument that it
    is a good policy, there is no objection to the policy, but we
    should trust that the Census Bureau would do it anyway, rather
    than write it in, is wholly unpersuasive to me. And I do not--
    if the policy of regular adjustment for inflation is not
    controversial, I do not understand why it becomes controversial
    for us to say that we want to reassure that we--we want to
    assure that we do the non-controversial policy.
        Let me say this. I have voted for this bill. I ask for 30
    second, Mr. Chairman. I have voted for this bill in committee
    before. I do think that there is abuse, and I am ready for
    changes, but adopt the posture that your Rembrandt--and not a
    brush stroke of this masterpiece can ever be changed, even if
    people find that there are ways in which it can be improved,
    and you will drive votes away; you will not add votes. I thank
    you, Chairman.
        Chairman Sensenbrenner. The gentleman's time has expired.
    The question is on the----
        Mr. Watt. Mr. Chairman.
        Chairman Sensenbrenner. For what purpose does the gentleman
    from North Carolina, Mr. Watt, seek recognition?
        Mr. Watt. I move to strike the last word.
        Chairman Sensenbrenner. The gentleman is recognize for 5
    minutes.
        Mr. Watt. I am sorry. I had to be out for a little bit, and
    may have missed part of this, but is Mr. Gekas's contention
    that the Census Bureau can change the bankruptcy bill, even if
    it adopts a cost of living increase?
        Mr. Gekas. Would the gentleman yield?
        Mr. Watt. It wouldn't have any bearing--maybe I am just--I
    got in on the end of the discussion.
        Mr. Gekas. Many of the bureaus in our system of government
    have regular reporting updates of current conditions and a
    variety of our societal needs and institutions. In our bill we
    say, in this particular instance, that for instance, in the
    portion having to do with a household of two, three or four
    individuals, the highest median family income of the applicable
    State for a family of the same number or fewer individuals last
    reported by the Bureau of the Census. And we are saying that
    that does not mean this is the final set of statistics. ``Last
    reported'' contemplates the ongoing duty of the Census Bureau
    to update all of these statistics. Thus, we incorporate by
    reference, after they promulgate their latest reporting----
        Mr. Watt. So the gentleman's argument is, if we do this, we
    are doing something that the Census Bureau might do anyway?
        Mr. Gekas. Is doing anyway.
        Mr. Watt. And it is redundant?
        Mr. Gekas. Well, yes. That is a peroration. No, but--no, I
    think that states the proposition.
        Mr. Watt. Which set into play the Barney Frank Principle of
    redundancy. I yield, Mr. Meehan.
        Mr. Meehan. The problem is that the Census Bureau only
    updates these figures, the family income based on the size of
    the family, every 10 years. That is when they do it presently.
    So all the amendment says is, is that we should update the
    figures. If you are going to have safe harbor provisions and
    they are going to be 8 years old or 9 years old, that we ought
    to use the most updates information. There is nothing that
    assures that the US Census Bureau is going to change. It is a
    very simple amendment.
        Mr. Watt. Perhaps the gentleman has forgotten that because
    the cost of living has been so modest under the Democratic
    Administration, he has forgotten the times that there was
    runaway inflation under some of the prior administrations.
        Mr. Frank. The gentleman yield to me?
        Mr. Watt. I will yield.
        Mr. Frank. It is very clear. If the Census Bureau did it on
    an annual basis, this amendment would have no effect. This
    amendment would only have an effect if the Census Bureau, for
    some reason, did not promulgate these figures annually. So if
    in fact it works exactly as the gentleman from Pennsylvania
    expects, there is no problem. But if the Census Bureau did not
    promulgate them annually, this would prevent there from being a
    lag in that figure. As someone who supports that concept, I
    cannot for the life of me, understand why there should be any
    substantive objection to this amendment.
        Mr. Watt. I think I understand, Mr. Chairman. Mr. Gekas
    thinks he has a Rembrandt that any brush will clearly make----
        Chairman Sensenbrenner. Moses had a more hard-line attitude
    than Rembrandt did. Will the gentleman yield back?
        Mr. Watt. Moses?
        Chairman Sensenbrenner. Yes. He sent things down in stone
    tablets.
        Mr. Watt. Oh, yeah. Well----
        Mr. Frank. If the gentleman would yield, I am not----
        Mr. Watt. Perhaps he thinks he has a stone tablet then.
        Mr. Frank. If the gentleman would yield, I am not a great
    theologian, but I don't think Moses sent down the tablets; he
    was more the recipient. I don't think Moses ever claimed to be
    the author.
        Chairman Sensenbrenner. I stand corrected. Will the
    gentleman yield back?
        Mr. Watt. I think I will, on that happy note.
        Chairman Sensenbrenner. Okay. The question is on the
    amendment offered by the gentleman from Massachusetts, Mr.
    Meehan. Those in favor will signify by saying aye.
        Opposed, no.
        The noes appear to have it. Roll call is ordered. The
    question is on the Meehan Amendment. Those in favor will, as
    your names are called, vote aye. Those opposed, no. And the
    clerk will call the roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. No.
        The Clerk. Mr. Gekas, no. Mr. Coble?
        [No response.]
        The Clerk. Mr. Smith?
        Mr. Smith. No.
        The Clerk. Mr. Smith, no. Mr. Gallegly?
        [No response.]
        The Clerk. Mr. Goodlatte?
        [No response.]
        The Clerk. Mr. Chabot?
        [No response.]
        The Clerk. Mr. Barr?
        Mr. Barr. No.
        The Clerk. Mr. Barr, no. Mr. Jenkins?
        [No response.]
        The Clerk. Mr. Hutchinson?
        [No response.]
        The Clerk. Mr. Cannon?
        [No response.]
        The Clerk. Mr. Graham?
        Mr. Graham. No.
        The Clerk. Mr. Graham, no. Mr. Scarborough?
        [No response.]
        The Clerk. Mr. Bachus?
        [No response.]
        The Clerk. Mr. Hostettler?
        [No response.]
        The Clerk. Mr. Green?
        Mr. Green. No.
        The Clerk. Mr. Keller?
        Mr. Keller. No.
        The Clerk. Mr. Issa?
        [No response.]
        The Clerk. Ms. Hart?
        Ms. Hart. No.
        The Clerk. Ms. Hart, no. Mr. Flake?
        Mr. Flake. No.
        The Clerk. Mr. Flake, no. Mr. Conyers?
        Mr. Conyers. Aye.
        The Clerk. Mr. Conyers, aye. Mr. Frank?
        Mr. Frank. Aye.
        The Clerk. Mr. Frank, aye. Mr. Berman.
        [No response.]
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        [No response.]
        The Clerk. Mr. Scott?
        Mr. Scott. Aye.
        The Clerk. Mr. Scott, aye. Mr. Watt?
        Mr. Watt. Aye.
        The Clerk. Mr. Watt, aye. Ms. Lofgren?
        [No response.]
        The Clerk. Ms. Jackson Lee?
        Ms. Jackson Lee. Aye.
        The Clerk. Ms. Jackson Lee, aye. Ms. Waters?
        Ms. Waters. Aye.
        [No response.]
        The Clerk. Mr. Meehan?
        Mr. Meehan. Aye.
        The Clerk. Mr. Meehan, aye. Mr. Delahunt?
        Mr. Delahunt. Aye.
        The Clerk. Mr. Delahunt, aye. Mr. Wexler?
        [No response.]
        The Clerk. Ms. Baldwin?
        Ms. Baldwin. Aye.
        The Clerk. Ms. Baldwin, aye. Mr. Weiner?
        [No response.]
        The Clerk. Mr. Schiff?
        Mr. Schiff. Aye.
        The Clerk. Mr. Schiff, aye. Mr. Chairman?
        Chairman Sensenbrenner. No.
        The Clerk. Mr. Chairman, no.
        Chairman Sensenbrenner. Are there members in the chamber
    who wish to record their vote or change their vote? The
    gentleman from Alabama, Mr. Bachus.
        Mr. Bachus. No.
        The Clerk. Mr. Bachus, no.
        Chairman Sensenbrenner. The gentleman from Indiana, Mr.
    Hostettler.
        Mr. Hostettler. No.
        The Clerk. Mr. Hostettler, no.
        Chairman Sensenbrenner. The gentleman from Florida, Mr.
    Scarborough?
        Mr. Scarborough. No.
        The Clerk. Mr. Scarborough, no.
        Chairman Sensenbrenner. Further members who wish to record
    or change their vote? The gentleman from Arkansas, Mr.
    Hutchinson?
        Mr. Hutchinson. No.
        The Clerk. Mr. Hutchinson, no.
        Chairman Sensenbrenner. Anybody else? If not, the clerk
    will report.
        The Clerk. Mr. Chairman, there are 9 ayes and 13 nays.
        Chairman Sensenbrenner. And the amendment is not agreed to.
    Are there further amendments? For what purpose the gentlewoman
    from Texas, Ms. Jackson Lee seek recognition?
        Ms. Jackson Lee. Mr. Chairman, I have an amendment at the
    desk. I think it is known as No. 3. It has .010 at the top.
        Chairman Sensenbrenner. The clerk will report the
    amendment.
        The Clerk. Amendment to H.R. 333 offered by Ms. Jackson
    Lee. Beginning on page 417, strike line 21 and all that
    follows----
        Chairman Sensenbrenner. Without objection, the amendment
    will be considered as read, and the gentlewoman from Texas is
    recognized for 5 minutes.
        Ms. Jackson Lee. Thank you very much, Mr. Chairman. I am
    hoping that there can be an opportunity for a rich and
    rewarding discussion on this. First of all, I am gratified that
    the chairman allowed us to have hearings last week, because if
    my recollection serves me well, I believe Mr. Gekas raised an
    issue as well about section 1310, which this amendment
    addresses.
        My concern about this particular provision in the
    legislation is that it was added in conference, and it was not
    in either the House or the Senate bills, and therefore, I think
    it merits a deep consideration. If it stays as it is in H.R.
    333, this provision would have, I believe, a drastic and
    serious impact on the international commerce, on insurance and
    reinsurance placements for American business, and could
    interfere with the states' regulation of the insurance
    industry.
        In addition, international investment organizations, such
    as the US State Department, the US Department of Justice, have
    both declared that such a provision could undermine US efforts
    to enforce US court orders in foreign courts.
        This is sort of a two-way street. If we are to be in the
    international arena, we must give to international businesses
    or businesses other than American businesses, the same
    opportunity and the same grace that we would wish our
    businesses receive in doing international trade.
        I would like to yield to Mr. Gekas and ask his thoughts. I
    would like to have this language eliminated. I know that my
    recollection is that you have an interest in this language not
    being in the bill. I would be willing to have further
    discussions about this. I have this amendment that I am ready
    to move forward, but I wanted to engage you, Mr. Gekas, to see
    whether or not we could work together on this.
        [The Amendment offered by Ms. Jackson Lee follows:]

        Mr. Gekas. Yes. If the lady----
        Ms. Jackson Lee. I yield to the gentleman.
        Mr. Gekas. All right. I do not--I am not enamored of this
    language, and I intended to, and still intend to follow through
    with attempting to remove it from the final outcome of this
    bill. By way of authorship jealousy or whatever we want to--
    pride, I want this bill to remain intact for the time being,
    and therefore, during these proceedings, I will not offer to
    remove it, nor will I support an amendment to remove it. But I
    have had discussions with this with a variety of people, and if
    nothing else happens, I will go before the Rules Committee and
    ask that an amendment to remove this from the bill be made an
    order, so that we can have full debate on it. But I would not
    be loyal to my own concept of keeping this bill intact on the
    one hand and my desire to do something about this provision if
    I didn't approach it in that manner.
        Chairman Sensenbrenner. Will the gentlewoman yield to me?
        Ms. Jackson Lee. Yes, I would be happy to yield to the
    chairman.
        Chairman Sensenbrenner. First of all, I thank the
    gentlewoman for yielding. Let me state that I share the
    gentleman from Pennsylvania's discomfort with the provisions in
    section 1310.
        Ms. Jackson Lee. My discomfort as well.
        Chairman Sensenbrenner. Any your discomfort as well. I am
    informed, however, that if section 1310 is removed here, then
    the Committee on Financial Services will demand a sequential
    referral of this legislation. As I stated at the organization
    meeting of this committee, I will vigorously defend the
    jurisdiction of the Judiciary Committee against all enemies,
    foreign and domestic. [Laughter.]
        Ms. Jackson Lee. I support you, Mr. Chairman.
        Chairman Sensenbrenner. And the enemies of the jurisdiction
    of this committee are more domestic than foreign, and we know
    who they are. Bankruptcy is very clearly within the
    jurisdiction of the Judiciary Committee, and I am not willing
    to have another committee start mucking around in what I think
    everybody in this committee feels is within our jurisdiction.
    If section 1310 stays in, the bill goes to the floor without a
    sequential. What happens out on the floor will be the will of
    the House and not the will of this committee or any other
    committee, but I will join with the gentleman from Pennsylvania
    in seeking to make an amendment to strike section 1310 in order
    on the floor if the gentlewoman will withdraw her amendment at
    this time.
        Ms. Jackson Lee. Mr. Chairman, with that generous offer,
    and I would like to be included as part of the offeror of such
    an amendment to go to the floor, I would be willing to----
        Mr. Scott. Before you do that.
        Ms. Jackson Lee. I will withhold.
        Mr. Scott. Mr. Chairman?
        Chairman Sensenbrenner. The gentleman from Alabama also
    wants to say something, so--the gentleman from Virginia, go
    ahead.
        Mr. Scott. Before it is stricken, Mr. Chairman, I have an
    additional discomfort. We have a provision in here that
    obviously means something, and no one can explain to us what we
    are voting on, why it is in there, how it got there.
        Chairman Sensenbrenner. The gentlewoman's time has expired.
    For what purpose does the gentleman seek recognition?
        Mr. Scott. Move to strike the last----
        Ms. Jackson Lee. I was going to ask for an additional----
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Scott. Mr. Chairman, we have a provision in the bill
    that obviously means something. It is there for some reason,
    and no one can explain to use what it does or why it got there,
    and I think the gentleman from Alabama--I will yield to him if
    he can explain to us why we ought to vote for the bill with
    that provision in there.
        Mr. Bachus. Let me say this. You are yielding to me?
        Mr. Scott. I yield.
        Mr. Bachus. What this does, this language, which was put in
    in the Senate, only applies to a foreign judgment which is the
    result of fraudulent misrepresentations made in the United
    States to investors. So it is narrowly drawn. And what it says,
    if someone--fraud was practiced on an American citizen here in
    the United States, in getting them to invest. In this case it
    is in a Lloyd's of London underwriting situation, that in the
    bankruptcy proceeding, they would be allowed to assert that
    they were defrauded, that the judgment was a result of fraud.
        Mr. Scott. Well, I would reclaim my time, and I would ask
    the gentleman, why shouldn't this benefit apply to others if it
    is such a good idea, and why is it limited to these years, and
    does it apply to anybody other than those names of Lloyd's of
    London?
        Mr. Bachus. I can't answer that. I can tell you that in my
    mind, as far as what the language does--I mean, if the
    gentleman has another amendment--but in my mind, an American
    citizen who believes they have been defrauded deserves their
    day in court, and I think the long history of bankruptcy is
    that in a proceeding to try to collect a judgment, that they
    can assert fraud. And I think really the provision is more
    consistent than inconsistent with----
        Mr. Scott. I would ask to reclaim my time. I don't see
    anything in this provision that has anything to do with
    bankruptcy. Can you point out to me what this has to do with
    bankruptcy, a proceeding in bankruptcy?
        Mr. Bachus. If it deals with bankruptcy. I mean, I don't--I
    am just simply telling what the----
        Mr. Scott. It doesn't say anything about bankruptcy. I
    reclaim my time.
        Ms. Waters. Mr. Chairman, I cannot hear the gentleman. Can
    he speak into his mike?
        Mr. Scott. Reclaiming my time. It says, ``Notwithstanding
    any provision of law''----
        Mr. Bachus. I don't know whether----
        Chairman Sensenbrenner. Will the gentleman from Alabama
    please speak into the mike, because the gentlewoman from
    California's point is well taken.
        Mr. Scott. ``A court within the United States shall not
    recognize or enforce any judgment rendered in a foreign
    court.'' It doesn't say anything about bankruptcy.
        Mr. Bachus. I am simply saying I am not arguing about that.
    What I am simply saying is the reasoning behind it. You said
    could anyone explain it.
        Ms. Jackson Lee. Will the gentleman yield?
        Mr. Bachus. And I am explaining it by saying that this
    deals with--it is narrowly constructed to deal with simply
    saying you cannot enforce a foreign judgment which was gained
    as a result of a fraudulent misrepresentation made here in the
    United States to an investor, and that that investor would have
    its day in court here.
        Mr. Scott. Well, reclaiming my time, I am a little lost as
    to what it is doing in a bankruptcy bill, but I will yield to
    the gentlelady from Texas.
        Ms. Jackson Lee. I think the gentleman has a sort of struck
    the court of the issue of the amendment that I presented. I
    think that it tampers with state insurance law. It stifles quid
    pro quo of having US judgments enforced, as well as foreign
    judgments enforced. I too was trying to find a relationship to
    the bankruptcy code, and that is why I was offering to say that
    we would do well to have this language stricken as it is not
    relative to this code, but as well, it puts at a second class
    position, judgments that US citizens would want to enforce,
    because of the way it would be implemented. And I would ask
    that we work together for an amendment subsequent to this
    hearing and this markup to have this language addressed and
    removed.
        Chairman Sensenbrenner. Does the gentlewoman want to
    withdraw her amendment at this time?
        Ms. Jackson Lee. Mr. Chairman, can I secure from the--do I
    understand--let me not--do I understand from Mr. Gekas and the
    Chair that we can work together for such an amendment moving to
    the floor, and I would like to work with them?
        Chairman Sensenbrenner. Well, I will give you a commitment
    that the rule that I asked for the Rules Committee to grant
    will allow this amendment to be offered. I have an open mind on
    whether or not personally to support it, but I do believe that
    this issue should be brought to the floor.
        Ms. Jackson Lee. All right. I thank the gentleman. You and
    Mr. Gekas. Mr. Gekas, are you intending to jointly offer it, or
    would you join me, or would you support the amendment that I
    would like to have before Rules Committee?
        Mr. Gekas. I will appear before the Rules Committee with
    the chairman at the appropriate time, and urge that this
    proposition be put up under their consideration to be made an
    order. I will continue, at this juncture, to oppose its
    inclusion subject to whatever I learn between now and then, but
    in either event, I will urge that we have it made an order.
        Chairman Sensenbrenner. Would the gentlewoman care to
    withdraw the amendment at this time?
        Ms. Jackson Lee. And I am not trying to be overly
    persistent, Mr. Chairman. I will withdraw it, but I intend to
    offer such an amendment. I am trying to understand if the
    chairman and the ranking will be supporting the amendment that
    I would be offering to strike the language?
        Chairman Sensenbrenner. The amendment is withdrawn.
        Ms. Jackson Lee. Mr. Chairman, I was asking an inquiry.
        Chairman Sensenbrenner. The gentleman from Massachusetts.
        Ms. Jackson Lee. Mr. Chairman, I am sorry. I was asking an
    inquiry. I was concerned about the amendment that I have
    offered and withdrawn. Is it my understanding that if offered
    in Rules Committee, if I offer it in Rules Committee as it is,
    that I would have the support of the chairman and Mr. Gekas for
    it to move forward?
        Chairman Sensenbrenner. Yes. To have it made an order.
        Ms. Jackson Lee. I understand.
        Chairman Sensenbrenner. That both Mr. Gekas and I have said
    that you would have an opportunity to offer it on the floor.
        Ms. Jackson Lee. I appreciate that, Mr. Chairman.
        Chairman Sensenbrenner. I can't speak for any other member,
    but I can say that I am not sure whether I would support the
    amendment on the floor.
        Ms. Jackson Lee. I understand.
        Chairman Sensenbrenner. But I will protect the
    gentlewoman's right to get a vote on it on the floor.
        Ms. Jackson Lee. And, Mr. Chairman, I withdraw the
    amendment at this time.
        Chairman Sensenbrenner. The amendment is withdrawn.
        Ms. Jackson Lee. Thank you.
        Chairman Sensenbrenner. For what purpose does the gentleman
    from Massachusetts, Mr. Delahunt, seek recognition?
        Mr. Delahunt. Mr. Chairman, I have an amendment at the
    desk. It is labeled Delahunt 004, and ask for its
    consideration.
        Chairman Sensenbrenner. The clerk will report the
    amendment.
        The Clerk. Amendment to H.R. 333, offered by Mr. Delahunt.
    Page 169, line 3, strike ``during the 2-year period.''
        Chairman Sensenbrenner. Without objection, the amendment is
    considered as read, and the gentleman from Massachusetts is
    recognized for 5 minutes.
        Mr. Delahunt. Thank you, Mr. Chairman. This amendment would
    eliminate, in my mind, the most significant loophole in the
    bankruptcy code, by placing a meaningful national cap on the
    so-called homestead exemption. And I say ``meaningful'', Mr.
    Chairman, because $100,000 cap that is currently in the bill is
    conditioned by a series of exemptions that assure that those
    who engage in flagrant abuse of the bankruptcy system by
    sheltering homestead assets can continue to do so. Amendment
    this amendment would extend that cap to $250,000.
        I heard during the hearings the concerns that were
    expressed by the gentleman from Indiana, Mr. Hostettler, and I
    concur with him. And I should emphasize that $250,000 I think
    is most generous, and refers clearly, obviously, to the equity
    that the debtor should have in his or her primary residence.
        But in exchange, it eliminates the exemptions for
    transactions conducted within the 2 years preceding the
    bankruptcy filing, and for that--another condition that I found
    unacceptable, for transactions occurring prior to that time
    within a single state of residency.
        Now, the rationale we had been given for the so-called
    needs-based provisions proposed in H.R. 333, is to eliminate
    abuses of the bankruptcy law, abuses which proponents of the
    legislation have characterized as the use of the bankruptcy
    code as a, quote, unquote, ``financial planning tool.'' I want
    to be clear, I don't necessarily subscribe to that theory. Yet,
    while the bill focuses about whether small debtors can manage
    to pay $20 a month in chapter 13, it leaves untouched the most
    notorious abuse of the consumer bankruptcy system, the
    financial planning strategy, if you will, whereby debtors
    purchase expensive homes in states with unlimited homestead
    exemptions, declare bankruptcy, and continue to enjoy a life of
    luxury, while their creditors get zero or very little.
        Now, if we are truly serious, if we are sincere about
    curtailing abuses, it seems to me that this is the place to
    start. For example, with the owner of the failed Ohio S&L who
    paid off only a fraction of 300 million in bankruptcy claims,
    while keeping his multimillion dollar ranch in Florida, or the
    convicted Wall Street financier, who filed bankruptcy while
    owing some 50 million in debts and fines, but still kept his $5
    million Florida mansion, complete with 11 bedrooms and 21
    baths, or the movie actor, Burt Reynolds, who declared
    bankruptcy in 1996, claiming more than $10 million in debt.
    Burt Reynolds kept a $2.5 million home, appropriately named
    Valhalla, while his creditors received less than 20 cents on
    the dollar.
        If there is ever a case for a national standard, this is
    it. Without a national cap, debtors who live in the 37 States,
    rather, that cap the exemption at $40,000 or less, are free to
    locate to one of the five so-called debtors' paradises and have
    no cap at all.
        If the amendment is adopted, it will have no effect on the
    45, 45 states that cap the exemption at $250,000 or less, but
    it will discourage residents of those jurisdictions from moving
    to one of the 7 States with a higher cap or no cap at all in
    order to take care of this enormous loophole.
        If we are serious about curbing this flagrant abuse of the
    bankruptcy system, my amendment, I would suggest, respectfully,
    is the only way to do it. I urge my colleagues to support it,
    and I would yield back the balance of my time.
        [The Amendment offered by Mr. Delahunt follows:]

        Chairman Sensenbrenner. For what purpose does the gentleman
    from Pennsylvania seek recognition?
        Mr. Gekas. I move to strike the last word.
        Chairman Sensenbrenner. Recognized for 5 minutes.
        Mr. Gekas. I have to say that if the gentleman from
    Massachusetts is really interested in curbing abuse in this
    particular segment of bankruptcy law, that he would support our
    bill enthusiastically because otherwise, he is supporting the
    status quo, which the status quo is the one that Burt Reynolds
    is flying high on and these millionaires. There is the abuse,
    the one that we are curbing, by permitting in our language only
    a 2-year period of new residence to qualify for any kind of an
    exemption, therefore, erasing for all time the abuse to which
    the gentleman refers. It is odd to me that he would not be
    clapping with enthusiasm that we have a homestead exemption
    that curbs Burt Reynolds forever. And therefore, I ask for a
    vote no on this provision. There is no question about serious--
    --
        Mr. Delahunt. If the gentleman would yield?
        Mr. Gekas. I am not yielding yet, Bill. I will yield to
    you. Don't worry, Bill.
        Mr. Delahunt. Thank you.
        Mr. Gekas. This particular section has been debated and
    redebated and over debated since the beginning of the
    bankruptcy reform effort 5 years ago, and it is always a bone
    of contention.
        We do have to take into consideration States' rights in
    these momentous decisions that we make, and on a political
    basis--I don't mean Republican or Democrat, but on a political
    basis for the purpose of bankruptcy, Texas and Florida are
    important keys to a continued overall broad support of this
    legislation. I acknowledge that. And I was willing to fight for
    originally retention of the current status of homestead
    exemption, but because of the good offices of the members from
    Florida and the members from Texas, who were willing to yield
    on this point, still preserving the overall State homestead
    exemption that they have enjoyed for so long, and which in the
    case of Texas at least is part of their constitution, we
    crafted this reform measure, which amply meets the challenge to
    which the gentleman from Massachusetts refers.
        I urge him to remove the status quo, to get Burt Reynolds
    out of our hair and vote for our bill.
        Mr. Delahunt. If the gentleman will yield, I will get Burt
    Reynolds out of his hair. Will the gentleman yield?
        Mr. Gekas. I yield.
        Mr. Delahunt. I thank the gentleman for yielding, and I
    want to indicate to him that I do respect his acknowledgement
    that this is a political decision based upon the votes of
    members from Florida and Texas, because to be honest, that is
    really all that it is about, no more. To suggest that any
    individual can go to either one of those States and purchase a
    home for any amount of money, pay off any mortgage over a
    period of time, and live there without having the possibility
    of that particular residence being subject to a bankruptcy
    claim, I suggest to you is absolutely outrageous. And folks and
    debtors and creditors from all of the other 45 States in this
    Nation are paying for that particular abuse.
        Now the gentleman talks about states' right, but I am sure
    that the gentleman would also acknowledge that Congress,
    pursuant to the Constitution--I think it's article 1, section
    8, has the authority to mandate uniform bankruptcy laws for
    this country. It is embraced within our Constitution. Now is
    the time to do it. The 2 years that the gentleman refers to
    that is in the current legislation would not in any way hinder
    the sophisticated, astute, deadbeat, scam artist that wanted to
    circumvent the system.
        Mr. Gekas. I yield--I seize back the balance of my time,
    and say anyone who wants to gain the system has a great
    opportunity to do so in every single line of this mammoth bill
    that we are proposing. What we are trying to do is the best we
    can to eliminate or to reduce the number of scams and the
    amount of impact it would have on our economic system. This is
    a good compromise that we have. Florida and Texas are to be
    commended in joining with us in the promulgation of this
    homestead exemption. I ask everybody to vote no on this
    amendment.
        Chairman Sensenbrenner. The time of the gentleman has
    expired.
        For what purpose does the gentlewoman from Wisconsin seek
    recognition?
        Ms. Baldwin. Move to strike the last word.
        Chairman Sensenbrenner. The gentlewoman is recognized for 5
    minutes.
        Ms. Baldwin. Yield to the gentleman from Massachusetts, Mr.
    Delahunt.
        Mr. Delahunt. I thank my friend from Wisconsin for
    yielding.
        You know, Mr. Chairman, and I think we really should
    reflect for a moment on what we're doing in terms of this
    particular amendment. As I'm sure most of my colleagues are
    aware, that IRA's, pension dollars are exempt under the
    provisions of H.R. 333, up to $1 million, $1 million. I think
    we can all imagine a scenario where, again, a sophisticated,
    astute, white-collar criminal, because that's really what these
    folks are, could go to one of these States and clearly, with
    the assistance of those who understand the system, purchase a
    primary residence without a mortgage and live very comfortable
    on the income, the income from the $1 million--the interest on
    the income from the $1-million pension asset that's exempted by
    this statute. That, I suggest to you, is just bad. It's bad
    public policy, and at the same time, simultaneously, there are
    other provisions in this bill where we end up chasing people
    who are lucky to be earning $40- or $50,000 a year and have a
    family to support. It is unconscionable, I respectfully
    suggest, and I think it will further, further bring into
    disrepute the bankruptcy system, and we should pass this
    particular amendment and save face.
        Mr. Watt. Will the gentlelady yield, Ms. Baldwin?
        Chairman Sensenbrenner. The time belongs to the gentlelady
    from Wisconsin.
        Mr. Watt. Will the gentlelady yield?
        Ms. Baldwin. Yes.
        Mr. Watt. For the purpose of asking Mr. Delahunt a
    question, we debate this last year or whenever we did this bill
    before, and it's a very difficult issue. I agree with the
    gentleman that we ought to have a national standard, whether
    it's inside the 2 years or outside the 2 years. I'm not sure I
    agree with him that $250,000 is high enough to cover----
        Mr. Delahunt. If the gentleman would yield.
        Mr. Watt. I'm happy to yield. I was going to ask the
    gentleman whether he might entertain increasing that amount to
    $500,000.
        Mr. Delahunt. You know, given the realities, and again, Mr.
    Gekas, I want to acknowledge the fact that he put it out on the
    record, this is a political decision. Of course, I would
    recognize it because I think we're putting ourselves in a
    situation, where the confidence of the American people and the
    integrity of this process is truly at risk when we can pass a
    bill that creates the potential scenario that I just described.
        I'd be happy to entertain that as a motion, if that's an
    amendment offered by the gentleman.
        Mr. Watt. Maybe you should just do it yourself, since
    you're willing to do it. I mean, I'm willing to author it.
        Mr. Delahunt. I'd ask unanimous consent to raise the
    national cap from $250- to $500,000.
        Chairman Sensenbrenner. Without objection, the modification
    to the amendment is agreed to. Hearing none, so ordered.
        Mr. Watt. Would the gentlelady continue to yield?
        Chairman Sensenbrenner. The time belongs to the gentlewoman
    from Wisconsin.
        Mr. Watt. Thank you, Mr. Chairman.
        This is where we are here. We are trying to get people to
    stop abusing the Bankruptcy Code. We're making a concerted
    effort to do that, but it's quite obvious that we have a
    different standard for rich people who abuse the Bankruptcy
    Code than we have for poor people who abuse the Bankruptcy
    Code.
        Now, as I said in the hearing the other day, I have some
    concern about this whole means test provision because I think
    what we are doing with the means test is setting up two
    different systems, two different structures for----
        Chairman Sensenbrenner. The gentlewoman's time has expired.
        Mr. Watt. Mr. Chairman?
        Chairman Sensenbrenner. For what purpose does the
    gentleman----
        Mr. Watt. I move to strike the last word.
        Chairman Sensenbrenner. The gentleman from North Carolina
    is recognized for 5 minutes.
        Mr. Watt. Thank you, Mr. Chairman, and I hope not to take
    the 5 minutes.
        I think what we are going to end up with is, in effect, a
    pauper's court for--that handles chapter 7 bankruptcies,a need
    a higher-income bankruptcy court that handles chapter 13
    bankruptcies. We are doing this in the name of getting rid of
    abuse in the system, but we are setting up two bankruptcy
    systems in this country under this bill. And I understand why
    the means test is in the bill. That was a political decision to
    buy support for the bill, but if somebody abuses the bankruptcy
    laws, and we can write a system to ferret out the abuses, and
    that's our objective, we ought to write a bill that does that
    and that ought apply to rich people, it ought to apply to poor
    people.
        Mr. Delahunt. Would the gentleman yield?
        Mr. Watt. I'll yield to the gentleman.
        Mr. Delahunt. I thank the gentleman for yielding.
        You know the gentleman from Pennsylvania talked about
    States' rights. And as he well knows, and as my colleagues on
    the committee know, that the States have been--have their own
    list of exemptions that can vary from the list of Federal
    exemptions, and in some cases, the differences are significant.
    I wonder how the gentleman from Pennsylvania would respond or
    react to a proposal to allow the States, not just simply to
    establish their own standards and their own levels, in terms of
    exemptions of assets, but income. If, for example, the people
    in the Commonwealth of Massachusetts wanted to opt out, I think
    that's the operative term, opt out of the means testing, would
    the gentleman, at that point in time, recognize, would he
    accept that amendment and recognize the right of the people of
    Massachusetts to make that decision, in terms of their debtors,
    the individuals that find themselves in dire financial straits
    through no fault of their own?
        Mr. Gekas. If the gentleman would yield, we've already
    provided that the people of Massachusetts can decide the
    figures of a median income. It's in our bill.
        Mr. Delahunt. I understand that. I understand----
        Mr. Gekas. Every State can do that, and we honor that.
        Mr. Delahunt. No, I'm talking about opting out of the so-
    called means test aspect of H.R. 333 and maintain their own
    calculation in terms of whether the debtor should go to--should
    stay in 7 or go to chapter 13.
        Mr. Gekas. I am in the process of trying to complete a
    process by which the Federal bankruptcy laws will be changed to
    try to--to try to minimize the abuses, as the gentleman from
    North Carolina said. We're going to fail in some respects.
    We're always going to have those who could game the system, but
    we're doing the best we can----
        Mr. Delahunt. I understand we're going to have people who
    will always game the system. In fact, there's an interesting
    article, relative to the same use of the language ``gaming the
    system'' back in the 1930's, when concerns were expressed about
    the then-current Bankruptcy Act, but what I'm talking about is
    the gentleman who just moments ago spoke to the issue of
    States' rights in terms of homestead exemptions, willing to
    entertain a motion which would allow the individual States to
    opt out of the so-called means test that's being proposed in
    H.R. 333. I ask, just for the sake of consistency.
        Mr. Gekas. My answer is no, but it's not inconsistent.
        Mr. Watt. Let me just finish the point I'm making. I think
    everybody understands now that this bill sets up a two-tier
    system, and I hope everybody understands that this is not
    really all about people who are abusing the system. Basically,
    we are providing much, much greater protections for rich people
    in this bill----
        Chairman Sensenbrenner. The gentleman's time has expired.
        Mr. Watt [continuing]. Than we are for people who meet
    other criteria.
        Mr. Wexler. Mr. Chairman?
        Chairman Sensenbrenner. For what purpose does the gentleman
    from Florida seek recognition?
        Mr. Wexler. I move to strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Wexler. Thank you, Mr. Chairman. I will be brief. As
    Mr. Watt has said, this issue was discussed and debated ad
    nauseam last session.
        I just, as a Member of Congress who represents Florida, who
    represents Palm Beach and Broward Counties, the issue of
    homestead protection is as important in my area of the country
    as any other. And I would just like to add that for every one
    scoundrel, for lack of a better word, that seeks to move from
    the Northeast or the Midwest or what have you to Florida to
    protect his or her assets in this million-dollar home that was
    referred to in Florida, and certainly there have been those
    characters, and undeniably there would be some in the future,
    but for every one of those, there are possibly 700/800/1,200/
    1,400, I don't know how many hundreds if not thousands of
    people that move to Florida with a moderate amount of savings
    or even a greater than moderate amount of savings, buy a home
    in their sixties or seventies, and then medical catastrophe
    strikes, and the only thing or one of the few things that
    protect them from having to move from their home or sell their
    home is a homestead exemption that was placed in the Florida
    Constitution.
        So, while the depiction is of the scoundrel that's looking
    to escape whatever ills he or she has committed and moves to
    Florida or somewhere else where there's a constitutional, State
    constitutional protection, there are thousands of older people
    and others where economic catastrophe strikes, and that is the
    purpose of this kind of protection.
        Now that does not get to the argument that Mr. Watt raises,
    which is this dual aspect of this bill. Mr. Watt may be
    entirely correct, but even if he is, I don't believe that
    that's a justification for striking from the State of Florida
    those that the citizens of Florida and other States have
    provided for their residence, so that the one asset they have
    can remain their one asset no matter what economic, health or
    other catastrophe may strike.
        Mr. Watt. Will the gentleman yield?
        Mr. Wexler. Certainly.
        Mr. Watt. I just want to point to the gentleman that's the
    very reason that I asked Mr. Delahunt to raise the limit from
    $250- to $500-. I'm still not sure that $500,000 is high
    enough. I agree, but I hope the gentleman will also agree that
    those same kind of medical catastrophes impact just as bad and
    worse on the poor people that we are relegating to a second
    class under this bill, and that's the only point that I'm
    having trouble with her. You know, I have no problem with
    trying to protect legitimate, people who are not gaming the
    bankruptcy system. I thought that's what we were setting out to
    accomplish.
        Mr. Delahunt. If my friend would yield----
        Mr. Watt. And this bill doesn't do that.
        Mr. Wexler. If I could just answer, at least from this one
    member's perspective, I agree with Mr. Watt. And I think in
    each instance, when the opportunity arises to protect those
    citizens in your State and others who are in those situations,
    I vote with you. What I'm asking is, in this instance, in this
    case, this amendment specifically would affect those residents
    of States like Florida, and I'm asking it doesn't help one iota
    that particular person that Mr. Watt is concerned about, and I
    concur with his concern, it doesn't help them one bit if the
    72-year-old in Palm Beach County who just got diagnosed with
    cancer and has now got enormous bills, gets thrown out of their
    home. It doesn't help that person----
        Mr. Delahunt. If my friend would yield.
        Mr. Wexler [continuing]. One bit. Certainly.
        Mr. Delahunt. I certainly wouldn't want to see anyone
    thrown out of their home. And if it would allay the concerns
    you expressed, I'm willing to go to a million dollars just to,
    for once, establish some sort of norm. Clearly----
        Chairman Sensenbrenner. Will the gentleman yield?
        Mr. Delahunt. I yield.
        Chairman Sensenbrenner. May I use you as a reference in
    case I need to get an auctioneer's license in conducting this
    auction here today? [Laughter.]
        Mr. Delahunt. Well, I definitely would serve as a
    reference----
        Chairman Sensenbrenner. I thank you.
        Mr. Delahunt. And I would suggest this is an auction, Mr.
    Chairman. Thank you.
        Mr. Scarborough. Property is expensive in Palm Beach, a
    million is not enough.
        Chairman Sensenbrenner. Does the gentleman yield back the
    balance of his time?
        Mr. Scarborough. Mr. Chairman?
        Chairman Sensenbrenner. For what purpose does the gentleman
    from Florida, Mr. Scarborough, seek recognition?
        Mr. Scarborough. I concur with Mr. Wexler for once. I'm
    keeping my mouth shut. [Laughter.]
        Chairman Sensenbrenner. For what purpose does the gentleman
    from Virginia, Mr. Scott, seek recognition?
        Mr. Scott. I move to strike the last word, Mr. Chairman.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Scott. Mr. Chairman, we're talking about throwing
    people out in the cold, out of their million-dollar mansions,
    some multi-million-dollar mansions. I remind the committee that
    we just threw poor single parents with children out in the
    street a few minutes ago, just for purposes of reference.
        I'd like to ask the gentleman from Massachusetts, Bill, a
    question. As I understand the present law, your exemption under
    the homestead is limited only by State law and some States it's
    totally unlimited. Under the bill, you keep your State law for
    your unlimited exemptions, limited only by $100,000 for
    everything you've gotten within the last 2 years.
        Mr. Delahunt. That's been amended now to $500,000.
        Mr. Scott. And under your amendment you get to keep all of
    your State homestead exemptions, unlimited, except for an
    aggregate total of $500,000.
        Mr. Delahunt. As it relates just simply to the primary
    residence.
        Mr. Scott. Just simply to the----
        Mr. Delahunt. If the gentleman will continue to yield, as I
    indicated, this is simply a homestead exemption. You know, in
    this bill there is also a provision for a million-dollar
    protection exemption on a pension fund. So combine that with
    the value of equity up to $500,000, and with all due respect to
    my colleagues from Florida and Texas, I dare say no one is
    going to be tossed out on the street.
        Mr. Scott. I would ask the gentleman some States have
    property exempt other than real estate. I don't see where the
    limitation under State and local law is limited in the bill to
    real estate. If you've got other things it may be exempt for
    other reasons, because it just says property under State or
    local law. It doesn't say real estate.
        Mr. Delahunt. Well, again, this amendment is intended to
    refer specifically to the prime--the exemption that is provided
    by most States, in varying degrees of value of equity to the
    primary residence.
        Mr. Bachus. Mr. Chairman?
        Chairman Sensenbrenner. For what purpose does the gentleman
    from Alabama seek recognition?
        Mr. Bachus. Mr. Chairman----
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Bachus. Now this amendment, now that it's been amended
    to a half-million dollars, it actually----
        Chairman Sensenbrenner. Could the gentleman speak into the
    mike because we've had some----
        Mr. Bachus. What you're saying is that now you could have a
    half-million-dollar exemption. And before it was a $100,000
    exemption, but you're talking about the legislation----
        Mr. Scott. Two years.
        Mr. Bachus. But that is, the 2-year limitation is designed
    to catch people from making transfers in anticipation of
    bankruptcy.
        Mr. Delahunt. But if the gentleman would yield, what I
    would suggest that if we're serious, first, there should be a
    uniform national standard, but if that's unacceptable, I don't
    think anyone, in fact, I have in another, I have another
    amendment that I will offer at a different point in time, which
    would expand the 2-year look-back provision for transactions to
    5 years because it's clear that those individuals who act most
    egregiously, who, in fact, those high-profile cases that I
    believe really undermine the confidence of the American people
    in the integrity of the system, with the resources available to
    them, their level of sophistication, they can drag it out for 2
    years.
        Mr. Bachus. I understand, but you're actually increasing
    the exemption for these people. You've taken it from $100,000
    to a half million----
        Mr. Delahunt. No.
        Mr. Bachus [continuing]. Which I would think is doing the
    exact opposite of what you're arguing----
        Mr. Delahunt. No, because the $100,000, okay, is subject to
    the 2-year limitation, but does not apply, okay, to
    transactions within the State. So, for example, if you lived in
    one community and wanted to--if--and you wanted to move to
    another community, that limitation would not be applicable.
        Mr. Bachus. I think we're moving in the wrong direction. I
    think this amendment----
        Mr. Delahunt. I concur, but, again, I'm dealing with Mr.
    Gekas----
        Mr. Bachus. I understand you're pointing out----
        Mr. Delahunt. [continuing]. Mr. Gekas said the political
    reality. In some ways, we're I think trying to present a
    picture that this is what it is.
        Mr. Bachus. I understand, but obviously it undermines the
    intent of the bill.
        Chairman Sensenbrenner. Does the gentleman yield back? Does
    the gentleman from Alabama yield back?
        Mr. Bachus. Yes.
        Chairman Sensenbrenner. The question is on the amendment,
    as modified, offered by the gentleman from Massachusetts, Mr.
    Delahunt.
        Those in favor will signify by saying aye.
        Opposed, no.
        The noes appear to have it.
        Mr. Delahunt. Roll call.
        Chairman Sensenbrenner. Roll call is requested.
        Those in favor of the Delahunt amendment, as modified,
    will, as your names are called, answer aye; those opposed, no,
    and the clerk will call the roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. No.
        The Clerk. Mr. Gekas, no. Mr. Coble?
        [No response.]
        The Clerk. Mr. Smith?
        Mr. Smith. No.
        The Clerk. Mr. Smith, no. Mr. Gallegly?
        [No response.]
        The Clerk. Mr. Goodlatte?
        [No response.]
        The Clerk. Mr. Chabot?
        Mr. Chabot. No.
        The Clerk. Mr. Chabot, no. Mr. Barr?
        Mr. Barr. No.
        The Clerk. Mr. Barr, no. Mr. Jenkins?
        [No response.]
        The Clerk. Mr. Hutchinson?
        Mr. Hutchinson. No.
        The Clerk. Mr. Hutchinson, no. Mr. Cannon?
        [No response.]
        The Clerk. Mr. Graham?
        Mr. Graham. No.
        The Clerk. Mr. Graham, no. Mr. Bachus?
        Mr. Bachus. No.
        The Clerk. Mr. Bachus, no. Mr. Scarborough?
        Mr. Scarborough. No.
        The Clerk. Mr. Scarborough, no. Mr. Hostettler?
        Mr. Hostettler. No.
        The Clerk. Mr. Hostettler, no. Mr. Green?
        Mr. Green. No.
        The Clerk. Mr. Green, no. Mr. Keller?
        Mr. Keller. No.
        The Clerk. Mr. Keller, no. Mr. Issa?
        Mr. Issa. Absolutely no. [Laughter.]
        The Clerk. Mr. Issa, absolutely no. Ms. Hart?
        Ms. Hart. No.
        The Clerk. Ms. Hart, no. Mr. Flake?
        Mr. Flake. No.
        The Clerk. Mr. Flake, no. Mr. Conyers?
        [No response.]
        The Clerk. Mr. Frank?
        [No response.]
        The Clerk. Mr. Berman?
        [No response.]
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        [No response.]
        The Clerk. Mr. Scott?
        Mr. Scott. Aye.
        The Clerk. Mr. Scott, aye. Mr. Watt?
        Mr. Watt. Aye.
        The Clerk. Mr. Watt, aye. Ms. Lofgren?
        [No response.]
        The Clerk. Ms. Jackson Lee?
        Ms. Jackson Lee. Pass.
        The Clerk. Ms. Jackson Lee, pass. Ms. Waters?
        Ms. Waters. Aye.
        The Clerk. Ms. Waters, aye. Mr. Meehan?
        [No response.]
        The Clerk. Mr. Delahunt?
        Mr. Delahunt. Aye.
        The Clerk. Mr. Delahunt, aye. Mr. Wexler?
        [No response.]
        The Clerk. Mr. Wexler, no. Ms. Baldwin?
        Ms. Baldwin. Aye.
        The Clerk. Ms. Baldwin, aye. Mr. Weiner?
        [No response.]
        The Clerk. Mr. Schiff?
        Mr. Schiff. Aye.
        The Clerk. Mr. Schiff, aye. Mr. Chairman?
        Chairman Sensenbrenner. No.
        The Clerk. Mr. Chairman, no.
        Chairman Sensenbrenner. The gentleman from North Carolina,
    Mr. Coble?
        Mr. Coble. No.
        The Clerk. Mr. Coble, no.
        Ms. Jackson Lee. How am I recorded, Mr. Chairman?
        Chairman Sensenbrenner. The gentlewoman from Texas, Ms.
    Jackson Lee?
        Ms. Jackson Lee. No.
        Chairman Sensenbrenner. Jackson Lee is a no.
        The Clerk. Jackson Lee, no.
        Chairman Sensenbrenner. Are there other members who wish to
    record or to change their votes? If not, the clerk will report.
        The Clerk. Mr. Chairman, there are 6 ayes and 18 nays.
        Chairman Sensenbrenner. And the amendment is not agreed to.
        Are there further amendments? For what purpose does the
    gentlewoman from Wisconsin seek recognition?
        Ms. Baldwin. Thank you, Mr. Chairman. I have an amendment
    at the desk, Baldwin 003.
        Chairman Sensenbrenner. The clerk will report the
    amendment.
        The Clerk. Three?
        Ms. Baldwin. Three.
        The Clerk. Amendment to H.R. 333 offered by Ms. Baldwin.
        Ms. Baldwin. Mr. Chairman, I ask that the amendment be
    considered as read.
        Chairman Sensenbrenner. Without objection, so ordered, and
    the gentlewoman is recognized for 5 minutes.
        Ms. Baldwin. Thank you, Mr. Chairman. I offer this
    amendment on behalf of myself and my colleague from Wisconsin,
    Mr. Kleczka. This amendment was adopted by this committee
    during last year's consideration of bankruptcy legislation in
    the form of H.R. 833. Unfortunately, this provision was not
    ultimately included in the conference report, and therefore was
    not made a part of H.R. 333 that's before us today.
        The amendment is fairly simple. Under the current
    Bankruptcy Code, wages and benefits earned, even after a
    bankruptcy has been initiated, are payable as administrative
    expenses and are accorded first-priority treatment. However,
    this provision of current law has been interpreted by some
    courts to deny any priority treatment of payment awards of back
    pay, which accrues after a bankruptcy is filed, to workers who
    have been discharged in violation of Federal law.
        What this means is that back pay awarded under Federal
    laws, such as whistleblower laws, the Family and Medical Leave
    Act, and Federal Mine Safety Act, the Uniformed Services
    Employment and Reemployment Act are all treated as general,
    unsecured claims in the corporation's bankruptcy. This, of
    course, means that workers who are entitled to back pay or
    other compensation may never actually receive it. I believe
    that awards of back pay, resulting from an employer's violation
    of Federal law, should be treated the same as other wages
    earned after bankruptcy has been initiated, and this amendment
    would do exactly that, making back pay part of the
    administrative expenses in a bankruptcy settlement.
        Mr. Chairman, this loophole in current law should be fixed.
    The amendment would make it more likely that workers who are
    entitled to back pay actually receive it. It would treat back
    pay the same as other wages earned after bankruptcy, which is
    entirely fair.
        Mr. Chairman, if there is no objection, I would like to
    submit a letter from Mr. Kleczka to be made a part of our
    record.
        Chairman Sensenbrenner. Without objection.
        [The letter of Mr. Kleczka follows:]

        Ms. Baldwin. And I ask the committee's approval of this
    amendment, especially since we did it 2 years ago. I'd like to
    see it happen again.
        Chairman Sensenbrenner. Will the gentlewoman yield back?
        Ms. Baldwin. Yes.
        Chairman Sensenbrenner. The gentleman from Pennsylvania?
        Mr. Gekas. I thank the chair. I move to strike the last
    word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Gekas. I would join in the request to have the letter
    from Jerry Kleczka made part of the record. The lady is correct
    that 2 years ago we did adopt this amendment, and we were happy
    with it, but to explain my position here is that, similar to
    some other positions that I've undertaken, I want bankruptcy
    reform to pass. I want this bill to pass.
        We have noted that this particular issue was a point of
    friction when the conference occurred twice now, and we
    succumbed to the entreaties of the other body to remove that
    portion of it because there were some questions on it for the
    rationale that impels us to move ahead in the adoption of this
    bill. So I will again here oppose the amendment, ask the people
    on the committee to reject it, to vote no, but here I extend
    again----
        Ms. Baldwin. Would the gentleman yield?
        Mr. Gekas [continuing]. After I extend to the lady the
    proposition that we, together, will seek out the truth in this
    particular amendment between now and the floor of the House,
    and perhaps confer with our Senate brethren to see where we
    stand on it. I don't know where we stand at the moment. I ask
    for a no vote. I will yield.
        Ms. Baldwin. Will the gentleman yield?
        Mr. Gekas. I'll yield.
        Ms. Baldwin. Thank you. In order to be fruitful in those
    discussions, it certainly would be helpful to me to have some
    light shed on why this particular provision was a point of
    friction in conference; after all, it passed unanimously in
    this committee and this House last time, and with no objection
    it went very smoothly.
        Mr. Gekas. Recalling my time. The moment I learn why the
    friction occurred, I will expose it fully to the lady. I will
    provide a memo and other evidence.
        Ms. Baldwin. In the meantime, I think a favorable vote in
    this committee would strength to our getting back into the
    final version.
        Mr. Gekas. I do believe you believe that. [Laughter.]
        Chairman Sensenbrenner. Does the gentleman yield back?
        Mr. Gekas. I do.
        Chairman Sensenbrenner. The question is on the amendment
    offered by the gentlewoman from Wisconsin, Ms. Baldwin.
        Those in favor will say aye.
        Opposed no.
        The noes appear to have it.
        Ms. Baldwin. Recorded vote.
        Chairman Sensenbrenner. A roll call is requested and will
    be ordered. The question is on the Baldwin amendment. Those in
    favor will, as your names are called, answer aye; those
    opposed, no, and the clerk will call the roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. No.
        The Clerk. Mr. Gekas, no.
        Mr. Coble?
        [No response.]
        The Clerk. Mr. Smith?
        Mr. Smith. No.
        The Clerk. Mr. Smith, no.
        Mr. Gallegly?
        [No response.]
        The Clerk. Mr. Goodlatte?
        [No response.]
        The Clerk. Mr. Chabot?
        [No response.]
        The Clerk. Mr. Barr?
        Mr. Barr. No.
        The Clerk. Mr. Barr, no.
        Mr. Jenkins?
        [No response.]
        The Clerk. Mr. Hutchinson?
        Mr. Hutchinson. No.
        The Clerk. Mr. Hutchinson, no.
        Mr. Cannon?
        [No response.]
        The Clerk. Mr. Graham?
        Mr. Graham. No.
        The Clerk. Mr. Graham, no.
        Mr. Bachus?
        Mr. Bachus. No.
        The Clerk. Mr. Bachus, no.
        Mr. Scarborough?
        [No response.]
        The Clerk. Mr. Hostettler?
        [No response.]
        The Clerk. Mr. Green?
        Mr. Green. No.
        The Clerk. Mr. Green, no.
        Mr. Keller?
        [No response.]
        The Clerk. Mr. Issa?
        Mr. Issa. No.
        The Clerk. Mr. Issa, no.
        Ms. Hart?
        Ms. Hart. No.
        The Clerk. Ms. Hart, no.
        Mr. Flake?
        Mr. Flake. No.
        The Clerk. Mr. Flake, no.
        Mr. Conyers?
        [No response.]
        The Clerk. Mr. Frank?
        [No response.]
        The Clerk. Mr. Berman?
        [No response.]
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        [No response.]
        The Clerk. Mr. Scott?
        [No response.]
        The Clerk. Mr. Watt?
        Mr. Watt. Aye.
        The Clerk. Mr. Watt, aye.
        Ms. Lofgren?
        [No response.]
        The Clerk. Ms. Jackson Lee?
        [No response.]
        The Clerk. Ms. Waters?
        [No response.]
        The Clerk. Mr. Meehan?
        [No response.]
        The Clerk. Mr. Delahunt?
        [No response.]
        The Clerk. Mr. Wexler?
        [No response.]
        The Clerk. Ms. Baldwin?
        Ms. Baldwin. Aye.
        The Clerk. Ms. Baldwin, aye.
        Mr. Weiner?
        [No response.]
        The Clerk. Mr. Schiff?
        Mr. Schiff. Aye.
        The Clerk. Mr. Schiff, aye.
        Mr. Chairman?
        Chairman Sensenbrenner. No.
        The Clerk. Mr. Chairman, no.
        Chairman Sensenbrenner. Are there additional members in the
    room who wish to record or to change their vote?
        The gentleman from North Carolina, Mr. Coble.
        Mr. Coble. No.
        Chairman Sensenbrenner. The gentleman from Ohio, Mr.
    Chabot.
        Mr. Chabot. No.
        Chairman Sensenbrenner. The gentleman from Florida, Mr.
    Keller.
        Mr. Keller. No.
        Chairman Sensenbrenner. The gentleman from Indiana, Mr.
    Hostettler.
        Mr. Hostettler. No.
        Chairman Sensenbrenner. Further members who wish to record
    or change their vote? If none, the Clerk will report.
        The Clerk. Mr. Chairman, there are 3 ayes and 15 nays.
        Chairman Sensenbrenner. And the amendment is not agreed to.
        Are there further amendments? The gentlewoman from
    Wisconsin, Ms. Baldwin.
        Ms. Baldwin. Thank you, Mr. Chairman.
        I have an amendment at the desk. This would be Baldwin 2.
        Chairman Sensenbrenner. The Clerk will report the
    amendment.
        The Clerk. Amendment to H.R. 333 offered by Ms. Baldwin,
    page 357----
        Ms. Baldwin. Mr. Chairman, I ask that the amendment be
    considered as read.
        Chairman Sensenbrenner. Without objection, so ordered, and
    the gentlewoman from Wisconsin is recognized for 5 minutes.
        Ms. Baldwin. Thank you, Mr. Chairman.
        I am pleased to offer this amendment to update the
    definition of ``family farmer'' in the Bankruptcy Code in order
    to permit more farmers to file under chapter 12.
        My amendment does three simple things in order to enable
    more of our family farmers to qualify for chapter 12 bankruptcy
    protections. Those protections, of course, help ensure that
    family farmers will not have to liquidate their farming
    operation, but will be able to continue to keep on with their
    family business.
        First, the amendment will increase from 1.5 million to 3
    million, the amount of aggregate debt that may be accrued by
    the family farmer. This is necessary primarily because we have
    not updated this limit to eligibility under chapter 12 since
    its enactment, and regrettably, many family farmers' debt
    exceeds the current statutory limit.
        Second, the amendment will reduce from 80 percent to 65
    percent the amount of debt that must be related to the farming
    operation. Again, this expanded definition will allow more
    families to keep their farms under chapter 12 rather than
    having to liquidate their farm assets, and this is particularly
    important, for example, when medical debt from injury or
    illness contributes to a bankruptcy filing.
        Finally, under current law, the person or family must earn
    more than 50 percent of gross income from farming in the year
    immediately prior to the filing of the bankruptcy. This
    amendment, instead, would look at one of the last 3 years prior
    to the bankruptcy filing instead of limiting it self to the
    prior year. This change is very important because it is not at
    all unusual for one spouse to work in a non-farm job to secure
    health or other benefits for the entire family and, of course,
    extra income.
        Additionally, in a year prior to declaring bankruptcy, non-
    farm income can easily exceed farm-related income since low
    prices such as low milk prices or crop failures can
    dramatically reduce gross income in any given year.
        Looking at one of the 3 years prior to the bankruptcy
    filing will keep true farm families from being denied chapter
    12 protections.
        Thank you, Mr. Chairman, and I hope that we can help farm
    families by approving this amendment. I yield back any
    remaining time.
        [The Amendment offered by Ms. Baldwin follows:]

        Chairman Sensenbrenner. The gentleman from Pennsylvania,
    Mr. Gekas.
        Mr. Gekas. I rise to speak in opposition to the amendment.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Gekas. This, too, as the previous amendment offered by
    the lady from Wisconsin, was the subject, and continues to be
    the subject, of great debate, but the final language that we
    have in our bill is as a result of a well-settled compromise
    and back-and-forth solution to this particular problem.
        The result at conference was to eliminate the extra million
    and a half that the lady is alluding to in her amendment, and,
    thus, we are ready to support the compromise. It seems to fit
    all parties except perhaps the lady from Wisconsin.
        So, rather than upset, again, the delicate balance that we
    have striven so fervently to accomplish, I ask the members to
    vote no, and I will, again, accord the lady the extra
    consultation that we might require to inquire whether or not
    this can be modified at a later stage.
        Chairman Sensenbrenner. The gentleman yield back? The
    gentleman yield back the balance of his time?
        Mr. Gekas. I do.
        Chairman Sensenbrenner. Question is on the amendment
    offered by the gentlewoman from Wisconsin. Those in favor will
    signify by saying aye.
        Opposed, no.
        The no appears to have it. Roll call will be ordered. The
    question is on the Baldwin Amendment No. 13. Those in favor
    will as your names are called answer aye; those opposed, no.
    And the Clerk will call the roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. No.
        The Clerk. Mr. Gekas, no.
        Mr. Coble?
        Mr. Coble. No.
        The Clerk. Mr. Coble, no.
        Mr. Smith?
        Mr. Smith. No.
        The Clerk. Mr. Smith, no.
        Mr. Gallegly?
        [No response.]
        The Clerk. Mr. Goodlatte?
        [No response.]
        The Clerk. Mr. Chabot?
        [No response.]
        The Clerk. Mr. Barr?
        [No response.]
        The Clerk. Mr. Jenkins?
        [No response.]
        The Clerk. Mr. Hutchinson?
        Mr. Hutchinson. No.
        The Clerk. Mr. Hutchinson, no.
        Mr. Cannon?
        [No response.]
        The Clerk. Mr. Graham?
        [No response.]
        The Clerk. Mr. Bachus?
        Mr. Bachus. No.
        The Clerk. Mr. Bachus, no.
        Mr. Scarborough?
        [No response.]
        The Clerk. Mr. Hostettler?
        [No response.]
        The Clerk. Mr. Green?
        [No response.]
        The Clerk. Mr. Keller?
        Mr. Keller. No.
        The Clerk. Mr. Keller, no.
        Mr. Issa?
        Mr. Issa. No.
        The Clerk. Mr. Issa, no.
        Ms. Hart?
        Ms. Hart. No.
        The Clerk. Ms. Hart, no.
        Mr. Flake?
        Mr. Flake. No.
        The Clerk. Mr. Flake, no.
        Mr. Conyers?
        [No response.]
        The Clerk. Mr. Frank?
        [No response.]
        The Clerk. Mr. Berman?
        [No response.]
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        [No response.]
        The Clerk. Mr. Scott?
        Mr. Scott. Aye.
        The Clerk. Mr. Scott, aye.
        Mr. Watt?
        Mr. Watt. Aye.
        The Clerk. Mr. Watt, aye.
        Ms. Lofgren?
        [No response.]
        The Clerk. Ms. Jackson Lee?
        [No response.]
        The Clerk. Ms. Waters?
        [No response.]
        The Clerk. Mr. Meehan?
        [No response.]
        The Clerk. Mr. Delahunt?
        [No response.]
        The Clerk. Mr. Wexler?
        [No response.]
        The Clerk. Ms. Baldwin?
        Ms. Baldwin. Aye.
        The Clerk. Ms. Baldwin, aye.
        Mr. Weiner?
        [No response.]
        The Clerk. Mr. Schiff?
        Mr. Schiff. Aye.
        The Clerk. Mr. Schiff, aye.
        Mr. Chairman?
        Chairman Sensenbrenner. No.
        The Clerk. Mr. Chairman, no.
        Chairman Sensenbrenner. Additional members who wish to
    record or to change their votes?
        The gentleman from Ohio, Mr. Chabot.
        Mr. Chabot. No.
        Chairman Sensenbrenner. The gentleman from South Carolina,
    Mr. Graham.
        Mr. Graham. No.
        Chairman Sensenbrenner. The gentleman from Georgia, Mr.
    Barr.
        Mr. Barr. No.
        Chairman Sensenbrenner. Anybody else? If not, the Clerk
    will report.
        The Clerk. Mr. Chairman, there are 4 ayes and 13 nays.
        Chairman Sensenbrenner. And the amendment is not agreed to.
        Further amendments?
        For what purpose does the gentleman from California, Mr.
    Schiff, seek recognition?
        Mr. Schiff. Reference to amendments at the desk.
        Chairman Sensenbrenner. Will the gentleman tell the Clerk
    which amendment he wishes to have read?
        Mr. Schiff. The first is 004 offered by myself and Ms.
    Waters.
        Chairman Sensenbrenner. The Clerk will report the
    amendment.
        Mr. Schiff. Amendment to H.R. 333 offered by Mr. Schiff and
    Ms. Waters, page 10, after line 17, insert the following, I-5,
    in addition----
        Chairman Sensenbrenner. Without objection, the amendment
    will be considered as read, and the gentleman from California
    is recognized for 5 minutes.
        Mr. Schiff. Thank you, Mr. Chairman and members.
        This amendment exempts foster care expenses from the means
    test definition of disposable income. Foster care payments are
    meant to help the family pay for certain expenses related to
    accepting a foster child on a temporary basis, and while foster
    care is specifically addressed in the bill in certain places,
    it is excluded from those expenses exempted from the means
    test.
        There is a very lengthy list of others which are not
    neglected in those sections; for example, care and support of
    the elderly, the chronically ill. We even, for example, exclude
    the expenses for a dependent child up to the age of 18 for
    $1,500 per year per child to attend a private, elementary, or
    secondary school, and I think if we are going to be excluded
    from a debtor's monthly expenses, expenses for up to $1,500 per
    child for a private school, we certainly ought to be excluding
    the expenses related to foster care. This amendment would
    ensure that expenses necessary to care for a foster child are
    included in the list. There are a lot of children, as this
    committee well knows, in foster care, a lot of families that
    have difficulty meeting their financial commitments even with
    the foster care support, and, Mr. Chairman, I would ask that we
    include this amendment and yield back the balance of my time.
        [The Amendment offered by Mr. Shiff and Mrs. Waters
    follows:]

        Chairman Sensenbrenner. The gentleman from Pennsylvania,
    Mr. Gekas.
        Mr. Gekas. I ask for 5 minutes.
        Chairman Sensenbrenner. The gentleman is recognized.
        Mr. Gekas. Move to strike the last word.
        Mr. Chairman and members, I ask the members to vote no on
    this provision. For the gentleman's edification, it is our
    belief and, therefore, we assert that the phraseology that we
    use throughout the sections that are pertinent to his amendment
    cover other necessary expenses, and if that wouldn't be
    enough--we believe it is--to cover the care of foster children,
    the IRS standards that are employed do include foster children
    as well. So I ask for a no vote.
        Mr. Watt. Mr. Chairman, could you yield on that point?
        Chairman Sensenbrenner. Yes.
        Mr. Watt. Could you tell us where that provision is? I
    don't--I know where the other necessary expenses are, but I
    don't see anything in this bill that suggests that a foster
    child is counted as a child in the determination of expenses.
        Mr. Gekas. Naturally, you would not see it because what I
    tried to maintain is that by incorporating by reference the IRS
    standards, as we do in the----
        Mr. Watt. But under IRS standards, is it--I mean, foster
    children are not children either, right?
        Mr. Gekas. Yes, they are.
        Mr. Watt. I don't think so, Mr. Chairman, but----
        Mr. Gekas. That's the--that's the assertion that we have
    made throughout.
        Mr. Watt. Will the gentleman yield?
        Mr. Gekas. Yes.
        Mr. Watt. The gentleman has made a number of assertions
    throughout, a number of which I have disagreed with.
        Mr. Gekas. No question about that,
        Mr. Watt. And this is--this is yet another one.
        Mr. Gekas. No question, and if any of my assertions----
        Mr. Watt. I don't think that's the case.
        Mr. Gekas [continuing]. Can be disproved, we will meet that
    when the time comes. I am not hard-headed about it. I thank the
    gentleman.
        I yield back the balance of my time.
        Chairman Sensenbrenner. The question is on----
        Mr. Scott. Mr. Chairman?
        Chairman Sensenbrenner. For what purpose does the gentleman
    from Virginia seek recognition?
        Mr. Scott. Move to strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Scott. And I would ask the gentleman from Pennsylvania,
    if we find out that the IRS regulations do not include foster
    children, would it be the intent of the gentleman from
    Pennsylvania to support this amendment somewhere between here--
    --
        Mr. Gekas. If we find out that that's not the case, we will
    review it and act accordingly.
        I thank the Chair.
        Mr. Schiff. Will the gentleman yield?
        Mr. Gekas. I yield back the balance of my time.
        Mr. Schiff. Will the gentleman yield?
        Chairman Sensenbrenner. The time belongs to the gentleman
    from Virginia. Only he can yield it.
        The question is on the Schiff amendment.
        Mr. Scott. Wait a minute.
        Mr. Schiff. If the gentleman would yield for a moment?
        Mr. Scott. I yield to the gentleman from California.
        Chairman Sensenbrenner. Okay. The gentleman recaptures his
    time even though the Chair has pushed the button, and go ahead.
        Mr. Schiff. Thank you, Mr. Chairman.
        As I understand it, there are references throughout the
    bill to foster care children, and I think if that is the case,
    then if you omit the reference to foster care in this
    paragraph, you are kind of begging the question about why
    references are made elsewhere and not provided for here. That
    might create a presumption if this ever came to litigation that
    it was intentionally excluded from this section.
        And if, as you suggest, that it is included in the IRS
    regulations, then this would merely be redundant. If not, then
    it would serve a very useful purpose, particularly if it is
    excluded elsewhere and the presumption is that it was
    intentionally excluded from this section.
        Mr. Gekas. Who has the time?
        Chairman Sensenbrenner. The time belongs to the gentleman
    from Virginia.
        Mr. Gekas. Would the gentleman yield?
        Mr. Scott. I yield to the gentleman from Pennsylvania.
        Mr. Gekas. If, as I said, the references are made in other
    portions, the subject matter is so different where we use
    foster children that they do not by virtue of the fact that you
    believe it is not in this particular section make it necessary
    to include this, but rather the subject matter is so different
    than we believe it is already covered as I have stated.
        Chairman Sensenbrenner. The question is on the amendment
    offered by the gentleman from California, Mr. Schiff. Those in
    favor will signify by saying aye.
        Opposed, no.
        The noes appear to have it. The noes have it, and the
    amendment is not agreed to.
        Are there further amendments?
        For what purpose does the gentleman from California, Mr.
    Schiff, seek recognition?
        Mr. Schiff. Mr. Chairman, Amendment 001.
        Chairman Sensenbrenner. The Clerk will report the
    amendment.
        The Clerk. Amendment to H.R. 333 offered by Mr. Schiff,
    page 17, line 8, strike ``and the debtor's spouse''----
        Chairman Sensenbrenner. Without objection, the amendment
    will be considered as read, and the gentleman from California
    will be recognized for 5 minutes.
        Mr. Schiff. Mr. Chairman and members, this amendment
    provides a safe harbor to exclude a spouse's income from the
    means test.
        Bankruptcy experts tell us that a large percentage of
    bankruptcy filings are the result of family problems, a
    separation, divorce, et cetera. Unfortunately, children often
    suffer under these circumstances, and the way the bill is
    currently drafted, even though the parents might be legally
    separated and one spouse files for bankruptcy, even though that
    spouse has no access to the income of the other spouse and may
    be estranged from the other spouse, the second spouse's income
    is nonetheless included in the means test. This can have a very
    direct and negative impact on the children, among others, in
    that family, and preclude that parent from the relief of
    bankruptcy. This appears to be an oversight in the current bill
    and can be remedied with this amendment.
        I yield back the balance of my time and urge an aye vote on
    the amendment.
        [The Amendment offered by Mr. Schiff follows:]

        Chairman Sensenbrenner. The gentleman from Pennsylvania,
    Mr. Gekas.
        Mr. Gekas. Move to strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized.
        Mr. Gekas. I ask the members to vote no on this amendment,
    but I hasten to say that the gentleman may have struck a cord
    of error here in which, again, we became frozen in time, as it
    were, during the conference to preserve the unity of the bill.
    It may have been an oversight. We are not certain of that.
        We are going to double-check. We are going to ask for a no
    vote. We are going to try to defeat your amendment, and then we
    will consult to see what the future holds for your proposed
    amendment.
        Chairman Sensenbrenner. Does the gentleman yield back?
        Mr. Gekas. I yield back.
        Chairman Sensenbrenner. Question?
        Mr. Scott. Mr. Chairman? Mr. Chairman?
        Chairman Sensenbrenner. The gentleman from Virginia, Mr.
    Scott.
        Mr. Scott. Move to strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Scott. Mr. Chairman, the gentleman's amendment seems to
    me to make excellent sense. This is the original determination
    of presumption of abuse to determine whether or not a person's
    income is above or below the State median income to determine
    where they go in bankruptcy. It seems to me ridiculous to
    include in that calculation the income of a spouse that may
    have been--may be deserted, may be long gone, someone that you
    don't have any access to their money, and account that income
    to force a person out of chapter 7 into chapter 13 when the
    person filing has very little, if any, income at all. It seems
    to me absolutely ridiculous, and if this markup means anything,
    it seems to me that we would consider the amendment and not put
    everything off until such time as if this markup is
    meaningless.
        Mr. Gekas. If the gentleman would yield?
        Mr. Scott. I will yield.
        Mr. Gekas. I am considering it. I just spoke to the fact
    that I am considering it.
        Mr. Scott. Well, if it is a good amendment, let's adopt it.
        Mr. Gekas. I am asking you to consider my position of
    wanting to double-check, and, therefore, I am asking for a no
    vote. It is not being--I am not being cruel to you, but you are
    trying to be cruel to me. Therefore, I ask for a no vote. I
    pledge to the gentleman that we are going to look at this
    between now and the floor.
        Chairman Sensenbrenner. Does the gentleman yield back?
        Mr. Scott. Well, I assume I will yield back. I mean, the
    point of the gentleman has been made, that we are not going to
    consider any amendment however meritorious until he can check
    with whoever.
        I yield back.
        Chairman Sensenbrenner. The gentleman from North Carolina,
    Mr. Watt.
        Mr. Watt. Thank you, Mr. Chairman.
        I have to say that this is extremely frustrating. We got a
    committee here that has--I don't know how many members we got.
    Thirty-seven members, I am told.
        We are told that it is our responsibility to mark up a bill
    and to evaluate arguments for and against it, and, yet, time
    after time after time, we have been told that--and it has been
    demonstrated. In fact, I think Mr. Scarborough's lone vote for
    one amendment today is the sole and only vote from the other
    side for any amendment regardless of how meritorious it is.
        It makes us wonder what it is we are doing here, and then
    if we stay here and try to do our job, then we get accused of
    being dilatory and, you know, trying to draw the--obstructive,
    whatever the words are, and trying to draw the process out, and
    at some point, I am sure somebody is going to get angry because
    tomorrow we are going to be here going through what appears to
    be a charade. It is a charade.
        I don't think I have seen this. I mean, obviously, the
    committee has worked its will throughout all the 8-plus years I
    have been on this committee, but I don't think I have ever seen
    a bill come to our committee and have the person who is
    controlling the bill say over and over again----
        Mr. Gekas. Move to strike that phrase from the record.
        Chairman Sensenbrenner. The gentleman--the gentleman will
    suspend. If the gentleman from Pennsylvania asked that the
    gentleman's words be taken down, the gentleman will----
        Mr. Gekas. Well, no, I have never used that word except in
    conjunction with Boulder. That is the only time I ever used
    that word.
        Chairman Sensenbrenner. With what? Without objection, the
    word ``damn'' will be stricken from the record. Hearing none,
    so ordered, and the gentleman from North Carolina may continue.
        Mr. Watt. There is something offensive to me about being
    told--and I don't think I have ever seen this happen in this
    committee over and over again by the person who is controlling
    the bill; that I don't give a darn how much--I don't give a
    darn how much sense or merit your amendment has. Either I have
    some deal with somebody else or I'm not bright enough myself to
    evaluate what is being proposed, and to have over and over
    again just absolute misrepresentations made about what the
    state of the law is--I mean, I hope you are going to go back
    now, Mr. Gekas, and look at--I finally did get the definition
    of ``child.'' Under the Income Tax Code, it says nothing about
    step--foster children. You know, you just represent stuff as if
    we are just stupid, and you are treating us now as if we are
    stupid and you are right on the verge, I would tell you, of
    getting me to start treating you all the same way.
        Mr. Gekas. Would the gentleman yield for a moment?
        Chairman Sensenbrenner. The time belongs to the gentleman
    from North Carolina.
        Mr. Watt. I am happy to yield to him.
        Mr. Gekas. I have always felt, and I still continue to
    feel--and I think the gentleman will agree that part of the
    legislative process and the committee work is when confronted
    with a provision or a set of words or a comma or other parts of
    a proposed piece of legislation that we pause, we look around,
    we say would you withdraw that amendment or I will accept it on
    the condition that--and we do this constantly. It is part of
    the process, and it is part of the give-and-take. Any illusion
    to the contrary is abusive on your part as to what we are
    trying to do for----
        Mr. Watt. Well, I'm sure we were--I was sure we were going
    to get to the point where this whole process was my fault all
    of a sudden. I had no doubt about that.
        Mr. Gekas. And we're all on the same----
        Chairman Sensenbrenner. The time of the gentleman has
    expired.
        Mr. Watt. Okay. Well, I'm getting ready to make it my fault
    now.
        Chairman Sensenbrenner. And the question is on the adoption
    of Schiff Amendment No. 15. Those in favor will say aye.
        Those opposed will say no.
        Chairman Sensenbrenner. The noes appear to have it.
        Mr. Watt. I ask for a recorded vote.
        Chairman Sensenbrenner. A recorded vote is ordered. The
    question is on Schiff Amendment No. 15. Those in favor will as
    your names are called answer aye; those opposed, no. And the
    Clerk will call the roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. No.
        The Clerk. Mr. Gekas, no.
        Mr. Coble?
        [No response.]
        The Clerk. Mr. Smith?
        [No response.]
        The Clerk. Mr. Gallegly?
        [No response.]
        The Clerk. Mr. Goodlatte?
        [No response.]
        The Clerk. Mr. Chabot?
        Mr. Chabot. No.
        The Clerk. Mr. Chabot, no.
        Mr. Barr?
        Mr. Barr. No.
        The Clerk. Mr. Barr, no.
        Mr. Jenkins?
        [No response.]
        The Clerk. Mr. Hutchinson?
        [No response.]
        The Clerk. Mr. Cannon?
        [No response.]
        The Clerk. Mr. Graham?
        Mr. Graham. No.
        The Clerk. Mr. Graham, no.
        Mr. Bachus?
        [No response.]
        The Clerk. Mr. Scarborough?
        [No response.]
        The Clerk. Mr. Hostettler?
        Mr. Hostettler. No.
        The Clerk. Mr. Hostettler, no.
        Mr. Green?
        Mr. Green. No.
        The Clerk. Mr. Green, no.
        Mr. Keller?
        [No response.]
        The Clerk. Mr. Issa?
        Mr. Issa. No.
        The Clerk. Mr. Issa, no.
        Ms. Hart?
        Ms. Hart. No.
        The Clerk. Ms. Hart, no.
        Mr. Flake?
        Mr. Flake. No.
        The Clerk. Mr. Flake, no.
        Mr. Conyers?
        [No response.]
        The Clerk. Mr. Frank?
        [No response.]
        The Clerk. Mr. Berman?
        [No response.]
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        [No response.]
        The Clerk. Mr. Scott?
        Mr. Scott. Aye.
        The Clerk. Mr. Scott, aye.
        Mr. Watt?
        Mr. Watt. Aye.
        The Clerk. Mr. Watt, aye.
        Ms. Lofgren?
        [No response.]
        The Clerk. Ms. Jackson Lee?
        [No response.]
        The Clerk. Ms. Waters?
        Ms. Waters. Aye.
        The Clerk. Ms. Waters, aye.
        Mr. Meehan?
        [No response.]
        The Clerk. Mr. Delahunt?
        [No response.]
        The Clerk. Mr. Wexler?
        [No response.]
        The Clerk. Ms. Baldwin?
        Ms. Baldwin. Aye.
        The Clerk. Ms. Baldwin, aye.
        Mr. Weiner?
        [No response.]
        The Clerk. Mr. Schiff?
        Mr. Schiff. Aye.
        The Clerk. Mr. Schiff, aye.
        Mr. Chairman?
        Chairman Sensenbrenner. No.
        The Clerk. Mr. Chairman, no.
        Chairman Sensenbrenner. The gentleman from Alabama.
        The Clerk. Mr. Bachus?
        Mr. Bachus. No.
        The Clerk. No.
        Chairman Sensenbrenner. The gentleman from North Carolina,
    Mr. Coble.
        Mr. Coble. No.
        Chairman Sensenbrenner. The gentleman from Arkansas.
        The Clerk. Mr. Coble, no.
        Mr. Hutchinson. No.
        The Clerk. Mr. Hutchinson, no.
        Chairman Sensenbrenner. Any further members who wish to
    record or to change their votes? If not, the Clerk will report.
        The Clerk. Mr. Chairman, there are 5 ayes and 13 nays.
        Chairman Sensenbrenner. The amendment is not agreed to.
        Are there further amendments? For what purpose does the
    gentleman from Virginia, Mr. Scott, seek----
        Mr. Scott. Mr. Chairman, I think the gentleman from
    California had one additional amendment.
        Chairman Sensenbrenner. For what purpose does the gentleman
    from California seek recognition?
        Mr. Schiff. Mr. Chairman, at the risk of provoking other
    Boulder Dam good debate, I have one last amendment to offer,
    003.
        Chairman Sensenbrenner. The Clerk will report the
    amendment.
        The Clerk. Amendment to H.R. 333 offered by Mr. Schiff,
    page 19, line 23, strike----
        Chairman Sensenbrenner. Without objection----
        Mr. Watt. I object.
        Mr. Schiff. Mr. Chairman, members, this amendment would----
        Chairman Sensenbrenner. The Clerk will continue to read.
        The Clerk. And insert ``studies,'' page 120, after 16,
    insert the following. C. Study. Not later than 1 year after the
    date of enactment of this act, the Controller General of the
    United States shall conduct a study to determine any effects of
    the bankruptcy bill on the ability of a parent to pay child
    support or the ability of a parent to collect child support.
    This study shall include cases where custodial parents are the
    debtors in bankruptcy cases and where child support obligers
    are the debtors in bankruptcy cases. D. Report. Not later than
    1 year after the date of enactment of this act, the Controller
    General shall submit to the President Pro Tem of the Senate and
    the Speaker of the House of Representatives a report containing
    the results of the study required by Subsection (c).
        Chairman Sensenbrenner. The gentleman from California is
    recognized for 5 minutes.
        [The Amendment offered by Mr. Schiff follows:]

        Mr. Schiff. Thank you, Mr. Chairman.
        This amendment would authorize the--a study by the GAO to
    determine any effects that the bill will have on an ability of
    a parent to pay child support or an ability of the parent to
    collect child support. Probably the most--one of the most
    significant concerns about the bill is a collateral consequence
    of the bill where those trying to collect child support will be
    placed in either indirect or direct competition with credit
    card companies or others who are in a much stronger position to
    collect on outstanding debts than those that are entitled to
    child support. This amendment would merely require the conduct
    of a study so we can determine after a suitable period of time
    elapses if there has been an adverse impact. I know that the
    author feels that many of the amendments in the bill will help
    those attempting to collect child support, and I think that is
    probably true, but on the whole, I think it is still unclear
    what the impact will be on those who rightfully have a child
    support and have not been able to collect on it. So this would
    give us a good and an objective analysis and help us determine
    whether subsequent legislation as a follow-up would be prudent.
        I will yield back the balance of my time and thank the
    chairman for allowing me to offer the amendment.
        Mr. Gekas. Mr. Chairman, I ask for a no vote.
        Mr. Watt. Mr. Chairman?
        Chairman Sensenbrenner. The gentleman from North Carolina,
    Mr. Watt.
        Mr. Watt. Thank you, Mr. Chairman.
        Chairman Sensenbrenner. For what purpose do you rise?
        Mr. Watt. I move to strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Watt. Thank you, Mr. Chairman.
        I suppose the gentleman who is controlling the bill can't
    entertain the notion of a study either or perhaps we don't care
    what impact the bankruptcy laws and the changes we are making
    are going to have on the people of America. Perhaps that is
    what we are saying to the American people today that we don't
    really care about doing our job, that some people have gotten
    together behind closed doors, outside the committee process,
    and worked a deal and that the powerful interests of this
    country are going to proceed regardless of what the people say
    about the equity of the bankruptcy laws of our country.
        Perhaps we are saying we don't care about having two
    systems of bankruptcy in this country, one for the poor and one
    for the rich.
        Perhaps we don't--we are saying to the American people we
    don't care that we are now going to send a resounding message
    that it is all right for rich people to abuse the system, but
    when poor people start to abuse the system, we got to draw
    the--draw the curtains down.
        This is--you know, we--I don't know how we are supposed to
    react here, you know, and I'm sure--I understand you all are
    getting ready to call the question. Call it because we are
    engaged in a charade. At least the question being called will--
    will let the American people know that you all don't care about
    the process, but understand sometime during this term, you are
    going to have to consider a bill unless you are going to call
    the question every time. I am going to be here. I am not going
    anywhere. I have no desire to get off the Judiciary Committee.
    I haven't asked to get off the Judiciary Committee. I will be
    here, and if this is the way we are going to conduct the
    business of this committee, let me assure each and every one of
    you now that every time the gavel is rapped, I will be sitting
    right here, and every time you call the previous question, I am
    going to be sitting right here, but between those times, if
    that is the way we are going to conduct the business of this
    committee, then you can expect me to play by those same kind of
    rules, and if you don't understand that, I will say it over
    again because I got two or three more minutes, since I ain't
    got nothing to do but filibuster here.
        Let the word go out right now. If we can't operate and do
    our jobs in this committee, I will not participate in this
    charade that you are playing, and so understand it, and if you
    don't understand it, I think you will before long.
        I yield back.
        Chairman Sensenbrenner. The time of the gentleman has
    expired. The question is on the amendment offered by the
    gentleman from California, Mr. Schiff. Those in favor will
    signify by saying aye; those opposed, no. The noes appear to
    have it.
        Mr. Watt. Record the vote.
        Chairman Sensenbrenner. A recorded vote is ordered. The
    question is on Schiff Amendment No. 16. Those in favor will as
    your names are called answer aye; those oppose, no. And the
    Clerk will call the roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. No.
        The Clerk. Mr. Gekas, no.
        Mr. Coble?
        [No response.]
        The Clerk. Mr. Smith?
        Mr. Smith. No.
        The Clerk. Mr. Smith, no.
        Mr. Gallegly?
        [No response.]
        The Clerk. Mr. Goodlatte?
        [No response.]
        The Clerk. Mr. Chabot?
        Mr. Chabot. No.
        The Clerk. Mr. Chabot, no.
        Mr. Barr?
        Mr. Barr. No.
        The Clerk. Mr. Barr, no.
        Mr. Jenkins?
        [No response.]
        The Clerk. Mr. Hutchinson?
        [No response.]
        The Clerk. Mr. Cannon?
        Mr. Cannon. No.
        The Clerk. Mr. Cannon, no.
        Mr. Graham?
        Mr. Graham. No.
        The Clerk. Mr. Graham, no.
        Mr. Bachus? Mr. Bachus?
        Mr. Bachus. No.
        The Clerk. Mr. Bachus, no.
        Mr. Scarborough?
        [No response.]
        The Clerk. Mr. Hostettler?
        Mr. Hostettler. No.
        The Clerk. Mr. Hostettler, no.
        Mr. Green?
        Mr. Green. No.
        The Clerk. Mr. Green, no.
        Mr. Keller?
        Mr. Keller. No.
        The Clerk. Mr. Keller, no.
        Mr. Issa?
        Mr. Issa. No.
        The Clerk. Mr. Issa, no.
        Ms. Hart?
        Ms. Hart. No.
        The Clerk. Ms. Hart, no.
        Mr. Flake?
        Mr. Flake. No.
        The Clerk. Mr. Flake, no.
        Mr. Conyers?
        [No response.]
        The Clerk. Mr. Frank?
        [No response.]
        The Clerk. Mr. Berman?
        [No response.]
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        [No response.]
        The Clerk. Mr. Scott?
        Mr. Scott. Aye.
        The Clerk. Mr. Scott, aye.
        Mr. Watt?
        Mr. Watt. Aye.
        The Clerk. Mr. Watt, aye.
        Ms. Lofgren?
        [No response.]
        The Clerk. Ms. Jackson Lee?
        [No response.]
        The Clerk. Ms. Waters?
        Ms. Waters. Aye.
        The Clerk. Ms. Waters, aye.
        Mr. Meehan?
        [No response.]
        The Clerk. Mr. Delahunt?
        [No response.]
        The Clerk. Mr. Wexler?
        [No response.]
        The Clerk. Ms. Baldwin?
        Ms. Baldwin. Aye.
        The Clerk. Ms. Baldwin, aye.
        Mr. Weiner?
        [No response.]
        The Clerk. Mr. Schiff?
        Mr. Schiff. Aye.
        The Clerk. Mr. Schiff, aye.
        Mr. Chairman?
        Chairman Sensenbrenner. No.
        The Clerk. Mr. Chairman, no.
        Chairman Sensenbrenner. The gentleman from North Carolina,
    Mr. Coble.
        Mr. Coble. No.
        Chairman Sensenbrenner. The gentleman from Arkansas, Mr.
    Hutchinson.
        Mr. Hutchinson. No.
        Chairman Sensenbrenner. Any further members in the room who
    wish to record or to change their votes? If not, the Clerk will
    report.
        The Clerk. Mr. Chairman, there are 5 ayes and 16 nays.
        Chairman Sensenbrenner. And the amendment is not agreed to.
        For what purpose does the gentleman from Alabama wish to
    seek recognition?
        Mr. Bachus. Mr. Chairman, I think that you know that I----
        Chairman Sensenbrenner. Move to strike the last word?
        Mr. Bachus. Move to strike the last word.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Bachus. I think that you know that I am not someone who
    just goes along to get along, and on occasions, I have had my
    differences with proposals on both sides of the aisle.
        However, I do want to say, and I feel constrained to say,
    that I think the conduct of this hearing at least, unless I
    have missed something, has been very orderly. I think it has
    been very business like. We--this hearing, we have moved along.
    We have allowed everyone to have their 5 minutes. We have
    played by the rules. We hadn't bent the rules for anyone. In
    fact, I find it quite refreshing, and I would say to the
    members on the other side of the aisle--and I mean this in all
    sincerity--I must have missed something because I thought that
    we were conducting a very orderly and courteous hearing, and
    the only time that the Chair has intervened is when somebody
    violated the rules.
        Having said that, I want to speak very briefly in favor of
    the need for amendments to the netting and the commercial
    banking, bankruptcy provisions of the act before us. I think it
    is an issue that needs to be addressed. These amendments are
    primarily concerned with the cross-product netting and
    commercial bankruptcy provisions of the bill, and several of
    the amendments have been made necessary by enactment this year
    of the Commodity Futures Modernization Act, but in each case,
    these are issues that are matters of concern not only for this
    committee, but also for the Financial Services mmittee. And as
    a member of both committees, I have a particular interest in
    seeing that these issues are addressed.
        And, Mr. Chairman, I think that these technical and
    confirming amendments will make important improvements to the
    legislation, and I want to say that the chairman of the
    Financial Services Committee, Mr. Oxley, shares my desire to
    see them included.
        So I would simply ask that you work with us and with
    Chairman Oxley to see that these issues are addressed, not that
    a referral is made to Financial Services. We said earlier we
    wanted to avoid that and----
        Chairman Sensenbrenner. Will the gentleman from Alabama
    yield?
        Mr. Bachus. I yield.
        Chairman Sensenbrenner. Let me say that the staff has
    already been working with the staff of the Financial Services
    Committee. I certainly do wish to work in very close
    conjunction with Chairman Oxley to prevent a sequential
    referral of this legislation, and I appreciate the good offices
    of the gentleman from Alabama to accomplish that goal.
        Mr. Bachus. Thank you, and with that, I would like to
    introduce my written statement in that regard and yield back
    the balance of my time.
        Chairman Sensenbrenner. Without objection, the written
    statement will be included as a part of the record.
        [The prepared statement of Mr. Bachus follows:]
    Prepared Statement of Hon. Spencer Bachus, a Representative in Congress
                           from the State of Alabama
        Mr. Chairman, I would just like to take a moment to speak in favor
    of amendments to the Netting Commercial Bankruptcy Provisions in the
    Bankruptcy Reform Act. This is an issue that needs to be addressed.
        There are additional conforming amendments to this legislation that
    I believe we should adopt for several reasons. Some are necessary in
    order to address issues that have been raised by bankruptcy experts,
    and others would improve the legislation by taking into account new
    developments since the legislation was first introduced. In each case,
    these are issues that are matters of concern for both this Committee
    and the Committee on Financial Services. As a member of both
    committees, I have a particular interest in seeing these issues
    addressed.
        These amendments are principally concerned with the cross-product
    netting and commercial bankruptcy provisions of the bill. Several of
    the amendments were made necessary by enactment last year of the
    Commodity Futures Modernization Act.
        Mr. Chairman, I think that these technical and conforming
    amendments will make important improvements in this legislation and I
    believe that the Chairman of the Financial Services Committee, Mr.
    Oxley, shares my desire to see them included.
        Mr. Chairman, I'd like to ask if you would allow me to work with
    you and Chairman Oxley to see that these issues are addressed.
        Thank you.

        Chairman Sensenbrenner. The Chair now recognizes himself
    and has an amendment at the desk, and the Clerk will report the
    amendment.
        The Clerk. Amendment to H.R. 333 offered by Mr.
    Sensenbrenner, page 174, line 5, strike ``30.76'' and insert
    ``33.87''; page 316, strike line 16 and insert the following,
    one, by redesignating section 407 as 407(a); beginning on page
    330, strike line 19 and all that follows through line 10 on
    page 331 and make such technical and conforming changes as may
    be appropriate; page 356, beginning on line 5, strike ``and
    amendment by this act is reenacted'' and insert ``is hereby
    reenacted and as here reenacted is amended by this act''; page
    356, line 20, strike ``2001'' and insert ``2004''; page 368,
    line 4, strike ``and (38)'' and insert ``(38)'' and ``54A'';
    page 380, strike lines 19 through 21 and insert the following,
    E, effective dates, one, except as provided in paragraph 2,
    this section and the amendments made by this section shall take
    effect on the date of the enactment of this act, two, with
    respect to the temporary bankruptcy judgeship authorized by the
    District of South Carolina under paragraph 8 of the Bankruptcy
    Judgeship Act of 1992, 28 USC 152 Note Subsection (c)(1) as it
    applies to the extension specified in subparagraph (d) of such
    subsection shall take effect immediately before December 31,
    2000.
        [The Amendment offered by Mr. Sensenbrenner follows:]

        Chairman Sensenbrenner. The Chair recognizes himself for 5
    minutes.
        The amendment makes four types of conforming revisions to
    H.R. 333, and this language has been given to the minority last
    night.
        The first revision pertains to section 325(c) of the bill
    which amends section 406(b) of the Judiciary Appropriations
    Act. The section, however, was amended by Public Law 106-113
    with respect to the stated percentage of fees. The amendment
    simply conforms the percentage figure in the bill to that which
    is specified under current law.
        The second set of revisions consists of a series of
    conforming amendments necessitated by the enactment of the
    Commodity Futures Modernization Act of 2000 on December 21st of
    2000. It is my understanding that those revisions are
    acceptable to the Financial Services Committee, and we look
    forward to continuing cooperation with Chairman Oxley and that
    committee.
        The third set of revisions is necessitated only because of
    the passage of time. The amendment to section 1001 of the bill
    which reenacts chapter 12 of the Bankruptcy Code, it makes it a
    permanent form of bankruptcy relief for family farmers, revises
    the language of this provision to take into account that
    chapter 12 expired as of July 1, 2000. The amendment to section
    1002 which is key to a provision in the Bankruptcy Code that
    requires certain dollar amounts in the Code to be automatically
    adjusted at specified 3-year intervals extends a specified date
    so that the provision does not have a retroactive effect.
        The final revision concerns section 1224 of the bill which
    in pertinent part extends five existing temporary judgeships
    including one in the District of South Carolina. As the term of
    the South Carolina judgeship expired on December 31, 2000, the
    bill would not have its intended effect with respect to that
    judgeship. My amendment simply reinstates the judgment position
    and extends it retroactively.
        And I yield back the balance of my time.
        Mr. Watt. Mr. Chairman?
        Chairman Sensenbrenner. For what purpose does the gentleman
    from North Carolina seek recognition?
        Mr. Watt. Mr. Chairman, I ask for a separate vote on each
    section of the amendment.
        Chairman Sensenbrenner. The Chair says that the gentleman
    is able to do that as a matter of right. However, how does the
    gentleman from North Carolina wish to divide the question?
        Mr. Watt. I wish to divide it the first line, the second
    two lines, the next three lines, the next three lines, the next
    one line, the next two lines, the next two lines, and then all
    of page 2.
        Chairman Sensenbrenner. I don't think that works. The last
    two lines----
        Mr. Watt. I'm sorry. That's--that's right.
        Chairman Sensenbrenner. The last two lines on the bottom of
    page----
        Mr. Watt. The last two lines and all of page 2. I'm sorry.
        Chairman Sensenbrenner. Okay. The question is on the first
    part of the technical amendment which relates to page 174, line
    5. Those in favor will signify by saying aye.
        Opposed, no.
        The ayes have it, and the amendment is----
        Mr. Watt. I ask for a recorded vote.
        Chairman Sensenbrenner. Okay. The Clerk will call the roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. Aye.
        The Clerk. Mr. Gekas, aye.
        Mr. Coble?
        [No response.]
        The Clerk. Mr. Smith?
        Mr. Smith. Aye.
        The Clerk. Mr. Smith, aye.
        Mr. Gallegly?
        [No response.]
        The Clerk. Mr. Goodlatte?
        [No response.]
        The Clerk. Mr. Chabot?
        Mr. Chabot. Aye.
        The Clerk. Mr. Chabot, aye.
        Mr. Barr?
        [No response.]
        The Clerk. Mr. Jenkins?
        [No response.]
        The Clerk. Mr. Hutchinson?
        Mr. Hutchinson. Aye.
        The Clerk. Mr. Hutchinson, aye.
        Mr. Cannon?
        [No response.]
        The Clerk. Mr. Graham?
        Mr. Graham. Aye.
        The Clerk. Mr. Graham, aye.
        Mr. Bachus?
        Mr. Bachus. Aye.
        The Clerk. Aye? Mr. Bachus, aye.
        Mr. Scarborough?
        Mr. Scarborough. Aye.
        The Clerk. Mr. Scarborough, aye.
        Mr. Hostettler?
        Mr. Hostettler. Aye.
        The Clerk. Mr. Hostettler, aye.
        Mr. Green?
        Mr. Green. Aye.
        The Clerk. Mr. Green, aye.
        Mr. Keller?
        Mr. Keller. Aye.
        The Clerk. Mr. Keller, aye.
        Mr. Issa?
        Mr. Issa. Aye.
        The Clerk. Mr. Issa, aye.
        Ms. Hart?
        Ms. Hart. Aye.
        The Clerk. Ms. Hart, aye.
        Mr. Flake?
        Mr. Flake. Aye.
        The Clerk. Mr. Flake, aye.
        Mr. Conyers?
        [No response.]
        The Clerk. Mr. Frank?
        [No response.]
        The Clerk. Mr. Berman?
        [No response.]
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        Mr. Nadler. Aye.
        The Clerk. Mr. Nadler, aye.
        Mr. Scott?
        Mr. Scott. Aye.
        The Clerk. Mr. Scott, aye.
        Mr. Watt?
        Mr. Watt. Aye.
        The Clerk. Mr. Watt, aye.
        Ms. Lofgren?
        [No response.]
        The Clerk. Ms. Jackson Lee?
        [No response.]
        The Clerk. Ms. Waters?
        [No response.]
        The Clerk. Mr. Meehan?
        [No response.]
        The Clerk. Mr. Delahunt?
        [No response.]
        The Clerk. Mr. Wexler?
        [No response.]
        The Clerk. Ms. Baldwin?
        Ms. Baldwin. Aye.
        The Clerk. Ms. Baldwin, aye.
        Mr. Weiner?
        [No response.]
        The Clerk. Mr. Schiff? Mr. Schiff?
        Mr. Schiff. Aye.
        Mr. Chairman?
        Chairman Sensenbrenner. Aye.
        The Clerk. Mr. Chairman, aye.
        Chairman Sensenbrenner. Additional members? The gentleman
    from Georgia, Mr. Barr.
        Mr. Barr. No. [Laughter.]
        Aye.
        The Clerk. Mr. Barr, aye.
        Chairman Sensenbrenner. The gentleman from Utah, Mr.
    Cannon.
        Mr. Cannon. Aye.
        Chairman Sensenbrenner. More enlightened.
        The gentleman from Virginia, Mr. Goodlatte.
        Mr. Goodlatte. Aye, aye.
        Chairman Sensenbrenner. Aye, aye.
        Anybody else?
        The Clerk will report.
        The Clerk. Mr. Chairman, there are 22 ayes, no nays.
        Chairman Sensenbrenner. And the--and part one of the
    amendment is agreed to.
        The question is on page two which relates to page 316.
    Those in favor will say aye.
        Opposed, no.
        The ayes appear to have it. The ayes have it and----
        Mr. Nadler. I ask for a recorded vote.
        Chairman Sensenbrenner. A recorded vote will be ordered.
    Those in favor will vote aye. Those opposed will vote no. And
    the Clerk will call the roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. Aye.
        The Clerk. Mr. Gekas, aye.
        Mr. Coble?
        [No response.]
        The Clerk. Mr. Smith?
        [No response.]
        The Clerk. Mr. Gallegly?
        [No response.]
        The Clerk. Mr. Goodlatte?
        [No response.]
        The Clerk. Mr. Chabot?
        Mr. Chabot. Aye.
        The Clerk. Mr. Chabot, aye.
        Mr. Barr?
        Mr. Barr. Aye.
        The Clerk. Mr. Barr, aye.
        Mr. Jenkins?
        [No response.]
        The Clerk. Mr. Hutchinson?
        Mr. Hutchinson. Aye.
        The Clerk. Mr. Hutchinson, aye.
        Mr. Cannon?
        Mr. Cannon. Aye.
        The Clerk. Mr. Cannon, aye.
        Mr. Graham?
        Mr. Graham. Aye.
        The Clerk. Mr. Graham, aye.
        Mr. Bachus?
        Mr. Bachus. Aye.
        The Clerk. Aye.
        Mr. Scarborough?
        Mr. Scarborough. Aye.
        The Clerk. Mr. Scarborough, aye.
        Mr. Hostettler?
        Mr. Hostettler. Aye.
        The Clerk. Mr. Hostettler, aye.
        Mr. Green?
        Mr. Green. Aye.
        The Clerk. Mr. Green, aye.
        Mr. Keller?
        Mr. Keller. Aye.
        The Clerk. Mr. Keller, aye.
        Mr. Issa?
        Mr. Issa. Aye.
        The Clerk. Mr. Issa, aye.
        Ms. Hart?
        Ms. Hart. Aye.
        The Clerk. Ms. Hart, aye.
        Mr. Flake?
        Mr. Flake. Aye.
        The Clerk. Mr. Flake, aye.
        Mr. Conyers?
        [No response.]
        The Clerk. Mr. Frank?
        [No response.]
        The Clerk. Mr. Berman?
        [No response.]
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler? Mr. Nadler?
        Mr. Nadler. Aye.
        The Clerk. Mr. Nadler, aye.
        Mr. Scott?
        Mr. Scott. Aye.
        The Clerk. Mr. Scott, aye.
        Mr. Watt?
        Mr. Watt. Aye.
        The Clerk. Mr. Watt, aye.
        Ms. Lofgren?
        [No response.]
        The Clerk. Ms. Jackson Lee?
        [No response.]
        The Clerk. Ms. Waters?
        [No response.]
        The Clerk. Mr. Meehan?
        [No response.]
        The Clerk. Mr. Delahunt?
        [No response.]
        The Clerk. Mr. Wexler?
        [No response.]
        The Clerk. Ms. Baldwin?
        Ms. Baldwin. Aye.
        The Clerk. Ms. Baldwin, aye.
        Mr. Weiner?
        [No response.]
        The Clerk. Mr. Schiff?
        Mr. Schiff. Aye.
        The Clerk. Mr. Schiff, aye.
        Mr. Chairman?
        Chairman Sensenbrenner. Aye.
        The Clerk. Mr. Chairman, aye.
        Chairman Sensenbrenner. Additional members in the room who
    wish to record or to change their votes? If not, the Clerk will
    report.
        Mr. Goodlatte. Mr. Chairman, have I been recorded?
        Chairman Sensenbrenner. Mr. Goodlatte.
        The Clerk. Mr. Goodlatte, aye.
        Mr. Chairman, there are 21 ayes and no nays.
        Chairman Sensenbrenner. And part two is agreed to.
        The question is now on the adoption of part three of the
    technical amendment which relates to the language beginning on
    page 330.
        Mr. Nadler. Mr. Chairman?
        Chairman Sensenbrenner. For what purpose does the gentleman
    from----
        Mr. Nadler. I am not sure if this should be a motion or a
    unanimous consent request that we take the other section of
    this amendment en bloc.
        Mr. Watt. Mr. Chairman, I will withdraw, and Mr. Cannon
    says he has a plane to catch. So I will--I will withdraw my
    request to----
        Chairman Sensenbrenner. Without objection, the question is
    on the remaining parts of the technical amendment. Those in
    favor will signify by saying aye.
        Opposed, no.
        The ayes have it, and the remaining parts of the technical
    amendment are adopted.
        For what purpose does the gentleman from Pennsylvania seek
    recognition?
        Mr. Gekas. Mr. Chairman, I have a motion at the desk.
        [The information referred to follows:]

      Prepared Statement of Hon. Sheila Jackson Lee, a Representative in
                        Congress from the State of Texas
        Mr. Chairman, I am submitting this statement to express my
    displeasure and strong opposition to the motion that was presented by
    the Republican Judiciary Committee Leadership to ``move the previous
    question'' which prevented me and other Democrats from offering
    amendments that would improve the bill.
        Mr. Chairman, throughout the day, you and Chairman Gekas stated
    that you supported a number of amendments that were offered to improve
    the Bankruptcy Reform Bill, such as the amendment I offered to strike
    language in the bill that would bar the enforcement of certain foreign
    judgments. You stated however, Mr. Chairman, that while you supported
    my amendment, you would not vote in favor of it during the mark-up
    because you did not want to tamper with the bill. I agreed to withdraw
    this amendment, with assurances from you and Chairman Gekas that you
    would work with me to ensure it is included in the rules to be debated
    on the floor.
        While I appreciate your commitment to protect this amendment for
    debate on the floor, I believe that the work ethic that has been the
    pride of the committee throughout the years was undermined today when
    good amendments that would better the bill were defeated with the
    excuse that the bill should be preserved ``as-is.''
        The political process that the legislative body has followed for
    years promotes the offering of amendments, and the robust debate that
    follows to better craft and reshape legislation to benefit all
    Americans. Mr. Chairman, the Gestapo tactics that were used during the
    mark-up of the bankruptcy bill destroyed not only the minority party
    who sought to improve the bill, but also the American people, whose
    interests we represent.
        Mr. Chairman, I was only allowed to offer 2 amendments to the
    Bankruptcy Reform Bill before the motion was passed to move the
    previous question, which prevented further amendments and further
    debate on this very important bill. Had an opportunity been allowed to
    adequately analyze, debate and amend H.R. 333, I had 8 additional
    crucial amendments to offer to the bill. They may not have been
    accepted, but a true democratic process would have allowed for a robust
    full debate and scrutiny by all interested members of the Judiciary
    Committee. The additional amendments I would have offered are as
    follows:

            1. Lan amendment to include an exception from limitation on
            ``cramdowns'' for domestic support obligations,

            2. Lan amendment to include an exception from the reaffirmation
            provisions on ``cramdowns'' for domestic support obligations.

            3. Lan amendment striking the economically biased means test
            from the bill,

            4. Lan amendment to expand the means test to apply to business
            debts,

            5. Lamendment to make public school expenses an allowable
            expense under the means test,

            6. Lan amendment to page 15 line 2 of HR 333 striking (the
            court) ``may'' and inserting (the court) ``will,'' to make the
            courts responsibility stronger if creditors bring frivolous
            actions against creditors,

            7. Lan amendment modifying the burden of proof creditors must
            shoulder to ``substantially justified,'' to fairly proportion
            the prima facie case a creditor must prove bring a cause of
            action against a debtor.

            8. Lan amendment to include disaster relief benefits as a
            recognizable income in the ``means test,''

        Mr. Chairman, the amendments I would have offered to the
    reaffirmation and limitation provisions of H.R. 333 would have provided
    protection to domestic support for women and children taking them out
    of the field of competition with creditors.
        H.R. 333 places economically vulnerable women and children who are
    forced into bankruptcy, and those who are owed support by men who file
    for bankruptcy at greater risk by increasing the rights of many
    creditors, including credit card companies, finance companies, auto
    lenders and others over that of the women and children. Thousands of
    women and children will be held hostage by H.R. 333 because this bill
    effectively increases the rights of creditors over these vulnerable
    women and children, and sets up a competition for scarce resources
    between parents and children owed support and commercial creditors both
    during and after bankruptcy. Therefore, single parents facing financial
    crises often caused by divorce, nonpayment of support, loss of a job,
    uninsured medical expenses or domestic violence would find it harder to
    regain their economic stability through the bankruptcy process.
        This fact is not something new, whose light has recently been cast
    over the dark future of bankruptcy reform that would follow H.R. 333.
    The fact that H.R. 333 would effectively place women and children in a
    gladiator's arena with creditors to do battle for child support money
    owed by former spouses who file bankruptcy has been articulated by
    national organizations such as the National Women's Law Center, the
    National Association of Consumer Bankruptcy Attorney's, the National
    Organization for Women, a coalition of bankruptcy professors and
    bankruptcy judges and the National Association of Attorney's General's
    to name but a few. How, anyone could argue against the drastic effects
    and hardships that the language in this bill will cause on the
    vulnerable women and children in this country is beyond me.
        I have consistently said that the greatest challenge before us in
    the bankruptcy reform efforts is solving the widely recognized
    inadequacies of the law in the area of consumer bankruptcy. As it has
    always been in the Congress, the key to this process, is, of course,
    successfully balancing the priorities of creditors, who desire a
    general reduction in the amount of debtor filing fraud, and debtors,
    who desire fair and simple access to bankruptcy protections when they
    need them. H.R. 333 does not accomplish this goal.
        I would have also offered an amendment replacing the means-testing
    standard in the legislation with a standard that more accurately
    reflects current law or, better put, least hurts those consumers who
    earnestly need to file for bankruptcy.
        The means-testing standard is inadequate for those who are least
    equipped to conform to such a drastic alteration from current law and
    would be a disaster for middle-income and low-income families in
    America. The principal problem with the means test is that the rigid
    one-size-fits-all test in determining eligibility for Chapter 7 and the
    operation of Chapter 13 will often operate in an arbitrary fashion.
        Access to bankruptcy would be more difficult, especially for low-
    income filers without legal assistance. The means test within HR 333
    would make filings more complex, and the IRS formula it incorporates
    discriminates against lower-income individuals and families. The ``safe
    harbor'' provision that is supposed to protect some low-income families
    from the application of the IRS standards will not protect many single
    mothers, because it is based on the combined income of the debtor and
    the debtor's spouse--even if they are separated and the mother who is
    filing for bankruptcy is receiving no support from the non-debtor
    spouse from whom she is separated.
        Mr. Chairman, under my amendment, a more flexible standard would
    have allowed the debtor to have the ability to repay debts from future
    debts, which is not possible under the legislation as written. I think
    such a change in the standard would have been warmly welcomed for
    middle-income and low-income filers.
        Mr. Chairman, I would have also offered an amendment to expand the
    ``means test'' to apply to business debts to ensure that business
    debtors are treated as favorably as non-business debtors within the
    framework of the means-testing standard contained in the bill. My
    amendment essentially expands the means-test to apply to business
    debts.
        Let me explain a few of the glaring difficulties with treatment of
    business debtors under HR 333. First, the bill relies upon IRS
    collection standards, which lay out no comprehensive or specific
    standards for the deduction of living expenses. In fact, the bill even
    fails to provide specific guidance concerning the appropriateness of
    deducting part or all of the funds a debtor may expend for items such
    as health care (both medical expenses and health insurance), taxes, and
    accounting and legal fees, among other things.
        The 1973 Commission on Bankruptcy Laws similarly considered and
    rejected industry calls for mandatory Chapter 13s, noting that Congress
    itself rejected similar proposals in 1967, and observed: ``[b]usiness
    debtors are not subject to any limitation on the availability of
    straight bankruptcy relief, including discharge from debts, and it was
    pointed out, quite apart from bankruptcy, business debtors are able to
    incorporate and to limit their liability to their investments in
    corporate assets . . .'' See Report of the Commission on Bankruptcy
    Laws, H.R. Doc. No. 137, Part I, 93rd Congress, 15859 (1973) (citations
    omitted) (emphasis added).
        The bottom line is that business debtors incur a windfall if the
    legislation is not amended. There are several consumer provisions in
    the bill that will exact hardships on all debtors, regardless of income
    level or degree of culpability. This will harm consumers, especially
    low-income filers and place them on an unfair playing field when
    compared to business debtors.
        Mr. Chairman, the approach regarding business and non-debtors
    within HR 333 must be revisited if bankruptcy reform is realized this
    year.
        Mr. Chairman, I would have also offered an amendment to page 10,
    line 14 of H.R. 333 to merely add a debtor's monthly public school
    expenses as an allowable expense under the means test. My amendment
    would put public school expenses at an equal footing with that of
    private school expenses which is already included in the bill.
        The principal problem with the means test is that the rigid one-
    size-fits-all test in determining eligibility for Chapter 7 and the
    operation of Chapter 13 will often operate in an arbitrary fashion.
        Access to bankruptcy would be more difficult, especially for low-
    income filers who are not able to meet the requirements because they
    cannot list public school expenses as an allowable expense as would
    their private school counterparts. The ``safe harbor'' provision that
    is supposed to protect some low-income families from the application of
    the IRS standards will not protect many single mothers, because it is
    based on the combined income of the debtor and the debtor's spouse--
    even if they are separated and the mother who is filing for bankruptcy
    is receiving no support from the non-debtor spouse from whom she is
    separated. As the Committee knows, the majority of low-income families
    send their children to public schools (as opposed to higher-income
    people) because they cannot afford the private school tuition. It would
    seem that if the true intent of this bill were to assist all Americans,
    a provision recognizing public school tuition would have accompanied
    the recognition of private school tuition as an allowable expense under
    the ``means test,'' however, this is not the case.
        Under my amendment, low-income people will have a more flexible
    standard (that is consistent with that of high-income people) that
    would allow the debtor to have a fair opportunity to financial
    recourse, which is not possible under the legislation as written. I
    think such a change in the standard would be warmly welcomed for
    middle-income and low-income filers. We cannot in good conscience allow
    such an unbalanced approach to prevail.
        Mr. Chairman, I would have also offered two amendments that would
    curtail frivolous law suits by creditors against debtors. The first
    amendment would have struck the word ``may'' and insert ``shall'' on
    page 15, line 2, of the bill, and the second amendment would have
    struck the words ``violated'' and all that followed through
    ``procedure,'' and insert ``was not substantially justified'' to page
    15, line 10, of the bill.
        Mr. Chairman, these two very important amendments would have given
    American courts direction by specifically mandating that they must act
    strongly against creditors who bring frivolous actions for the sole
    purpose of coercing debtors into payment agreements on the creditors
    terms.
        H.R. 333 currently increases the burden that a debtor must shoulder
    while tearing down the checks that are in place to prevent creditors
    from engaging in abusive practices. Consumer bankruptcy expert Henry
    Somber has stated that the provisions of H.R. 333 increase the
    opportunity for creditors to file the types of abusive fraud complaints
    which have been found by many courts to be baseless and unjustified
    attempts to coerce reaffirmation's by debtors who cannot afford to
    defend them.
        The burden to defend against these actions will fall mainly upon
    low income debtors who are unsophisticated, do not have the time,
    budget flexibility, or attorney advice to defeat such frivolous
    actions.
        My amendment would have given a force of action to the courts by
    placing checks on debtors seeking to abuse the judiciary by filing
    frivolous suits.
        Mr. Chairman, I would have also offered an amendment to include
    ``disaster relief'' as a recognizable expense under the ``means test.''
    Disaster relief is not recognizable as something you can write off in
    HR 333 as income. That is simply ill conceived. We should be able to
    deduct disaster relief as a recognizable expense under the means-test
    because it is just as important as other considerations that were
    placed worked together in the bill.
        This would have restored some fundamental fairness to the
    legislation, particularly when we think of the tragic accidents that
    occur with regular frequency in America.
        Mr. Chairman, if means-testing and other consumer provisions will
    harm low-income and middle-income people, then HR 333 is sure to have
    an undesirable effect on consumers that are victims of disasters. While
    it is unclear whether how such costs will affect the overall bankruptcy
    system, it is clear that excluding disaster assistance from allowable
    expenses under the means-test in HR 333 is an unfortunate and
    unnecessary component of the bill.
        Mr. Chairman, as I stated at the opening of my statement, I believe
    that justice did not prevail during the mark-up of this very important
    bill. The political process and American democracy was trampled on when
    amendments and the robust debate that would have followed to better
    craft and reshape this legislation was prevented. Mr. Chairman, for the
    good of the political process within the Judiciary Committee, the U.S.
    House of Representatives, and the American people, I implore you to
    ensure that this not happen again.
        Mr. Chairman, in closing I reiterate my displeasure and strong
    opposition to the motion that was presented by the Republican Judiciary
    Committee Leadership's to ``move the previous question'' which
    prevented me and other Democrats from offering amendments to improve
    this very important bill.

        Chairman Sensenbrenner. The Clerk will report the motion.
        The Clerk. Motion----
        Mr. Watt. I reserve point of order, Mr. Chairman.
        Chairman Sensenbrenner. The Clerk will report the motion.
        Mr. Watt. I reserve a point of order, Mr. Chairman.
        Chairman Sensenbrenner. As I said, the Clerk will report
    the motion.
        The Clerk. Motion by Mr. Gekas, previous question.
        Chairman Sensenbrenner. Read the--read the motion.
        The Clerk. Mr. Chairman, I move the previous question on
    the bill.
        Chairman Sensenbrenner. The question is on ordering the
    previous question.
        Mr. Nadler. Parliamentary inquiry.
        Chairman Sensenbrenner. The gentleman will state his
    parliamentary inquiry.
        Mr. Nadler. Is the maker of the motion aware there are
    other amendments here to be offered which you would deny the
    opportunity of?
        Chairman Sensenbrenner. That is not a parliamentary
    inquiry.
        Mr. Nadler. It is an inquiry of the----
        Chairman Sensenbrenner. The motion for the previous
    question----
        Mr. Nadler. Mr. Chairman, further parliamentary inquiry.
        Chairman Sensenbrenner. The motion for the previous
    question is----
        Mr. Nadler. Mr. Chairman, parliamentary inquiry.
        Chairman Sensenbrenner. The gentleman from New York State's
    inquiry.
        Mr. Nadler. Can we expect this to be the bipartisanship on
    this committee from now on?
        Chairman Sensenbrenner. That is not----
        Mr. Nadler. Is this the way we are setting off this
    session?
        Chairman Sensenbrenner. That is not--that is not a
    parliamentary inquiry.
        Mr. Nadler. To hobble and silence the minority?
        Chairman Sensenbrenner. That is not a parliamentary
    inquiry.
        Mr. Bachus. Regular order.
        Chairman Sensenbrenner. That is not a parliamentary
    inquiry. The motion is non-debatable. Those in favor of
    ordering the previous question will say aye.
        Opposed, no.
        The ayes appear to have it.
        Mr. Watt. I ask for a recorded vote.
        Chairman Sensenbrenner. The Clerk will call the roll. Those
    in favor of ordering the previous question will as your names
    are called answer aye; opposed, no. And the Clerk will call the
    roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. Aye.
        The Clerk. Mr. Gekas, aye.
        Mr. Coble?
        [No response.]
        The Clerk. Mr. Smith?
        [No response.]
        The Clerk. Mr. Gallegly?
        [No response.]
        The Clerk. Mr. Goodlatte?
        Mr. Goodlatte. Aye.
        The Clerk. Mr. Goodlatte, aye.
        Mr. Chabot?
        Mr. Chabot. Aye.
        The Clerk. Mr. Chabot, aye.
        Mr. Barr?
        Mr. Barr. Aye.
        The Clerk. Mr. Barr, aye.
        Mr. Jenkins?
        [No response.]
        The Clerk. Mr. Hutchinson?
        Mr. Hutchinson. Aye.
        The Clerk. Mr. Hutchinson, aye.
        Mr. Cannon?
        Mr. Cannon. Aye.
        The Clerk. Mr. Cannon, aye.
        Mr. Graham?
        Mr. Graham. Aye.
        The Clerk. Mr. Graham, aye.
        Mr. Bachus?
        Mr. Bachus. Aye.
        The Clerk. Mr. Bachus, aye.
        Mr. Scarborough?
        Mr. Scarborough. Aye.
        The Clerk. Mr. Scarborough, aye.
        Mr. Hostettler?
        Mr. Hostettler. Aye.
        The Clerk. Mr. Hostettler, aye.
        Mr. Green?
        Mr. Green. Aye.
        The Clerk. Mr. Green, aye.
        Mr. Keller?
        Mr. Keller. Aye.
        The Clerk. Mr. Keller, aye.
        Mr. Issa?
        Mr. Issa. Aye.
        The Clerk. Mr. Issa, aye
        Ms. Hart?
        Ms. Hart. Aye.
        The Clerk. Ms. Hart, aye.
        Mr. Flake?
        Mr. Flake. Aye.
        The Clerk. Mr. Flake, aye.
        Mr. Conyers?
        [No response.]
        The Clerk. Mr. Frank?
        [No response.]
        The Clerk. Mr. Berman?
        [No response.]
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        Mr. Nadler. No.
        The Clerk. Mr. Nadler, no.
        Mr. Scott?
        Mr. Scott. No.
        The Clerk. Mr. Scott, no.
        Mr. Watt?
        Mr. Watt. No.
        The Clerk. Mr. Watt, no.
        Ms. Lofgren?
        [No response.]
        The Clerk. Ms. Jackson Lee?
        [No response.]
        The Clerk. Ms. Waters?
        [No response.]
        The Clerk. Mr. Meehan?
        [No response.]
        The Clerk. Mr. Delahunt?
        [No response.]
        The Clerk. Mr. Wexler?
        [No response.]
        The Clerk. Ms. Baldwin?
        Ms. Baldwin. No.
        The Clerk. Ms. Baldwin, no.
        Mr. Weiner?
        [No response.]
        The Clerk. Mr. Schiff?
        Mr. Schiff. No.
        The Clerk. Mr. Schiff, no.
        Mr. Chairman?
        Chairman Sensenbrenner. Aye.
        The Clerk. Mr. Chairman, aye.
        Chairman Sensenbrenner. Members in the room who wish to
    record or change their vote? The gentleman from North Carolina.
        Mr. Coble. Aye.
        The Clerk. Mr. Coble, aye.
        Chairman Sensenbrenner. Other members who wish to record or
    to change their vote? If not, the Clerk will report.
        Mr. Nadler. Mr. Chairman? Mr. Chairman?
        Chairman Sensenbrenner. The----
        Mr. Nadler. Mr. Chairman?
        Chairman Sensenbrenner. The Chair will recognize the
    gentleman from Michigan to change his vote.
        Mr. Conyers. No.
        Mr. Nadler. Mr. Chairman?
        The Clerk. Mr. Conyers, no.
        Chairman Sensenbrenner. The gentleman from New York.
        Mr. Nadler. I wish to change my vote to aye.
        The Clerk. Mr. Nadler changes his vote to aye.
        Chairman Sensenbrenner. The Clerk will report.
        The Clerk. Mr. Chairman? Mr. Chairman, there are 18 ayes
    and 5 nays.
        Chairman Sensenbrenner. And the previous question is
    ordered----
        Mr. Nadler. Mr. Chairman?
        Chairman Sensenbrenner. For what purpose does the gentleman
    from New York seek recognition?
        Mr. Nadler. Move to reconsider the vote by which the motion
    passed.
        Mr. Gekas. Mr. Chairman, I move to lay the motion on the
    table.
        Chairman Sensenbrenner. The question is on tabling the
    motion to reconsider the vote ordering the previous question.
    Those in favor will say--those in favor will as your names are
    called vote aye. Those opposed will vote no, and the Clerk will
    call the roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. Aye.
        The Clerk. Mr. Gekas, aye.
        Mr. Coble?
        Mr. Coble. Aye.
        The Clerk. Mr. Coble, aye.
        Mr. Smith?
        Mr. Smith. Aye.
        The Clerk. Mr. Smith, aye.
        Mr. Gallegly?
        [No response.]
        The Clerk. Mr. Goodlatte?
        Mr. Goodlatte. Aye.
        The Clerk. Mr. Goodlatte, aye.
        Mr. Chabot?
        Mr. Chabot. Aye.
        The Clerk. Mr. Chabot, aye.
        Mr. Barr?
        Mr. Barr. Aye.
        The Clerk. Mr. Barr, aye.
        Mr. Jenkins?
        [No response.]
        The Clerk. Mr. Hutchinson?
        Mr. Hutchinson. Aye.
        The Clerk. Mr. Hutchinson, aye.
        Mr. Cannon?
        Mr. Cannon. Aye.
        The Clerk. Mr. Cannon, aye.
        Mr. Graham?
        Mr. Graham. Aye.
        The Clerk. Mr. Graham, aye.
        Mr. Bachus?
        Mr. Bachus. Aye.
        The Clerk. Mr. Bachus, aye.
        Mr. Scarborough?
        Mr. Scarborough. Aye.
        The Clerk. Mr. Scarborough, aye.
        Mr. Hostettler?
        Mr. Hostettler. Aye.
        The Clerk. Mr. Hostettler, aye.
        Mr. Green?
        Mr. Green. Aye.
        The Clerk. Mr. Green, aye.
        Mr. Keller?
        Mr. Keller. Aye.
        The Clerk. Mr. Keller, aye.
        Mr. Issa?
        Mr. Issa. Aye.
        The Clerk. Mr. Issa, aye
        Ms. Hart?
        Ms. Hart. Aye.
        The Clerk. Ms. Hart, aye.
        Mr. Flake?
        Mr. Flake. Aye.
        The Clerk. Mr. Flake, aye.
        Mr. Conyers?
        Mr. Conyers. No.
        The Clerk. Mr. Conyers, no.
        Mr. Frank?
        [No response.]
        The Clerk. Mr. Berman?
        [No response.]
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        Mr. Nadler. No.
        The Clerk. Mr. Nadler, no.
        Mr. Scott?
        Mr. Scott. No.
        The Clerk. Mr. Scott, no.
        Mr. Watt?
        Mr. Watt. No.
        The Clerk. Mr. Watt, no.
        Ms. Lofgren?
        [No response.]
        The Clerk. Ms. Jackson Lee?
        Ms. Jackson Lee. No.
        The Clerk. Ms. Jackson Lee, no.
        Ms. Waters?
        [No response.]
        The Clerk. Mr. Meehan?
        [No response.]
        The Clerk. Mr. Delahunt?
        [No response.]
        The Clerk. Mr. Wexler?
        [No response.]
        The Clerk. Ms. Baldwin?
        Ms. Baldwin. No.
        The Clerk. Ms. Baldwin, no.
        Mr. Weiner?
        [No response.]
        The Clerk. Mr. Schiff?
        Mr. Schiff. No.
        The Clerk. Mr. Schiff, no.
        Mr. Chairman?
        Chairman Sensenbrenner. Aye.
        The Clerk. Mr. Chairman, aye.
        Chairman Sensenbrenner. Are there any members in the room
    who wish to either record or to change their votes? If not, the
    Clerk will report.
        The Clerk. Mr. Chairman, there are 18 ayes and 7 nays.
        Chairman Sensenbrenner. The motion to table the motion to
    reconsider is agreed----
        Mr. Nadler. Mr. Chairman, could the Clerk report that,
    please? What was that? Repeat that. What was that figure?
        Chairman Sensenbrenner. The Clerk will repeat the----
        The Clerk. Eighteen ayes and 7 nays.
        Chairman Sensenbrenner. And the motion to table the motion
    to reconsider is agreed to.
        The question now occurs on the motion to report the bill
    H.R. 333 favorably as amended.
        Mr. Scott. Mr. Chairman?
        Chairman Sensenbrenner. Those in favor----
        Mr. Scott. Mr. Chairman?
        Chairman Sensenbrenner. For what purpose does the gentleman
    seek recognition? The previous question has been ordered.
        All in favor will say aye.
        Opposed, no.
        The ayes appear to have it. The ayes have it.
        Mr. Watt. Mr. Chairman, I ask for a recorded vote.
        Chairman Sensenbrenner. A recorded vote will be ordered.
    Those in favor of ordering the bill favorably reported will
    signify by saying aye; those opposed, no. And the Clerk will
    call the roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Gekas?
        Mr. Gekas. Aye.
        The Clerk. Mr. Gekas, aye.
        Mr. Coble?
        Mr. Coble. Aye.
        The Clerk. Mr. Coble, aye.
        Mr. Smith?
        Mr. Smith. Aye.
        The Clerk. Mr. Smith, aye.
        Mr. Gallegly?
        [No response.]
        The Clerk. Mr. Goodlatte?
        Mr. Goodlatte. Aye.
        The Clerk. Mr. Goodlatte, aye.
        Mr. Chabot?
        Mr. Chabot. Aye.
        The Clerk. Mr. Chabot, aye.
        Mr. Barr?
        Mr. Barr. Aye.
        The Clerk. Mr. Barr, aye.
        Mr. Jenkins?
        [No response.]
        The Clerk. Mr. Hutchinson?
        Mr. Hutchinson. Aye.
        The Clerk. Mr. Hutchinson, aye.
        Mr. Cannon?
        Mr. Cannon. Aye.
        The Clerk. Mr. Cannon, aye.
        Mr. Graham?
        Mr. Graham. Aye.
        The Clerk. Mr. Graham, aye.
        Mr. Bachus?
        [No response.]
        The Clerk. Mr. Scarborough?
        Mr. Scarborough. Aye.
        The Clerk. Mr. Bachus?
        Mr. Bachus. Aye.
        The Clerk. Mr. Bachus, aye.
        Mr. Hostettler?
        I got you.
        Mr. Hostettler. Aye.
        The Clerk. Mr. Hostettler, aye.
        Mr. Green?
        Mr. Green. Aye.
        The Clerk. Mr. Green, aye.
        Mr. Keller?
        Mr. Keller. Aye.
        The Clerk. Mr. Keller, aye.
        Mr. Issa?
        Mr. Issa. Finally, aye.
        The Clerk. Mr. Issa, aye
        Ms. Hart?
        Ms. Hart. Aye.
        The Clerk. Ms. Hart, aye.
        Mr. Flake?
        Mr. Flake. Aye.
        The Clerk. Mr. Flake, aye.
        Mr. Conyers?
        Mr. Conyers. No.
        The Clerk. Mr. Conyers, no.
        Mr. Frank?
        [No response.]
        The Clerk. Mr. Berman?
        [No response.]
        The Clerk. Mr. Boucher?
        Mr. Boucher. Aye.
        The Clerk. Mr. Boucher, aye.
        Mr. Nadler?
        Mr. Nadler. No.
        The Clerk. Mr. Nadler, no.
        Mr. Scott?
        Mr. Scott. No.
        The Clerk. Mr. Scott, no.
        Mr. Watt?
        Mr. Watt. No.
        The Clerk. Mr. Scott--Watt, no.
        Ms. Lofgren?
        [No response.]
        The Clerk. Ms. Jackson Lee?
        Ms. Jackson Lee. No.
        The Clerk. Ms. Jackson Lee, no.
        Ms. Waters?
        Ms. Waters. No.
        The Clerk. Ms. Waters, no.
        Mr. Meehan?
        [No response.]
        The Clerk. Mr. Delahunt?
        [No response.]
        The Clerk. Mr. Wexler?
        [No response.]
        The Clerk. Ms. Baldwin?
        Ms. Baldwin. No.
        The Clerk. Ms. Baldwin, no.
        Mr. Weiner?
        [No response.]
        The Clerk. Mr. Schiff?
        Mr. Schiff. No.
        The Clerk. Mr. Schiff, no.
        Mr. Chairman?
        Chairman Sensenbrenner. Aye.
        The Clerk. Mr. Chairman, aye.
        Chairman Sensenbrenner. Are there additional members in the
    room who wish to record or to change their votes? If not, the
    Clerk will report.
        The Clerk. Mr. Chairman, there are 19 ayes and 8 nays.
        Chairman Sensenbrenner. And the motion is agreed to. The
    bill is favorably reported.
        Without objection----
        Mr. Watt. Mr. Chairman?
        Chairman Sensenbrenner [continuing]. The bill will be
    favorably----
        Mr. Watt. Mr. Chairman?
        Chairman Sensenbrenner [continuing]. Reported----
        Mr. Watt. Mr. Chairman, I object.
        Chairman Sensenbrenner. The objection is heard. We will
    take care of that in the Rules Committee.
        Mr. Watt. Mr. Chairman?
        Chairman Sensenbrenner. Without objection, the chairman has
    authorized to move to go to conference.
        Mr. Watt. I object.
        Mr. Scott. Mr. Chairman? Mr. Chairman, reserving the right
    to object.
        Chairman Sensenbrenner. The objection is heard. The Chair--
    the gentleman from Texas, Mr. Smith.
        Mr. Smith. Mr. Chairman, pursuant to----
        Chairman Sensenbrenner. Will you turn your mike on, please?
        Mr. Smith. I'm sorry.
        Mr. Chairman, pursuant to Clause 1 of House Rule 22, I move
    that the chairman be authorized to make such motions in the
    House as may be necessary to go to conference with the Senate
    on H.R. 333.
        Mr. Scott. Mr. Chairman, reserving the right to object.
        Chairman Sensenbrenner. This is a motion. The question is
    on the adoption----
        Mr. Scott. Move to strike the last word.
        Mr. Watt. Mr. Chairman, I move to strike the last word.
        Mr. Scott. Last word on the amendment--on the motion.
        Chairman Sensenbrenner. The gentleman from Virginia.
        Mr. Scott. Mr. Chairman, I oppose the motion because I was
    not able to offer amendments, one of which would have exempted
    from monthly expenses new illnesses or disabilities incurred by
    family members, another--allow making sure that it was the
    trustee to determine private school expenses, another that
    would have limited small businesses exemption from frivolous
    and coercive litigation, another to put renter-own contracts on
    the same level as other installment contracts, a study of the
    effect of this bill on homicide, suicide, and civil
    commitments. A reasonable expense limitation is in the bill at
    10 percent. That is unreasonable, particularly for small
    estates, and, again--and in calculating the--your current
    income to exclude in the last 6 months that receipt of lump
    sum--non-recurring lump sums such as gifts inheritances and
    litigation recoveries. None of these have been considered
    because of the motion to close debate on the previous question,
    and, therefore, I would oppose the motion of the gentleman from
    Texas.
        I yield back.
        Ms. Jackson Lee. Mr. Chairman? Mr. Chairman? Mr. Chairman?
    This way, Mr. Chairman. Look this way. Mr. Chairman?
        Mr. Smith. Mr. Chairman, I would like to withdraw the
    motion.
        Chairman Sensenbrenner. The motion is withdrawn. All
    members will be given 2 days as provided by House Rules in
    which----
        Ms. Jackson Lee. Mr. Chairman?
        Chairman Sensenbrenner [continuing]. To submit additional
    dissenting supplemental or minority views.
        We have another bill that----
        Ms. Jackson Lee. Mr. Chairman, can you object at this time
    or is the objection ongoing?
        Chairman Sensenbrenner. For the 2 days that is provided in
    House Rules, it does not require unanimous consent, but does
    have to be stated by the Chair at the time the bill is
    reported.
        Ms. Jackson Lee. And so, Mr. Chairman, for clarification
    sake, understanding the rule, if you want to submit your basis
    for objections, can I submit them in writing into the record?
        Chairman Sensenbrenner. They will be within 2 days. If they
    are submitted within 2 days, every member has the right to
    submit whatever they would like to, and that is printed as a
    part of the committee report.
        Ms. Jackson Lee. Thank you, Mr. Chairman. I would like to
    continue my objection to the bill.
        Chairman Sensenbrenner. Okay. We duly note it.
        Ms. Waters. Mr. Chairman?
        Mr. Nadler. Mr. Chairman?
        Chairman Sensenbrenner. All members will be given 2 days as
    provided by House Rules in which to submit additional
    dissenting supplemental or minority rules.
        For what purpose does the gentleman from New York seek
    recognition?
        Mr. Nadler. To make a statement, Mr. Chairman.
        Mr. Chairman, this markup session was noticed for 2 days,
    today and tomorrow. I have no objection to shortening it to 1
    day. I would like to go home. But what was done to destroy the
    rights of the minority and the rights of the American people
    that we represent by moving the previous question so that
    amendments could not be offered; amendments, the contents of
    which you don't know.
        One amendment I would have offered would have been to
    correct a technical correction. The way the bankruptcy bill
    reads now in educational loan fraud section, the debts of the
    victims of the fraud are non-dischargeable, but the debts of
    the criminals are dischargeable. That was a simple drafting
    error. I am sure no one meant it. It was upside-down. It should
    have been the other way around. That amendment could not be
    offered.
        I would have offered an amendment to substitute Mr. Gekas'
    language from last year where we had a reasonable definition of
    household goods in last year's bill to the unreasonable
    definition in this year's bill.
        I would have offered an amendment to remove the language in
    this year's bill that was not in last year's bill that we never
    saw until the conference committee that applies all of the non-
    discharge provisions of chapter 7 to business bankruptcies in
    chapter 11 with no good reason and with disastrous effects on
    small businesses.
        Now, the fact is in my 8 years of service here, I don't
    recall the previous question having been called in this
    committee except 4 years ago on the same bill, and the chairman
    then was apologetic and said that he was under orders from the
    Speaker to get the bill out by a date certain and we had had
    about 6 or 7 days of markup by then. And he made a promise to
    us to go to the Rules Committee and ask that amendments that
    haven't had a chance be offered because of that motion would be
    made an order on the floor.
        Now, this is the first major bill of the session. The
    majority trampled over the rights of the minority by calling
    the previous question. So we couldn't even offer the
    amendments. I hope this will not happen again. If it does
    happen again, then we are obviously going to have a war in this
    committee, and I hope that won't happen.
        Chairman Sensenbrenner. The Chair will respond to the
    gentleman from New York and others.
        The Chair and the members of this committee have been very
    patient, and we went through 16 amendments that were offered by
    the minority where there was a full and a fair debate.
        We got to the sixteenth amendment, and one of the members
    of the committee objected to the standard motion that an
    amendment be considered as read and open for amendment at any
    point. At that time, the Chair told the minority party staff
    that if this was to be continued, we would move the previous
    question.
        I was informed by the minority party staff that the member
    who objected intended to continue objecting to waiving the
    readings of amendments that were offered. This committee is
    going to do its business. This committee is not going to be
    subjected into dilatory tactics. I would hope that the
    bipartisan olive branch that I as chairman have offered to the
    minority on a lot of procedural things will be reciprocated by
    all of the members of the minority party, and if that is the
    case, we can move on fairly smoothly, but if it is not the
    case, then the majority will have to do its job alone.
        The committee stands adjourned.
        [Whereupon, at 5:13 p.m., the committee was adjourned.]

                                DISSENTING VIEWS

        Although we would support a responsible and balanced
    bankruptcy reform effort that remedies debtor and creditor
    abuses in a balanced manner, we cannot support H.R. 333 in its
    present form. We believe the bill, while modestly improved from
    the legislation reported by the committee last Congress,
    remains flawed. We oppose the bill because it is likely to harm
    low income consumers, women and children reliant on alimony and
    child support, and employees of troubled businesses, among
    other vulnerable groups. The risks that this legislation poses
    are far too grave, particularly at a time when our nation is
    experiencing an economic slowdown, if not an outright
    recession.
        We would also note that the legislation is being brought to
    the floor under a continuing specter of procedural abuse.
    Although 2 days were scheduled for markup, the majority called
    the previous question on the first day, blocking the ability of
    the Democrats to offer more than two-thirds of their proposed
    amendments.\1\ Of the amendments that Democrats did offer,
    every single one, including those proposing only studies or
    curing obvious technical flaws in the bill, were voted down on
    purely partisan lines. This comes on top of the egregious
    breach in procedures last Congress, when the majority inserted
    the bankruptcy bill into a defunct State Department
    authorization conference (H.R. 2415) without the benefit of a
    single meeting of conferees.\2\
    ---------------------------------------------------------------------------
        \1\ This is the second time in the history of this legislation,
    which is now in its third Congress, that the majority has cut off
    consideration by calling the previous question while Democratic
    amendments were pending at the desk.
        \2\ Notwithstanding a unanimous vote by the House instructing the
    conferees to hold a meeting, the conference report was filed with the
    Rules Committee a few hours after the vote.
    ---------------------------------------------------------------------------
        H.R. 333 is an omnibus bankruptcy bill that includes titles
    concerning consumer bankruptcy, business bankruptcy, municipal
    bankruptcy, tax, and bankruptcy administration. Although some
    of the bill's titles and provisions are non-controversial and
    stem from recommendations of the congressionally-created
    National Bankruptcy Review Commission (which completed its 2-
    year review of the bankruptcy laws in October 1997), provisions
    in the titles relating to consumer and business bankruptcies
    and tax matters constitute a significant and dangerous
    departure from historical bankruptcy procedures.
        The legislation has engendered widespread opposition among
    groups concerned about bankruptcy policy. Groups which have
    opposed, or have expressed serious concerns with, H.R. 333 or
    its predecessor versions, include the following:

            (1) groups concerned about the preservation of jobs
            and the rights of workers, including the AFL-CIO; the
            American Federation of State, County, and Municipal
            Employees; the United Auto Workers; the Union of
            Needletrades, Industrial and Textile Employees; the
            Service Employees; the United Steel Workers; and the
            Teamsters; \3\
    ---------------------------------------------------------------------------
        \3\ Written statement of Damon Silvers, Office of the General
    Counsel, AFL-CIO, Feb. 8 Hearing on H.R. 333, the ``Bankruptcy Abuse
    Prevention and Consumer Protection Act of 2001 before the House Jud.
    Comm., (February 8, 2001)(Hereafter: ``February 8, 2001 Hearing'');
    Letter from Charles M. Loveless, Director of Legislation, AFSCME, to
    Members of Congress (Apr. 19, 1999); Letter from Alan Reuther,
    Legislative Director, UAW, to Members of Congress (Apr. 26, 1999);
    Letter from Ann Hoffman, Legislative Director, UNITE, to the Honorable
    John Conyers, Jr., Ranking Member, House Comm. on the Judiciary (May 4,
    1998).
    ---------------------------------------------------------------------------
            (2) groups of non-partisan bankruptcy lawyers, judges,
            and academics, including the Judicial Conference of the
            United States, National Bankruptcy Conference , the
            American Bankruptcy Institute, the National Conference
            of Bankruptcy Judges, the National Association of
            Chapter 13 Trustees, the National Association of
            Bankruptcy Trustees, the Commercial Law League of
            America, the American College of Bankruptcy, and the
            National Association of Consumer Bankruptcy Attorneys;
            \4\
    ---------------------------------------------------------------------------
        \4\ Written statement of Edward R. Becker on behalf of the Judicial
    Conference of the United States, Feb. 8, 2001 Hearing on S. 220, the
    Bankruptcy Reform Act of 2001; statement of Ralph Mabey, National
    Bankruptcy Conference, Feb. 8, 2001 Hearing; written statement of the
    Honorable William Houston Brown, ABI; Hearing on H.R. 833, the
    ``Bankruptcy Reform Act of 1999,'' Before the House Subcomm. on
    Commercial and Admin. Law, 106th Cong., 1st Sess. (Mar. 17, 1999)
    [hereinafter, ``March 17, 1999 Hearing'']; (written statement of the
    Honorable Randall J. Newsome, NCBJ; Id. (written statement of Henry E.
    Hildebrand, III, NACTT); Id. (written statement of Robert H.
    Waldschmidt, NABT); Letter from Mark Sheriff, President of the
    Commercial Law League of America, to Members of the House and Senate
    (Feb., 2001); Letter from Raymond L. Shapiro, Chair, American College
    of Bankruptcy, to Members of Congress (Apr. 26, 1999); Letter from
    Norma Hammes, President, NACBA, to Members of Congress (Apr. 26, 1999).
    ---------------------------------------------------------------------------
            (3) groups concerned about the rights of women,
            children, seniors, and victims of crimes and torts,
            including the National Women's Law Center, the National
            Partnership for Women and Families, the National
            Organization for Women, the Association for Children
            for Enforcement of Support, the California Women's Law
            Center, Mothers Against Drunk Driving, the National
            Organization for Victim Assistance, the National
            Abortion and Reproductive Rights Action League, the
            National Victim Center, the National Council of Senior
            Citizens, and the Committee to Preserve Social Security
            and Medicare; \5\ and
    ---------------------------------------------------------------------------
        \5\ Letter from Patricia Ireland, President, NOW, to the Honorable
    John Conyers, Jr., Ranking Member, House Comm. on the Judiciary (May
    15, 1998); Letter from Geraldine Jensen, President, ACES, to the
    Honorable George W. Gekas, Chair, House Subcomm. on Commercial and
    Admin. Law (Mar. 17, 1999); Letter from Abby J. Leibman, Executive
    Director, California Women's Law Center, to the Honorable Dianne
    Feinstein, Senate Comm. on the Judiciary (Apr. 27, 1998); Letter from
    Karolyn V. Nunnallee, National President, MADD, to Members of Congress
    (Apr. 26, 1999); Letter from Marlene A. Young, Executive Director,
    NOVA, to the Honorable Henry J. Hyde, Chair, House Comm. on the
    Judiciary (Apr. 26, 1999); Letter from David Beatty, Director of Public
    Policy, The National Center for Victims of Crime, to the Honorable
    Jerrold Nadler, Ranking Member, House Subcomm. on Commercial and Admin.
    Law (Apr. 28, 1999); Letter from Dan Schulder, Director Legislation,
    National Council of Senior Citizens, to the Honorable Jerrold Nadler,
    Ranking Member, House Subcomm. on Commercial and Admin. Law (June 9,
    1998); Letter from Martha A. McSteen, President, National Committee to
    Preserve Social Security and Medicare, to the Honorable Jerrold Nadler
    (Feb. 14, 2001); Letter from Deborah Briceland-Betts, Executive
    Director, OWL, to the Honorable Melvin L. Watt, Ranking Member,
    Subcommittee on Commercial and Administrative Law (Feb. 14, 2001).
    ---------------------------------------------------------------------------
            (4) consumer and civil rights organizations, including
            the Leadership Conference on Civil Rights, National
            Consumer Law Center, Consumers Union, the Consumer
            Federation of America, U.S. Public Interest Research
            Group, Public Citizen, the Alliance for Justice, and
            the National Council of Senior Citizens.\6\
    ---------------------------------------------------------------------------
        \6\ Letter from the Leadership Conference on Civil Rights to
    Members of Congress (Apr. 21, 1999); Letter from Gary Klein, Senior
    Attorney, National Consumer Law Center, to Members of Congress (Apr.
    23, 1999); Press Release of National Consumer Law Center, Consumer
    Federation of America, Consumers Union, and U.S. PIRG (Apr. 19, 1999);
    Press Release of Consumers Union and the Consumers Federation of
    America (Feb. 14, 2001); Letter from Frank Clemente, Legislative
    Director, Public Citizen, to House Comm. on the Judiciary (May 11,
    1998); Letter from Nan Aron, President, Alliance for Justice, to
    Members of the Senate Comm. on the Judiciary (Apr. 23, 1998); Letter
    from Dan Schulder, Director Legislation, National Council of Senior
    Citizens, to the Honorable Jerrold Nadler, Ranking Member, House
    Subcomm. on Commercial and Admin. Law (June 9, 1998).

        Section I of these Dissenting Views describes our concerns
    regarding the lack of empirical justification for the
    legislation. Section II describes concerns with the consumer
    provisions, including, most notably, the means test. Section
    III discusses flaws in the business provisions, and Section IV
    turns to the tax sections of H.R. 333.

                       i. lack of empirical justification

        Close scrutiny of the quantitative evidence concerning the
    causes, costs, and effects of bankruptcy reveals that at best,
    the proponent's empirical justifications are overblown, and at
    worst, they are misstated. H.R. 333's proponents have sought to
    justify the bill's enactment based on claims (1) the United
    States is experiencing a dramatic growth in the number of
    bankruptcy filings, and (2) credit industry-funded studies by
    Professor Michael Staten of Georgetown University's Credit
    Research Center (CRC),\7\ Ernst & Young,\8\ and the WEFA \9\
    group that purport to demonstrate that the bankruptcy laws
    allow many relatively high income individuals to avoid debts
    they could otherwise pay and that this avoidance imposes
    substantial costs on the economy. However, the vast weight of
    the data and studies contradict the proponents' rationales and
    instead shows that non bankruptcy law factors are the root
    cause of increased bankruptcy filings.
    ---------------------------------------------------------------------------
        \7\ John M. Barron & Michael E. Staten, Purdue University Credit
    Research Center, Personal Bankruptcy: A Report on Petitioners' Ability
    to Pay (Oct. 1997) (concluding that 5% of chapter 7 debtors could repay
    all of their non-priority, non-housing debt over 5 years, 10% could
    repay at least 78% of such debt, and 25% could repay 30% of their
    debt).
        \8\ Policy Economics and Quantitative Analysis Group, Chapter 7
    Bankruptcy Petitioner's Ability to Repay: Additional Evidence from
    bankruptcy Petition Files, Ernst & Young LLP (Feb. 1998).
        \9\ WEFA Group Resource Planning Service, The Financial Costs of
    Personal Bankruptcy 4 (Feb. 1998) (calculated that ``financial losses
    due to 1997 personal bankruptcies totaled more than $44 billion. . . .
    Unsecured nonpriority losses totaled almost $35 billion in 1997 . . .
    [and] passing such financial losses on to consumers in terms of higher
    prices would cost the average household over $400 annually;'' and that
    the needs based proposal in the bill ``should decrease financial costs
    due to bankruptcy . . . from 8% to 17% annually'').
    ---------------------------------------------------------------------------
        Analysts with the Congressional Budget Office,\10\ the
    General Accounting Office,\11\ and the Federal Deposit
    Insurance Corporation all have called into question the
    conclusions of studies cited by the bill's supporters. These
    critiques are based on a number of grounds, including numerous
    flaws in the analysis and the assumptions underlying the
    studies. These analyses indicate that the rise in bankruptcies
    is more properly attributable to a number of changes unrelated
    to the bankruptcy laws, such as unexpected medical costs,
    family crises like divorce, loss of high paying full time jobs,
    and most notably, the deregulation of credit card interest
    rates and the dramatic increase in credit card solicitations
    and overall consumer debt.\12\ It also has been shown that the
    average income of persons filing for bankruptcy has declined
    from the 1980's, further contradicting assertions of widespread
    abuse by high-income individuals.\13\
    ---------------------------------------------------------------------------
        \10\ Kim J. Kowalewski, Evaluations of Three Studies Submitted to
    the National Bankruptcy Review Commission 4 (Oct.6, 1997). Kim
    Kowalewski of the Congressional Budget Office, at the request of the
    National Bankruptcy Review Commission, conducted a review of three
    economic analyses of this question. Kowalewski concluded that a 1996
    VISA study did not support such a conclusion and, in fact, ``because
    the social trends variable is flat during 1995 and early 1996 . . .
    social factors played no role behind the increase in personal
    bankruptcies in that period.''
        \11\ At the request of Senators Charles Grassley and Richard
    Durbin, the General Accounting Office examined the CRC study and found
    five areas of concern: (1) data supplied by the debtors regarding their
    income expenses, and debts and the stability of their income and
    expenses over a 5-year period were not validated, (2) the report did
    not define the universe of debts for which it estimated debtors'
    ability to pay, (3) payments on non-housing debts that debtors stated
    they intended to reaffirm were not included in debtor expenses in
    determining the net income debtors had, (4) the CRC did not account for
    the considerable variation among the 13 locations used in the analysis,
    and (5) a scientific random sampling methodology was not used to select
    the 13 bankruptcy locations or the bankruptcy petitions used in the
    analysis. General Accounting Office, Personal Bankruptcy: The Credit
    Research Center Report on Debtors' Ability to Pay, GAO/GGD-98-47 (Feb.
    1998).
        \12\ The Federal Deposit Insurance Corporation (``FDIC'') contested
    many of assertions made in the above-noted studies. Federal Deposit
    Insurance Corp., Bank Trends (Mar. 1998); Lawrence M. Ausubel, Credit
    Card Defaults, Credit Card Profits, and Bankruptcy, 71 American
    Bankruptcy L.J. 249 (1997). The FDIC observed a strong correlation
    between credit card default rates and personal bankruptcies, both of
    which increased in the 1990's. The FDIC found that, because of and
    following interest rate deregulation in 1978, credit card companies
    became more profitable and credit card lenders were able to extend more
    unsecured credit to less creditworthy borrowers. See also, David A.
    Moss, The Rise of Consumer Bankruptcy: Evolution, Revolution, or Both,
    Spring, American Bkcy L. J, Spring 311 (1999) (review of empirical
    evidence indicates that increased availability of credit, rather than
    declining stigma, are the most likely source of the recent increase in
    bankruptcy filings).
        \13\ American Bankruptcy Institute, 18 ABI Journal 1 (Apr. 1999);
    Lawrence M. Ausubel, University College London, A Self-Correcting
    ``Crisis'': The Status of Personal Bankruptcy in 1999 1 (Mar. 10,
    1999).
    ---------------------------------------------------------------------------
        One of the most revealing studies was performed by the non-
    partisan American Bankruptcy Institute, which commissioned
    Professors Marianne B. Culhane and Michaela M. White of the
    Creighton University School of Law to conduct a study a
    comprehensive database of chapter 7 cases.\14\ The study
    estimated that a mere 3.6% of the debtors had sufficient
    income, after deducting allowable living expenses, to pay all
    of their non-housing secured debts, all of their unsecured
    priority debts, and at least 20% of their unsecured nonpriority
    debts. Moreover, in making their calculations, Professors
    Culhane and White assumed that 100% of the debtors in chapter
    13 would complete a 5-year repayment plan even though more than
    two-thirds of voluntary chapter 13 plans currently do not
    complete.
    ---------------------------------------------------------------------------
        \14\ March 17, 1999 Hearing (written statement of Marianne B.
    Culhane); Marianne B. Culhane & Michaela M. White, Taking the New
    Consumer Bankruptcy Model for a Test Drive: Means-Testing Real Chapter
    7 Debtors (Mar. 8, 1999).
    ---------------------------------------------------------------------------
        The American Bankruptcy Institute study also showed that,
    while the credit industry estimates it may be eligible recover
    $4 billion under the rigid standards of the means test,
    creditors would receive only $450 million in actual
    collections. The Executive Office of United States Trustees in
    the Justice Department conducted a study that reached similar
    results, estimating that passage of the legislation probably
    would have netted creditors no more than 3% of the $400 per
    household they claim to be losing. These figures indicate that
    the credit industry funded studies may have overstated the
    ``problem'' by as much as 500%.
        It is also important to note we have never received any
    evidence that the credit card industry likely would pass on any
    of the ``savings'' from bankruptcy law changes to individual
    consumers. Instead the evidence shows that credit card
    companies, which represent by far the most profitable sector of
    the commercial banking business,\15\ tend to maintain high
    interest rates, even when their own cost of credit
    declines.\16\ The lack of competition in this industry has
    caught even the Justice Department's attention, which has
    brought an antitrust suit against VISA and MasterCard in the
    Southern District of New York.\17\
    ---------------------------------------------------------------------------
        \15\ In 1993, credit card banks were nearly four times as
    profitable as all commercial banks. Despite the slight decrease in the
    average credit card interest rate, credit card banks remain twice as
    profitable as commercial banks. March 16, 1999 Hearing (written
    statement of the Honorable Joe Lee) (citing Federal Reserve Board, The
    Profitability of Credit Card Operations of Depository Institutions
    (Aug. 1997)).
        \16\ In 1996, Professor James Medoff, the Meyer Kestnbaum Professor
    of Labor and Industry at Harvard University, pointed out that, between
    1980 and 1992, when the Federal funds rate (the interest that banks
    charge for overnight loans) fell from 13.4% to 3.5%, a drop of nearly
    10 percentage points, the average credit card interest rate rose from
    17.3% to 17.8%. Professor Medoff suggests that during the 1980's, when
    interest rates were high, lenders learned a valuable lesson; consumer
    debtors in general pay very little attention to interest rates. March
    16, 1999 Hearing (written statement of the Honorable Joe Lee at 1)
    (citations omitted).
        \17\ Kenneth N. Gilpin, ``Antitrust Suit Filed Against VISA and
    MasterCard,'' N.Y. Times, Oct. 8, 1998, at C1.
    ---------------------------------------------------------------------------

                            ii. consumer provisions

    A. Current Law and Proposed Changes
        Under current law, individuals facing financial difficulty
    may seek a variety of forms of relief under the bankruptcy
    laws, with chapter 7 (liquidation) being by far the most common
    form of relief sought. Under this chapter, debtors are required
    to forfeit all of their property other than their ``exempt''
    assets (i.e., deemed necessary for the debtor's maintenance, as
    determined under Federal or State law, at the State's option)
    in exchange for receiving a discharge of their unsecured debts.
    Creditors are entitled to receive any net proceeds from the
    sale of the debtor's nonexempt property, subject to the
    statutory priority schedule.\18\ The Bankruptcy Code does not
    permit the discharge of certain debts whose payments are
    considered to be important to society. Some of this debt is of
    the same nature as priority debt (e.g., family support
    obligations and taxes), but the law also excepts from discharge
    debts incurred through the debtor's misconduct, such as debts
    arising from fraud and intentional injuries.\19\
    ---------------------------------------------------------------------------
        \18\ For example, the costs of administering the estate are
    entitled to the first priority, and payments of alimony, child support,
    and taxes are entitled to later priorities, with general unsecured debt
    entitled to any residual assets left over. 11 U.S.C. Sec. 507(a).
        \19\ 11 U.S.C. Sec. 523(a).
    ---------------------------------------------------------------------------
        While there are no specific financial criteria for
    determining who may seek chapter 7 relief, Sec. 707(b) of the
    Bankruptcy Code grants the court the discretion to deny relief
    where the filing is found to be a ``substantial abuse.'' \20\
    Under Sec. 707(b), however, there is a presumption in favor of
    granting relief to the debtor. This stems in part from the
    costs and potential hardships associated with developing
    excessive barriers to chapter 7 eligibility, the belief that
    the ``honest but unfortunate debtor'' \21\ should be entitled
    to a ``fresh start,'' the importance of encouraging risk-taking
    and entrepreneurship, and avoiding situations where it is
    impossible for individuals to escape aggressive creditor
    collection tactics.\22\ Section 707(b) is not the only
    provision in the Bankruptcy Code that prevents individuals from
    misusing chapter 7. For example, creditors may request that
    certain debts be held nondischargeable under Sec. 523(a) or
    that the debtor be denied a discharge altogether under
    Sec. 727.
    ---------------------------------------------------------------------------
        \20\ The Code does not define the term ``substantial abuse,'' which
    is used in Sec. 707(b), although, some courts have found that the
    ability to pay an appreciable proportion of one's debts over 3 years,
    using future income, could constitute ``substantial abuse.'' See, e.g.,
    Fonder v. United States, 974 F.2d 996 (8th Cir. 1992) (debtor could pay
    89% of unsecured debts in 3 years); In re Krohn, 886 F.2d 123 (6th Cir.
    1989) (ability to pay portion of debts from ``ample income'' in excess
    of $80,000 per year); In re Walton, 866 F.2d 981 (8th Cir. 1989)
    (ability to pay two thirds of debts in 3 years).
        \21\ Local Loan v. Hunt, 292 U.S. 234 (1934).
        \22\ There are a number of disincentives to filing for bankruptcy,
    such as the fact that a person filed for a chapter 7 bankruptcy will be
    disclosed on a debtor's credit report, and the law's prohibitions on
    repeat chapter 7 filings for 6 years.
    ---------------------------------------------------------------------------
        A separate bankruptcy alternative available to individual
    debtors is chapter 13, formerly known as a wage earner's
    plan.\23\ Under chapter 13, a debtor is permitted to retain his
    or her property, but is required to pay to creditors over a 3-5
    year period out of future income at least as much as the
    creditors would have received under a chapter 7 liquidation,
    and is also required to pay all priority debts in full. To
    accomplish this, the debtor must propose a plan, administered
    by a trustee, that pays creditors in full or that devotes the
    debtor's ``disposable income'' after accounting for necessary
    support of the debtor, his or her family, or a business. In
    order to encourage the use of chapter 13 plans, which are
    currently voluntary to the debtor, Congress determined that
    persons who meet their chapter 13 obligations are entitled to a
    broader discharge of their unpaid debts than is available under
    chapter 7. This ``superdischarge'' results in the discharge of
    several types of debt that chapter 7 does not discharge. In
    addition, debtors are permitted to retain property whether or
    not the property is encumbered by liens and the debtor
    committed a prepetition default, so long as the chapter 13 plan
    cures any arrearages. In this manner, debtors can use chapter
    13 to save their homes from foreclosure. In addition, in
    chapter 13 a debtor is permitted to bifurcate a loan on
    personal property, such as an automobile, into secured and
    unsecured portions based on its present value, and treat only
    the secured portion as a secured claim that must be paid in
    full with interest.\24\ Also, chapter 13 plans can provide for
    the payment of priority debts, such as taxes and family support
    obligations, before payment on general unsecured debts.
    ---------------------------------------------------------------------------
        \23\ The eligibility requirements for chapter 13 may be found in 11
    U.S.C. Sec. 109(e). To be eligible for chapter 13, an individual must
    have regular income and unsecured debts of less than $269,250 and
    secured debts of less than $807,750. These numbers were indexed for
    inflation in April 1998. Individuals who exceed these thresholds may
    reorganize their affairs under chapter 11.
        \24\ This is known as a ``stripdown.'' Specifically, except for
    certain home mortgages, a debtor in chapter 13 may be able to bifurcate
    a debt to a secured creditor, treating only the current value of the
    collateral as secured, even if it is less than the full amount of the
    loan, and treating the remaining debt as unsecured.
    ---------------------------------------------------------------------------
        H.R. 333 would institute a number of major changes to
    consumer bankruptcy, in general, and chapter 7 and 13 in
    particular, that may reduce the number of bankruptcy filings
    (but will not reduce the number of cases of financial hardship)
    and that are designed to increase pay-outs to non-priority
    unsecured creditors, particularly credit card companies, as
    well as to certain secured lenders, especially those extending
    credit for automobile loans.
                1. Means Testing
        The most far-reaching change, set forth in section 102 of
    the bill, would institute a so-called ``means testing''
    approach to consumer bankruptcy.\25\ This new standard would
    create a presumption of abuse of the bankruptcy system and deny
    chapter 7 relief to debtors who fail a ``means test.'' The
    means test applies only to debtors with primarily consumer
    debts. The means test in general works as follows:
    ---------------------------------------------------------------------------
        \25\ Subsection (a) of section 102 amends section 707(b) of the
    Bankruptcy Code to permit a court, on its own motion, or on motion of
    the United States trustee, private trustee, bankruptcy administrator,
    or party in interest, to dismiss a chapter 7 case for abuse if it was
    filed by an individual debtor whose debts are primarily consumer debts.
    ---------------------------------------------------------------------------
        First, the debtor's ``current monthly income'' is computed.
    This is the average of the debtor(s)' monthly income over the
    last 6 months before the bankruptcy, excluding Social Security
    benefits and war crimes reparations.
        Second, the following are subtracted from the current
    monthly income:

              a. total priority debts divided by 60
              b. the scheduled payments on secured debts over the
            next 60 months, divided by 60
              c. arrears on secured debts such as mortgages and car
            payments
              d. monthly expenses permitted by the Internal Revenue
            Service collection guidelines, with possible 5%
            increase for food and clothing allowances if
            demonstrated to be ``reasonable and necessary'', long-
            term care expenses for the elderly or disabled,
            expenses due to domestic violence, and private school
            expenses up to $1500 per child annually \26\ if there
            is an explanation of why they are reasonable and
            necessary.
    ---------------------------------------------------------------------------
        \26\ The bill discriminates against public education by failing to
    allow parents to deduct comparable public school expenses (such as for
    enrichment programs, books and the like). Representative Jackson Lee
    had intended to offer an amendment to cure this disparity, but she was
    prevented from offering the amendment when the majority moved the
    previous question.
    ---------------------------------------------------------------------------
              e. if debtor is eligible for chapter 13, hypothetical
            administrative expenses for chapter 13, but only up to
            10% of projected plan payments.

        All of the calculations must be done as part of the
    debtor's schedules. If after deducting the allowed expenses,
    the debtor has enough ``disposable income'' over 60 months to
    pay $10,000 ($166.67 per month) or 25% of the nonpriority
    unsecured debts (unless the disposable income is less than $100
    per month), the debtor is presumed to be abusing chapter 7.
        If a debtor is presumed to be abusing chapter 7, the U.S.
    trustee must move to dismiss or file a report about why no
    motion is filed. Any creditor may also move to dismiss under
    the means test. However, no motion under Sec. 707(b) may be
    filed if the current monthly income of the debtor and the
    debtor's spouse is less than the State median income.\27\ If a
    motion is filed under the means test, the court has little
    discretion to deny it. The presumption of abuse can be overcome
    only if there are ``special circumstances'' that can be
    documented that require adjustment of the debtor's income or
    expenses for which there is ``no reasonable alternative.''
    ---------------------------------------------------------------------------
        \27\ However, due to a drafting error, the income of the debtor's
    spouse is counted regardless of whether the case is a joint case, and
    even if the spouse is separated and contributing nothing to the
    debtor's household. To address this clear drafting error,
    Representative Schiff offered an amendment to ensure that the spouse's
    income is not counted if the couple is legally separated.
    Representative Gekas voiced his opposition to correcting the error at
    the markup: ``I hasten to say that the gentleman may have struck a cord
    of error here in which, again, we became frozen in time, as it were,
    during the conference to preserve the unity of the bill. It may have
    been an oversight.'' Nevertheless, the amendment was rejected on a
    straight party-line vote.
    ---------------------------------------------------------------------------
        Although the means test is only applicable above median
    income,\28\ all debtors must complete the means test
    calculations. This gives rise to the possibility that trustees
    or U.S. trustees will bring motions for abuse under
    Sec. 707(b)'s new looser standard (``totality of the
    circumstances'' or ``bad faith'') and use the means test
    calculations to support the argument that the debtor could
    afford to pay creditors, especially since chapter 7 trustees
    could receive compensation under the chapter 13 plan.
    ---------------------------------------------------------------------------
        \28\ Two forms of ``safe harbors'' are recognized under section
    102(a). One provides that only a judge, United States trustee,
    bankruptcy administrator, or private trustee may bring a motion under
    section 707(b) of the Bankruptcy Code if the chapter 7 debtor's income
    (or in a joint case, the income of debtor and the debtor's spouse) does
    not exceed the State median family income for a family of equal or
    lesser size (adjusted for larger sized families), or the State median
    family income for one earner in the case of a one-person household. The
    second safe harbor provides that no motion under section 707(b)(2) may
    be filed by a judge, United States trustee, bankruptcy administrator,
    private trustee, or other party in interest if the debtor and the
    debtor's spouse combined have income that does not exceed the State
    median family income for a family of equal or lesser size (adjusted for
    larger sized families), or the State median family income for one
    earner in the case of a one-person household.
    ---------------------------------------------------------------------------
        The bill also converts the Chapter 13 plan requirements for
    debtors with income above the State median into a mandatory
    approach based upon IRS expense standards rather than a
    flexible approach under the current section 1325 to determine
    disposable income. Accordingly, under section 102(h) of the
    bill, debtors would be required to dedicate all of their
    available income to unsecured debt, again after allowing
    deductions for secured and priority debts and living expenses
    per the means test and its IRS collection standards, even if
    the debtor's actual expenses are reasonable but exceed the IRS
    permitted, but arbitrarily-created, expenses.\29\ Although the
    provisions clarifying the means test allow for adjustments in
    currently monthly income and expenses for ``special
    circumstances'' this requires the debtor to file a motion with
    the court, which may be challenged by the trustee or any
    creditor, with the burden of proof lying with the debtor.\30\
    ---------------------------------------------------------------------------
        \29\ H.R. 333, Sec. 102(h) (proposed amendment to 11 U.S.C.
    Sec. 1325(b)).
        \30\ H.R. 333, Sec. 102 (proposed amendment to 11 U.S.C. Sec. 707).
    ---------------------------------------------------------------------------
        The bill also goes on for these debtors to calculate the
    means test using expenses over 5 years rather than 3 years.
    This guarantees that, if the means test pushes a debtor into
    chapter 13, the repayment capacity assumptions would force the
    debtor into a 5-year repayment plan. This legislation also
    greatly curtails the broader discharge currently available to
    debtors who have successfully completed a chapter 13 plan,
    eliminating a significant inducement for voluntary debtor
    participation in chapter 13.
                2. Exceptions to Discharge & Loan Bifurcations
        H.R. 333 would make two significant additions to the types
    of debts that a debtor may not discharge under chapters 7 or 13
    and proscribes a debtor's ability to bifurcate a loan into
    secured and unsecured portions based upon the value of the
    collateral.
        Section 310 would allow a creditor to presumptively
    challenge the dischargeability of debts of $250 or more in the
    aggregate (as opposed to $1,075 under current law) or more owed
    to a single creditor for ``luxury goods or services'' incurred
    within 90 days prior to the bankruptcy filing (as opposed to 60
    days under current law).\31\ Additionally, Sec. 310 also makes
    presumptively nondischargeable cash advances aggregating at
    least $750 incurred within 70 days before the order for relief,
    to one or more creditors in an open-ended credit plan. This
    means that, if a debtor uses several cards to purchase basic
    household needs (there is no requirement that these cash
    advances be used for luxury goods) over a 70 day period, even
    if the debt to each creditor is a fraction of the $750
    threshold, all the debts would be nondischargeable. (Current
    law makes cash advances aggregating more than $1075
    nondischargeable if they are incurred more than 90 days before
    the filing.\32\
    ---------------------------------------------------------------------------
        \31\ H.R. 333, Sec. 310 (proposed amendment to 11 U.S.C.
    Sec. 523(a)(2)(C)).
        \32\ 11 U.S.C. Sec. 523(a)(2)(C).
    ---------------------------------------------------------------------------
        Section 314 adds another exception to discharge when the
    ``debtor incurred the debt to pay a tax to a governmental unit
    that would be nondischargeable.'' \33\ Therefore, regardless of
    the debtor's intent, any debts incurred to pay a
    nondischargeable tax debt--for example, by electronic tax
    filing--would be nondischargeable.\34\
    ---------------------------------------------------------------------------
        \33\ H.R. 333, Sec. 314 (proposed amendment to 11 U.S.C.
    Sec. 523(a)).
        \34\ H.R. 333, Sec. 315.
    ---------------------------------------------------------------------------
        Section 306 would also largely eliminate the possibility of
    loan bifurcations in chapter 13 cases. As noted above, under
    current law a debtor is permitted to bifurcate a loan between
    the secured and unsecured portions, and to treat only the
    secured portion as a priority debt. The legislation prevents
    such bifurcations (including with regard to interest and
    penalty provisions) with respect to any loan for the purchase
    of a vehicle in the 5 years before bankruptcy, as well as all
    loans secured by other property incurred within 1 year before
    bankruptcy.
                3. Domestic Support
        Sections 211-219 of the bill make a number of changes to
    current law purportedly intended to enhance the status of child
    support and alimony payments in bankruptcy. These changes are
    presumably being made in an effort to offset the considerable
    criticism the legislation has received from child and spouse
    support advocates. However, the most significant effect is to
    give priority to child support debts assigned to the State.\35\
    ---------------------------------------------------------------------------
        \35\ Under current law, such debts are non-dischargeable, but are
    not a priority.
    ---------------------------------------------------------------------------
        Section 211 creates a new definition of ``domestic support
    obligation.'' In addition to applying to debts owed on account
    of child support and alimony, which are largely covered by
    current law, the new definition includes alimony and child
    support debts owed or recoverable to a governmental unit. This
    definition is in turn relevant to new sections of the
    Bankruptcy Code that give certain enhanced rights to the
    holders of domestic support obligations in terms of priorities,
    payments, automatic stay, preferences, and foreclosure.
        Section 212 grants alimony and child care creditors a first
    priority in bankruptcy (they are currently seventh, although
    most of the higher priority debts are seen rarely in consumer
    bankruptcy cases). Section 213 prevents the confirmation of a
    reorganization plan unless the debtor has paid all domestic
    support obligations. Section 214 provides that the automatic
    stay does not prevent legal actions enforcing wage orders for
    domestic support obligations and similar actions. Section 215
    makes nondischargeable all domestic support obligations,
    including obligations owed to government support agencies.
    Section 216 permits nondischargeable domestic support
    obligations to be collected from property--notwithstanding
    State laws making that property exempt from collection or
    attachment--after bankruptcy. Section 217 makes clear that a
    transfer that was a bona fide payment for a domestic support
    obligation will not be considered a fraudulent prepetition
    transfer. Section 218 specifies that alimony and child support
    payments are not included in the definition of disposable
    income in chapter 12 and 13 cases. Finally, section 219 of the
    bill requires chapter 7 and chapter 13 trustees to send written
    notice to recipients of alimony and child support payments, and
    to the local and State child support agencies, notifying them
    that a debtor of such payments has filed for bankruptcy.
                4. Other Anti-Debtor Provisions
        The legislation makes a host of additional changes to the
    consumer provisions of the bankruptcy laws. The majority of the
    provisions are designed to increase creditor pay outs and would
    greatly harm low- and middle-class debtors. As Harvard Law
    Professor Elizabeth Warren writes, the bill ``has more than 120
    pages of amendments affecting consumer cases, and they all head
    in the same direction: They give a few creditor interests more
    opportunities to try to recover from their debtors while they
    reduce the protection for other creditors and debtors.'' \36\
    Last Congress, Chairman Hyde himself noted that the bill
    contains at least 75 provisions detrimental to debtors and
    favorable to creditors. Among other things, the bill extends
    the period permitted between chapter 7 filings from 6 years
    (under current law) to 8 years; \37\ expands the ability of
    residential landlords to evict tenants without seeking
    permission from the court; \38\ and significantly narrows the
    definition of household goods exempt from repossession in
    bankruptcy.\39\
    ---------------------------------------------------------------------------
        \36\ March 11, 1999 Hearing (written statement of Professor
    Elizabeth Warren).
        \37\ H.R. 333, Sec. 312.
        \38\ H.R. 333, Sec. 311.
        \39\ H.R. 333, Sec. 313.
    ---------------------------------------------------------------------------
    B. Principal Problems with Proposed Changes
                1. H.R. 333's Means Testing is Arbitrary and Unworkable in
                        Practice
        It is important to recall that the National Bankruptcy
    Review Commission's majority specifically rejected the so-
    called ``means testing'' approach,\40\ observing:
    ---------------------------------------------------------------------------
        \40\ Only two members of the National Bankruptcy Review Commission
    signed onto a dissenting statement supporting the consideration of
    various means testing options. National Bankruptcy Review Commission,
    Final Report: Bankruptcy--The Next Twenty Years (Oct. 20, 1997)
    (Chapter 5, Additional Dissent to Recommendations for Reform of
    Consumer Bankruptcy Law Submitted by the Honorable Edith H. Jones and
    Commissioner James I. Shepard).

            The credit industry has sought means testing
            consistently for at least 30 years, but Congress has
            consistently refused to change the basic structure of
            the consumer bankruptcy laws. . . . Access to chapter 7
            and to chapter 13, the central feature of the consumer
            bankruptcy system for nearly 60 years, should be
            preserved.\41\
    ---------------------------------------------------------------------------
        \41\ Bankruptcy: The Next Twenty Years, National Bankruptcy Review
    Commission Final Report 90-91 (Oct. 20, 1997).

        The 1973 Commission on Bankruptcy Laws similarly considered
    and rejected industry calls for mandatory chapter 13's, noting
    that Congress had itself rejected similar proposals in 1967,
    ---------------------------------------------------------------------------
    and observed:

            [B]usiness debtors are not subject to any limitation on
            the availability of straight bankruptcy relief,
            including discharge from debts, and it was pointed out
            that, quite apart from bankruptcy, business debtors are
            able to incorporate and to limit their liability to
            their investments in corporate assets. To force
            unwilling wage earners to devote their future earnings
            to payment of past debts smacked to some of debt
            peonage, particularly when business debtors could not
            be subjected to the same kind of regimen under the
            Bankruptcy Act. . . . The Commission concluded that
            forced participation by a debtor in a plan requiring
            contributions out of future income has so little
            prospect for success that it should not be adopted as a
            feature of the bankruptcy system.\42\
    ---------------------------------------------------------------------------
        \42\ Report of the Commission on Bankruptcy Laws, H.R. Doc. No.
    137, Part I, 93rd Congress, 158-59 (1973) (citation omitted).

        The principal problem with the means test is that the rigid
    one-size-fits-all test used in determining eligibility for
    chapter 7 and the operation of chapter 13 will often operate in
    an arbitrary fashion. Many of these flaws were highlighted last
    Congress by Chairman Hyde when he unsuccessfully sought to
    delete the use of the rigid IRS standards and instead
    substitute a more fact specific test based on the court's
    assessment of the facts and circumstances. First, the bill
    relies upon IRS collection standards, which lay out no
    comprehensive or specific standards for the deduction of living
    expenses. Part of the problem arises from the fact that the IRS
    standards referenced by the bill are not automatic in many
    cases. Although the IRS does set forth national standards for
    some expenses, such as food and clothing,\43\ and local
    standards for expenses such as housing and transportation,\44\
    it leaves the determination of ``other necessary expenses'' to
    the discretion of the relevant IRS employee.\45\ This means
    that the bill fails to provide specific guidance concerning the
    appropriateness of deducting part or all of the funds a debtor
    may expend for items such as health care (both medical expenses
    and health insurance), taxes, and accounting and legal fees,
    among other items. As a result, the means test could have the
    effect of requiring the payment of unsecured debt before
    allowing for payment of certain necessities such as health
    care.
    ---------------------------------------------------------------------------
        \43\ IRS Manual Sec. 5323.432.
        \44\ IRS Manual Sec. 5323.433.
        \45\ IRS Manual Sec. 5323.12.
    ---------------------------------------------------------------------------
        Even more importantly the bill allows the court no
    discretion to take into account the circumstances which led to
    the filing in determine whether abuse should be presumed and
    the debtor forced into a chapter 13 repayment plan. Thus an
    individual facing financial problems because he or she lost her
    job or suffered the death of a spouse is treated in the same
    manner as someone who has deliberately incurred excessive
    debts. Even a person who has incurred large debts because of an
    unexpected health care emergency will be forced into chapter 13
    without any court discretion if he or she has income above the
    applicable State median.
        Moreover, where the IRS has specific local expense
    standards, those standards do not always provide adequately for
    normal expenses. For example, the permitted automobile expense
    in the San Francisco Bay area for two cars is only $373 per
    month, even though most families could barely cover the cost of
    automobile insurance, let alone car payments, gasoline, tolls,
    and insurance under this amount.\46\ Ironically, Congress
    itself has recognized the inadequacy of such collection
    standards. The Internal Revenue Service Restructuring and
    Reform Act of 1998 directs the IRS to ``determine, on the basis
    of the facts and circumstances of each taxpayer, whether the
    use of the schedules . . . is appropriate'' and to ensure that
    they not be used ``to result in the taxpayer not having
    adequate means to provide for basic living expenses.'' \47\
    ---------------------------------------------------------------------------
        \46\ Hearing on H.R. 3150, the ``Bankruptcy Reform Act of 1998,''
    Before the House Subcomm. on Commercial and Admin. Law, 105th Cong., 2d
    Sess. (Mar. 10, 1998) (written statement of the Honorable Randall J.
    Newsome, U.S. Bankruptcy Judge, Northern District of California).
        \47\ Internal Revenue Service Restructuring and Reform Act of 1998,
    Pub. L. No. 105-206, Sec. 3462 (1998).
    ---------------------------------------------------------------------------
        The seemingly arbitrary allowances for such expenses points
    to another problem with the means test under H.R. 333--its bias
    against debtors without secured debts. This is because the bill
    allows all secured debt payments to be deducted from monthly
    income, but limits rental and lease payments to the amount
    permitted by the IRS standards. This means that persons renting
    apartments and leasing cars may not be able to deduct the full
    amount of their housing and transportation costs in bankruptcy,
    while persons with mortgages and automobile debt will be able
    to do so.\48\ There is no legitimate policy rationale for this
    discrepancy, which appears to punish personally-responsible
    individuals who tightened their belts and tried to live
    modestly within their means and nonetheless had to resort to
    bankruptcy.
    ---------------------------------------------------------------------------
        \48\ Higher income debtors can also easily plan around the means
    test by, for example, purchasing a new expensive car shortly before
    bankruptcy, or deferring tax and child support payments, thereby
    increasing priority claims.
    ---------------------------------------------------------------------------
        Also, it is important to note that the IRS collection
    standards can change the manner in which the bankruptcy laws
    are applied. The collection standards serve as internal
    guidelines for the IRS; they are not regulations that are
    subject to the Administrative Procedures Act. As such, the IRS
    does not need to provide notice and comment when introducing
    new standards or when changing the existing ones. If the
    bankruptcy law was amended to incorporate the collection
    standards, as H.R. 333 proposes, and IRS were to change the
    collection standards in the future, the alteration in the
    standards would completely change how the Bankruptcy Code is
    applied. In effect, H.R. 333 would delegate authority to the
    IRS to change the Bankruptcy Code.
        It is no answer to assert, as the legislation's proponents
    have done, that the ``glitches'' in the collection standards
    can be resolved through the bill's allowance that ``the
    presumption of abuse may only be rebutted by demonstrating
    special circumstances that justify additional expenses or
    adjustments of current monthly income for which there is no
    reasonable alternative.'' \49\ This is a new standard with no
    clear definition. It is unclear how the courts will apply it.
    Establishing ``special circumstances'' will not be simple or
    cost or risk-free. Special circumstances may be established
    only upon a debtor's motion to the court.\50\ It is the
    debtor's burden to show special circumstances. The debtor must
    present detailed documentation for expenses for adjustments to
    income and a detailed explanation of the special circumstances
    which make such expenses or adjustment to income the only
    reasonable alternative for the debtor. These requirements make
    it very difficult for debtors to claim special circumstances,
    since many expenses are paid in cash and cannot be documented.
    This risk provides a tremendous disincentive for debtors to
    claim special circumstances, let alone incur the legal costs
    the debtor himself is required to pay to bring the motion.
    ---------------------------------------------------------------------------
        \49\ H.R. 333, Sec. 102, (proposed new 11 U.S.C.
    Sec. 707(b)(2)(B)(i)).
        \50\ H.R. 333, Sec. 102 (proposed amendment to 11 U.S.C.
    Sec. 707(b)(2)(B)).
    ---------------------------------------------------------------------------
        There are also several serious interpretive problems caused
    by the drafting of the means test, which combines debt payment
    amounts with IRS allowances. For example, it is not clear
    whether a debtor who has two payments remaining on a secured
    car loan is allowed the IRS car ownership allowance for the
    remaining 58 months. If not, the debtor may have no funds to
    replace a car that is already seven or 8 years old at the
    outset of the 5 year period and is essential for a long commute
    to work. Also, the IRS home ownership allowance includes
    mortgage and utility payments. If a debtor's mortgage payment
    exceeds the IRS allowance, it is not clear whether any amount
    is allowed for utility payments.
        Finally, the current chapter 13 completion rate is less
    than one-third \51\ for voluntary plans which are voluntary and
    with disposable income tests that are less rigid than that
    proposed in this bill. By making chapter 13 the only avenue for
    bankruptcy relief for some individuals and imposing the bill's
    strict income and expense tests, the bill will undoubtedly
    result in an even smaller proportion of successful chapter 13
    plans.
    ---------------------------------------------------------------------------
        \51\ National Bankruptcy Review Commission, Final Report:
    Bankruptcy--The Next Twenty Years 90-91 (Oct. 20, 1997).
    ---------------------------------------------------------------------------
                2. Means Testing Will be Costly and Bureaucratic
        The bill's attempt to impose rigid financial criteria on
    debtors' eligibility for chapter 7 and the operation of chapter
    13 will impose substantial new costs on the bankruptcy system--
    both the portions paid for by private parties (through payment
    for private chapter 7 and chapter 13 trustees and higher
    attorneys' fees) and the Federal Government (through the
    bankruptcy courts and the U.S. Trustees Program). These costs
    may well exceed the presumed savings under the bill.
        The Congressional Budget Office's evaluation of last
    Congress' version of this legislation indicated that over the
    next 5 years the legislation could cost the private sector over
    $3 billion. The lion's share of the costs would be imposed on
    private trustees who administer bankruptcy estates, providers
    of debt relief counseling services, and attorneys. Much of this
    is attributable to the complexity and paperwork burdens
    associated with the means test.
        In addition, the CBO estimated that the bill's cost to the
    Federal Government would be $333 million over the next 5 years.
    Again, part of this cost estimate derives from implementing the
    complex and paperwork heavy means testing program. Henry E.
    Hildebrand, Chair of the Legislative Committee of the National
    Association of Chapter Thirteen Trustees, highlighted these
    costs when he estimated that:

            Assuming that one out of nine cases filing for chapter
            7 relief would be contested and further assuming that
            the contest would require about 2 hours of pretrial
            preparation and 1 hour of court time, the litigation
            would require 276,000 additional hours, about 90,000 of
            which would occupy the court.\52\
    ---------------------------------------------------------------------------
        \52\ Henry E. Hildebrand, The Hidden Costs of Bankruptcy Reform 2
    (1998)(unpublished manuscript on file with the Committee on the
    Judiciary, minority staff).

        A related concern is the many, many new opportunities for
    litigation and confusion created by the bill. Judge Randall
    Newsome testified on behalf of the National Conference of
    Bankruptcy Judges that at least 16 potential sources of
    litigation are contained in the means testing provisions alone,
    and that another 42 litigation points have been identified in
    the other consumer provisions, noting that ``[t]his is probably
    only the tip of the iceberg.'' \53\
    ---------------------------------------------------------------------------
        \53\ March 17, 1999 Hearing (written statement of the Honorable
    Randall J. Newsome, President, National Conference of Bankruptcy Judges
    at 1).
    ---------------------------------------------------------------------------
        Another source of higher costs for the government is the
    requirement that one in every 250 cases in each Federal
    district be randomly audited by independent certified public
    accountants or independent licensed public accountants, at
    taxpayer expense under generally-accepted auditing
    standards.\54\ CBO estimated it will cost the Federal
    Government $58 million over 5 years to effectuate this
    requirement. It is unclear whether such costs will yield any
    comparable benefits. For example, the Honorable William Houston
    Brown, a U.S. Bankruptcy Judge in the Western District of
    Tennessee, testified on behalf of the ABI that the audits
    required ``are likely to be very expensive, and such formal
    audits are likely unnecessary to determine significant
    misstatements in debtors' petitions and schedules.'' \55\
    ---------------------------------------------------------------------------
        \54\ H.R. 333, Sec. 602.
        \55\ March 17, 1999 Hearing (testimony of the Honorable William
    Houston Brown).
    ---------------------------------------------------------------------------
                3. Means Testing and the Other Consumer Provisions Will
                        Harm Low- and Middle-Income People
        a. Concerns Regarding the Means Test It is incorrect to
    assume that the effect of H.R. 333's harmful provisions would
    be limited to individuals seeking bankruptcy relief who earn
    more than the regional median income. First, there are
    numerous, significant flaws in the manner in which State median
    income is calculated. For a variety of reasons the median
    income figure required under H.R. 333 will be outdated and
    understated. The first problem is that the bill states that
    household income is to be based on the most recent Census
    Bureau figures available as of January 1. But as of January 1,
    the Census has information available for only the second year
    prior to the date. Accordingly, during this year, 2001, census
    figures are available for only 1999, not 2000. At times of
    inflation, this 2-year lag could result in a significant
    increase in the number of individuals who are the subject of
    motions to dismiss or convert and who may earn more than the
    outdated median income figure being used. In addition, the
    starting point for the calculation of median income may be
    overstated.
        An even more serious problem derives from the fact that the
    State median income information is currently only published by
    the census bureau once per decade, meaning the median income
    information could be as much as 10 years out of date. This is
    why Representative Meehan offered an amendment to allow for
    upward adjustment of the Census figures to reflect changes in
    the Consumer Price Index. Despite agreement by members of the
    majority with the amendment in principle, Representative Gekas
    opposed the measure, contending that the Census Bureau's
    ability to adjust the figure upward was sufficient to address
    the concern, and the amendment was defeated on a party-line
    vote.
        In addition, Representatives Waters and Watt offered
    amendments designed to relieve individuals in poverty from
    having to demonstrate their median income falls well below the
    threshold in the means test and allowing such individuals to
    avoid the associated paperwork requirements. To ensure that
    this provision would not be abused, Representative Watt
    modified Ms. Waters original amendment to require the debtor to
    declare under penalty of perjury that the debtor's income fell
    below the poverty line for the year preceding the filing. This
    amendment was again defeated on a mostly party line vote, with
    only Rep. Scarborough voting for the amendment--the only
    Republican vote cast during the entire markup for a Democratic
    amendment.
        Another flaw in the median income formula is that the test
    measures a debtor's income based upon how much the debtor
    earned in the 6 months prior to bankruptcy. If the debtor lost
    a good job in month three and has been working at a low-wage
    job ever since, the income from that good job, and help from
    family members, would be counted as if that is what his future
    income would be. The debtor would be expected to pay out of
    income that may no longer exist. Also, the means test will
    pickup a variety of revenue sources--such as disaster
    assistance, and Veterans' benefits--which will result in lower-
    and middle-income individuals being cast as bankruptcy
    ``abusers'' with income above the median. Also, due to an
    apparent drafting error, under the definition of ``projected
    income'' used in chapter 13, a debtor is required to use his or
    her previous 6 months income in determining the amount of
    payments he or she can make, regardless of whether or not that
    income stream is still available, even if the debtor's income
    is below the applicable median income.
        In addition, due to the fact that H.R. 333, unlike current
    law, will permit creditors and other parties-in-interest to
    bring motions to dismiss or convert, more aggressive and well-
    funded creditors will have extremely wide latitude to use such
    motions as a tool for making bankruptcy an expensive,
    protracted, and contentious process for honest debtors, their
    families, and other creditors. Creditors could use such motions
    as leverage to obtain reaffirmation agreements so that their
    unsecured debts survive bankruptcy.\56\ These threats will not
    be limited to individuals with income above the median.
    ---------------------------------------------------------------------------
        \56\ It is also important to note that the sanctions against
    creditors who file abusive motions against debtors under Sec. 707(b)
    are weak. The court may grant attorney's fees and costs only under a
    rule 9011 standard or if the motion was brought solely to coerce a
    debtor to waive bankruptcy rights, an almost impossible standard to
    meet. (If the motion was brought both for illegally coercive purposes
    and other purposes, fees would not be awarded.) Moreover, in motions
    brought by small businesses with small claims, no fees are awarded even
    if rule 9011 is violated. H.R. 333, Sec. 102 (proposed amendments to 11
    U.S.C. Sec. 707(b)(2)(B)).
    ---------------------------------------------------------------------------
        Collectively, provisions forcing large number of
    individuals from chapter 7 into forced repayment plans under
    chapter 13 will have the effect of relegating large numbers of
    otherwise middle-income families into poverty level
    subsistence. This is because they will have no way of avoiding
    their crushing debt load, whether it was derived from a medical
    emergency or irresponsible credit card borrowing aggravated by
    high interest and penalty rates. Such individuals will actually
    be much worse off than other impoverished families because
    their nominal income is higher than the median income level and
    they cannot qualify for programs such as the earned income tax
    credit, school lunch programs, food stamps, or other
    subsistence provided to families with income below the poverty
    level.\57\
    ---------------------------------------------------------------------------
        \57\ A recent study, by the University of Maryland Department of
    Economics, illuminates the phenomenon of ``informal bankruptcy'',
    whereby debtors, especially those who are difficult to find or those
    with few attachable assets, may choose simply to stop making payments
    altogether and enter the underground economy. Amanda E. Dawsey and
    Lawrence M. Ausubel, Informal Bankruptcy, U. MD. Dept. Econ., Jan.
    2001, at 2. This then puts the burden on the creditors to collect.
    While informal bankruptcy lacks the legal protections afforded by
    (formal) bankruptcy, the incentives of informal bankruptcy cannot be
    underestimated, not the least of which is the lack of any
    administrative or legal costs initially. Importantly, little
    consideration has been given to informal bankruptcy with respect to
    legislation, yet in 1996 some 65.2 % of credit card loans were charged
    off for reasons other than bankruptcy. 1997 Annual Bankruptcy Survey,
    Visa U.S.A. Inc., September 1998.
    ---------------------------------------------------------------------------
        b. Other Concerns As noted above, the bill grants
    nondischargeable status to a wider range of cash advances and
    debts incurred for so-called luxury goods and debts incurred to
    pay nondischargeable tax debts. These new exceptions from
    discharge obviate many of the benefits that debtors may realize
    from filing for bankruptcy under chapter 7 or 13 and increase
    the opportunity for creditor abuse. In a communication to the
    Congress, the Clinton administration wrote that it is
    ``generally inappropriate to make post-bankruptcy credit card
    debt a new category of nondischargeable debt. . . . We remain
    skeptical that the current protections against fraud and debt
    run-up prior to bankruptcy are ineffective and that the
    additional debts made nondischargeable by [the legislation]
    meet the standard of an overriding public purpose.'' \58\
    ---------------------------------------------------------------------------
        \58\ Letter from Jacob J. Lew, Director, Office of Management and
    Budget, to the Honorable Jerrold Nadler, Ranking Member, House Subcomm.
    on Commercial and Admin. Law 2 (Mar. 23, 1999).
    ---------------------------------------------------------------------------
        Consumer bankruptcy expert Henry Sommer also has explained
    that such provisions:

            increase the opportunity for creditors to file the
            types of abusive fraud complaints which have been found
            by many courts to be baseless and unjustified attempts
            to coerce reaffirmations by debtors who cannot afford
            to defend them. The new presumptions of
            nondischargeability will fall mainly on low income
            debtors who are unsophisticated, do not have the time,
            budget flexibility, or attorney advice to plan their
            bankruptcy cases carefully, have to file on short
            notice to prevent utility shutoffs or other impending
            creditor actions and will not have the funds to defend
            dischargeability complaints.'' \59\
    ---------------------------------------------------------------------------
        \59\ Hearing on Consumer Bankruptcy Issues in H.R. 3150, the
    ``Bankruptcy Reform Act of 1999,'' Before the House Subcomm. on
    Commercial and Admin. Law, 105th Cong., 2d Sess. (Mar. 10, 1998)
    (written statement of Henry J. Sommer).

        The new ban on loan bifurcations for car loans less than 5
    years old will further obviate the possibility of obtaining a
    fresh start through bankruptcy. Many creditors with security
    interests in household goods on credit extended in the year
    before bankruptcy will similarly be able to threaten
    repossession if they are not paid in full. Since an automobile
    depreciates rapidly when it leaves the showroom, it typically
    declines below its value and secured debt by several thousand
    dollars the day after it is bought. In essence, a lender with a
    secured loan which is underwater would be unjustly enriched by
    being able to treat the unsecured portion of that loan as fully
    secured to the detriment of other unsecured creditors. Such a
    prohibition on automobile bifurcation is likely to render many
    chapter 13 plans unfeasible because a debtor may be able to
    repay the entire secured value, but not the entire purchase
    price of the car along with penalties. The provision also
    permits the lender to come out of the bankruptcy in a superior
    position than if it had foreclosed on the loan, the usual rule
    that applies in bankruptcy cases.
        Several other consumer provisions also will exact
    significant hardships on all debtors, regardless of income
    level or degree of culpability. For example, by allowing
    landlords to continue eviction or unlawful detainer actions,
    and exempting them from the automatic stay regardless of the
    circumstances, the bill will force many battered women and
    families with children and seniors out on to the streets,
    without ever having an opportunity to use bankruptcy to catch
    up on their rent.\60\
    ---------------------------------------------------------------------------
        \60\ Because the bill's automatic stay provision could lead to the
    eviction of low-income individuals who are in bankruptcy,
    Representative Waters offered an amendment that would exempt senior
    citizens or single parents with minor children, either of whose incomes
    fall below the applicable median, and battered spouses, whose physical
    well-being would be threatened if relief from the stay is granted.
    Representative Gekas opposed the amendment, stating that ``her language
    vitiates, removes, erases what we have put in as combatants to the
    automatic stay in the previous portion of the statute.'' On the
    contrary, the amendment did not operate to exempt anyone other than the
    named individuals from the exclusion, and Representative Waters offered
    to clarify her amendment to clarify the point. Nonetheless, the
    amendment was defeated on a party-line vote. Representative Scott had
    intended to offer an amendment to eliminate the automatic stay
    provision entirely, but he was prevented from offering his amendment
    due to the Majority's abrupt termination of the markup.
    ---------------------------------------------------------------------------
        To cite but a few additional examples of new restrictions
    the bill imposes on consumers, section 106 makes pre-bankruptcy
    credit counseling mandatory regardless of the causes; section
    302 imposes new limits on repeat filing; section 304 prohibits
    ``ride through'' of secured claims; section 305 authorizes new
    automatic stay relief for secured creditors or lessors of
    personal property; section 309 allocates all payments made to
    under secured creditors in chapter 13 cases first to the
    unsecured portion of the debt and makes other pro-creditor
    changes; section 312 extends the period between bankruptcy
    filings from six to 8 years; section 313 sets forth a new
    narrower definition of exempt household goods; sections 315 and
    316 impose new notice and tax return filing obligations along
    with mandatory dismissal requirements; section 327 values
    secured claims at higher amounts than current law; section 1230
    denies discharge or plan confirmation for failing to file tax
    returns; and section 1232 includes special protections for pawn
    brokers.
                4. The Consumer Provisions Will Have a Significant, Adverse
                        Impact on Women, Children, Minorities, and Seniors,
                        as well as Victims of Crimes and Severe Torts
        a. Women and Children H.R. 333 will have an adverse impact
    upon single mothers and their children, both as debtors and as
    creditors. On the debtor side, the means test will make it far
    more difficult for women to access the bankruptcy system. For
    example, women whose average income was at the median during
    the last 180 days, before the support checks stopped, may be
    denied access to chapter 7 and forced into restrictive chapter
    13 repayment plans. In addition, the bill will also make it
    more difficult for women to hold onto the car they need to get
    to work if it was purchased or used as collateral in the last 5
    years if a creditor claims a security interest in such items.
    The new nondischargeability categories also are problematic--
    even if a single mother filing for bankruptcy believes they do
    not apply, it will be more difficult for her to litigate a
    credit card company's claim of nondischargeability.
        On the creditor side, the bill will have a particularly
    adverse impact on the payment of domestic support to women and
    children. The basic problem arises from the fact that
    bankruptcy and insolvency are by definition a zero-sum game.
    There is only so much money available to be divided among the
    creditors. Since H.R. 333 provides new advantages to large
    corporate creditors such as credit card companies, it will work
    to the ultimate disadvantage of single parents with children as
    they come into contact with the bankruptcy system as creditors
    seeking alimony and child support payments. These problems are
    by no means insignificant given that an estimated 243,000-
    325,000 bankruptcy cases involved child support and alimony
    orders during the most recent years.\61\
    ---------------------------------------------------------------------------
        \61\ Teresa Sullivan et al., Consumer Debtors Ten Years Later: A
    Financial Comparison of Consumer Bankrupts 1981-91, 68 AM. BANKRUPTCY
    L.J. 121 (1994).
    ---------------------------------------------------------------------------
        Under current law, alimony and child support are treated as
    priority debt and are not subject to discharge.\62\ This
    preferential treatment dates from as early as 1903 and is based
    on Congress' determination that the payment of these debts is
    so important to society that it should come ahead of most
    general creditors. Although H.R. 333 does not revoke this
    special treatment, viewed as a whole, the legislation will have
    the effect of diminishing the likelihood of full payment of
    alimony and child support. This arises as a result of several
    features of the bill: its creation of significant new
    categories of nondischargeable debt, provision of additional
    leverage for creditors to obtain reaffirmation of debts, the
    extension of the length and onerousness of chapter 13 plans,
    and the bill's general limitations on the availability of
    chapter 7 relief.
    ---------------------------------------------------------------------------
        \62\ 11 U.S.C. Sec. Sec. 507(a)(7) & 523(a)(5).
    ---------------------------------------------------------------------------
        Collectively considered, these changes will help foster an
    environment where unsecured and credit card debt is far more
    likely to compete against alimony and child support obligations
    in the State law collection process post-discharge, where
    bankruptcy priorities have no effect.\63\ As a Congressional
    Research Service Memorandum analyzing predecessor legislation
    concluded under [a predecessor] bill ``child support and credit
    card obligations could be `pitted against' one another. . . .
    Both the domestic creditor and the commercial credit card
    creditor could pursue the debtor and attempt to collect from
    post-petition assets, but not in the bankruptcy court.'' \64\
    ---------------------------------------------------------------------------
        \63\ As the President of the American Academy of Matrimonial
    Lawyers observed, ``[i]f a Chapter 7 case the nondischargeability of
    the credit card debt will mean that the debtor does not truly have a
    `fresh start' and will be unable to pay all his remaining obligations;
    most specifically, support obligations and potentially a property
    settlement payment. In a Chapter 13 case the credit card debts are
    treated equally with support obligations when devising a payment plan,
    thus the support obligation receives a pro-rate payment only while
    under existing law they have a priority.'' Letter from Charles C.
    Schoenberg to Rep. Gerald Nadler (Feb. 7, 2001).
        \64\ Congressional Research Service, Impact of Consumer Bankruptcy
    Reform Proposals on Child Support Obligations (May 13, 1998).
    ---------------------------------------------------------------------------
        Of course, outside of the bankruptcy court is precisely the
    arena where sophisticated credit card companies have the
    greatest advantages. While Federal bankruptcy court provides a
    strict set of priority and payment rules and generally seeks to
    provide equal treatment of creditors with similar legal rights,
    State law collection is far more akin to ``survival of the
    fittest.'' Whichever creditor engages in the most aggressive
    tactic--be it through repeated collection demands and letters,
    cutting off access to future credit, garnishment wages or
    foreclose on assets--is most likely to be repaid.
        It is for these reasons that groups concerned about the
    payment of alimony and child support have expressed their
    strong opposition to the bill and its predecessors. Professor
    Karen Gross of New York Law School stated succinctly that ``the
    proposed legislation does not live up to its billing; it fails
    to protect women and children adequately.'' \65\ Joan
    Entmacher, on behalf of the National Women's Law Center,
    testified that ``the child support provisions of the bill fail
    to ensure that the increased rights the bill would give to
    commercial creditors do not come at the expense of families
    owed support.'' \66\ Marshall J. Wolf, , the past Chair of the
    Family Law Section of the American Bar Association recently
    wrote, ``[t]he means testing, credit card nondischargeability,
    reaffirmation provisions, and limits on dischargeability
    features of . . . H.R. 333 will attack these women and children
    by placing disposable funds available to them at further risk.
    The credit card industry, whose debt may be protected from
    discharge by . . . H.R. 333, will not hesitate to attach the
    bank account of a woman whose monetary lifeblood, her child
    support check, is deposited into such an account!'' \67\
    ---------------------------------------------------------------------------
        \65\ March 18, 1999 Hearing (written statement of Karen Gross, New
    York Law School).
        \66\ Id. (written statement of Joan Entmacher, National Women's Law
    Center).
        \67\ Letter from Marshall J. Wolf to Sen. Edward Kennedy (Feb. 6,
    2001).
    ---------------------------------------------------------------------------
        Assertions by the legislation's supporters that any
    disadvantages to women and children under H.R. 333 are offset
    by supposedly pro-child support provisions are not persuasive.
    It is useful to recall the context in which these provisions
    were added. First, in the 105th Congress, the bill's proponents
    adamantly denied that the bill created any problems with regard
    to alimony and child support.\68\ Although the proponents have
    now changed course, the child support and alimony provisions
    included do not respond to the provisions in the bill causing
    the problem--namely the provisions limiting the ability of
    struggling, single mothers to file for bankruptcy; enhancing
    the bankruptcy and post-bankruptcy status of credit card debt;
    and making it more difficult for debtors to eliminate debts and
    focus on domestic support obligations. In some instances, the
    new sections are even counterproductive in furthering the goal
    of payment of support obligations to ex-spouses and children.
    ---------------------------------------------------------------------------
        \68\ Letter from Representative George W. Gekas, et al., to Members
    of Congress (Apr. 29, 1998).
    ---------------------------------------------------------------------------
        For example, section 211 provides a definition of
    ``domestic support obligation'' that includes funds owed to
    government units. If the government is acting as the debt
    collector for a woman or child, this is appropriate; the
    benefits of this inure to women and children directly. However,
    if the government is collecting for its own benefit (say, for
    example, the woman recipient is on welfare and the government
    is collecting arrearages to reimburse State or Federal
    expenditures), then the result may be to put the government
    collection agency in direct competition with single mothers and
    children, particularly in chapter 13.
        Section 212 purportedly increases to first priority from
    seventh priority obligations for domestic support, including
    debts owed to the government. It is misleading to suggest that
    moving up to ``first priority'' to ``seventh priority'' makes a
    significant difference: the debts that have second through
    sixth priorities almost never appear in consumer cases.\69\
    However, knocking out the first priority for administrative
    expenses incurred by the trustee could have the unintended
    effect of thwarting the original purpose of the provision.
    Putting support claims ahead of administrative expenses in
    priority may prevent trustees from liquidating assets because
    trustees need to use estate funds to liquidate property. If the
    trustee is not assured that the estate can cover the expenses
    of liquidating property, the trustee may have to abandon the
    property back to the debtor, resulting in the domestic support
    obligations receiving no distribution--the opposite of bill's
    intent.\70\
    ---------------------------------------------------------------------------
        \69\ Those priorities--which would likely apply in less than 1% of
    all cases--deal with debts of grain storage facility operators, debts
    of fishermen, employee wage claims, retail layaway claims, and the
    like. 11 U.S.C. Sec. 507(a).
        \70\ Rep. Waters had planned to offer an amendment on this issue,
    but was prevented because the Majority unilaterally cut off debate.
    ---------------------------------------------------------------------------
        Section 213, which requires that chapter 13 plans provide
    for child support owed to the State as well as to families
    before the debtor receives any bankruptcy discharge, may reduce
    the likelihood that a feasible plan can be confirmed. When
    combined with the other increased payments that must be made to
    secured creditors under Chapter 13, the requirement that State
    arrears as well as family arrears must be paid in full if the
    plan does not extend to 5 years would make it more difficult
    for a debtor to get a Chapter 13 plan confirmed and
    successfully completed, and could, therefore, adversely affect
    the family.
        Section 214 creates additional exceptions to the automatic
    stay that, like other provisions in the bill, have the
    potential of placing women and children at a disadvantage.
    First, these provisions apply only to income withholding orders
    issued by government agencies under the Social Security Act,
    even though an estimated 40-50% of all child support cases, and
    all alimony-only cases, are enforced privately, not by
    government child support agencies. Second, income withholding
    is helpful only if such orders are placed against debtors with
    regular income. Yet, in 1997, more than four out of ten cases
    in State child support systems across the country lacked a
    support order.\71\
    ---------------------------------------------------------------------------
        \71\ March 18, 1999 Hearing (written statement of Joan Entmacher,
    National Women's Law Center) (citing U.S. Dept. of Health and Human
    Servs., Office of Child Support Enforcement, Preliminary Data Report:
    Child Support Enforcement FY 1997 (Aug. 1998).
    ---------------------------------------------------------------------------
        Section 215, which makes all property settlement
    obligations nondischargeable, also could have unintended
    consequences in practice. For example, under this provision, a
    financially-troubled ex-spouse who is owed alimony and child
    support could be forced to compete with another ex-spouse who
    is not in need of support but had a settlement agreement
    dealing with business debts. Alternatively, a financially-needy
    ex-spouse who files for bankruptcy may be left with
    nondischargeable debt owed to her wealthier ex-spouse because
    of a property settlement. Again, the result is the needy spouse
    and child could be placed at a disadvantage by these changes.
        Section 216, which allows domestic support creditors to
    levy otherwise exempt homesteads and other exempt property,
    also does not go far enough. Like the other provisions, it is
    effective only if a single mother goes to the time and expense
    of hiring an attorney to enforce her new rights. It also grants
    State and local governments the right to pursue claims in
    possible competition with the single mother.
        Finally, section 217's insulation of payments to the
    government from preference actions also may hurt an ex-spouse
    and child of the debtor. This is because those funds, which
    were preferentially paid to the government, otherwise may have
    been available for ongoing support payments.
        Representatives Conyers and Waters sought to mitigate these
    concerns when they offered an amendment to section 310 to
    ensure that this new dischargeability for luxury goods and ATM
    cash advances would not apply if these new limitations on
    discharge would impair the debtor's ability to pay domestic
    support obligations. In opposing the amendment, Representative
    Gekas incorrectly asserted that the amendment does not
    ``enhance the situation we've already cured.'' On the contrary,
    section 310 would place the single mother seeking money for
    food into direct competition with credit card debt. The
    amendment was defeated on a party-line vote.
        The legislation also totally ignores another very serious
    problem facing women as a result of the Bankruptcy Code--the
    fear that violent and reckless individuals will be able to bomb
    abortion clinics and eliminate their liability from that action
    through the bankruptcy process. Although the current bankruptcy
    laws prevent discharge for ``willful and malicious injuries,''
    \72\ it is unclear whether this standard applies to a clinic
    bombing where a particular victim was not targeted.\73\ It is
    also unclear whether the law applies to damages resulting for
    barricading clinic entrances. At the same time, notorious
    clinic bomber and ``Operation Rescue'' found Randall Terry has
    specifically filed for bankruptcy in order to void a $1.6
    million judgment he owed to the National Organization for Women
    and Planned Parenthood,\74\ and many of the notorious
    ``Nuremberg files'' defendants have filed for bankruptcy.
    ---------------------------------------------------------------------------
        \72\ 11 U.S.C. Sec. 523(a)(6).
        \73\ Kawaauchau v. Geiger, 523 U.S. 57 (1998) (holding that the
    actor must intend the consequences of the act, injury to someone or
    something, not just the act, itself).
        \74\ Operation Rescue Founder Files for Bankruptcy due to Lawsuits,
    Wash. Post, Nov. 8, 1998, at A29; An Anti-Abortion Leader Files for
    Bankruptcy, N.Y. Times, Nov. 8, 1998, at 45.
    ---------------------------------------------------------------------------
        No appellate court has considered the issue of
    dischargeability of these debts. However, victims who have
    achieved Federal court judgments for violations of the clinic
    access law have been compelled to chase convicted criminals who
    have deliberately and publicly used the bankruptcy laws to
    avoid payment. According to one representative of a abortion
    clinic violence, it took more than 3,000 hours of attorney time
    to pursue such a claim in bankruptcy court.\75\
    ---------------------------------------------------------------------------
        \75\ See statement of Maria T. Vullo, Feb. 8, 2001 Hearing on S.
    220, the Bankruptcy Reform Act of 2001 before Sen. Jud. Comm.
    ---------------------------------------------------------------------------
        We believe it is irresponsible to allow the Bankruptcy Code
    to be used to void debts of this nature committed by violent
    individuals in violation of Federal law. As the National
    Abortion and Reproductive Rights Actions League has written,
    ``[d]ebtors whose debts arise from their own clinic violence
    are not honest debtors and should not be able to escape the
    financial liabilities incurred by their illegal conduct.'' \76\
    Senator Hatch (R-UT) also noted in defending the confirmation
    of the Attorney General, that even a staunch anti-abortion
    advocate such as Senator Ashcroft supported the amendment,
    which passed the Senate by a vote of 80-17.
    ---------------------------------------------------------------------------
        \76\ Memorandum of NARAL 8 (Mar. 30, 1999).
    ---------------------------------------------------------------------------
        b. Minorities, Seniors, and Victims of Crimes and Severe
    Torts H.R. 333 will also have a disparate impact upon
    minorities and victims of crimes and torts. The Leadership
    Conference on Civil Rights has warned that, under the
    predecessor legislation, ``African American and Hispanic
    American families, suffering from discrimination in home
    mortgage lending and in housing purchases and facing inequality
    in hiring opportunities, wages, and health insurance coverage
    [will be less able to] turn to bankruptcy to stabilize their
    economic circumstances.'' \77\ We know this because the
    economic struggle for Hispanic American and African American
    homeowners is harder than for any other group. While 68% of
    whites own their own homes, only 44% of African Americans and
    Hispanic Americans own their homes. Both African American and
    Hispanic American families are likely to commit a larger
    fraction of their take-home pay for their mortgages, and their
    homes represent virtually all their family wealth. It is no
    surprise, then, that African American and Hispanic American
    homeowners are six hundred percent more likely to seek
    bankruptcy protection when a period of unemployment or
    uninsured medical loss puts them at risk for losing their
    homes.\78\ Experience has also shown that minorities are also
    particular targets of predatory lenders.
    ---------------------------------------------------------------------------
        \77\ Letter from LCCR to Members of Congress (Apr. 21, 1999).
        \78\ Id.
    ---------------------------------------------------------------------------
        Similar concerns have been raised on behalf of seniors, who
    could lose their retirement savings if forced into chapter 13
    plans. The National Council of Senior Citizens has warned that
    legislation of this nature:

            would have a harsh impact on a group of people who are
            often subject to job loss or catastrophic health costs;
            instead of ameliorating these problems, this bill will
            only exacerbate them. . . . Since 1992, more than a
            million people over the age of 50 have filed for
            bankruptcy; in 1997, an estimated 280,000 older
            Americans filed. For them it is particularly hard. If
            they are forced into prolonged repayment schedules,
            they may not be able to maintain or accumulate savings
            for retirement. As you know, approximately two third of
            voluntary, Chapter 13 workout plans fail, and we
            believe that retirement savings must be protected for
            that purpose.\79\
    ---------------------------------------------------------------------------
        \79\ Letter from Dan Schulder, Director Legislation, National
    Council of Senior Citizens, to the Honorable Jerrold Nadler, Ranking
    Member, House Subcomm. on Commercial and Admin. Law (June 9, 1998).

        With regard to the concerns of victims' groups, it is
    important to note that current law provides for the
    nondischargeability of debts for obligations arising out of
    willful or malicious injury, death or personal injury caused by
    the operation of a motor vehicle, or criminal restitution
    payments.\80\ However, making more credit card debt
    nondischargeable, encouraging more reaffirmations of general
    unsecured debt, and discouraging more financially-troubled
    individuals from seeking debt relief will place these
    individual creditors at a relative disadvantage. As the
    National Organization for Victim Assistance has written, ``more
    exempted creditors with rights to the same finite amount of
    resources means lower payments to all. Inevitably, for victim-
    creditors, that means either a smaller return on the
    restitution owed, or a longer period of repayment, or both.''
    \81\ The National Center for Victims of Crime has similarly
    observed, ``to equate contractual losses of a commercial
    creditor with . . . personal obligations [for victim claims as
    the legislation does] is to belittle their importance and to
    directly reduce the likelihood that crime victims will ever be
    financially restored, despite obtaining an order of restitution
    or a civil judgment.'' \82\ Mothers Against Drunk Driving
    (``MADD'') has also complained that if ``individuals [whose
    lives] have been shattered financially and emotionally by the
    death or serious injury of their family members . . . have to
    compete with credit card debt holders for the limited post-
    discharge income of debtors available [as the predecessor
    legislation requires], they may themselves end up in
    bankruptcy.'' \83\ MADD also noted that in contrast to crash
    victims, ``lending institutions have the ability to provide
    some degree of protection to themselves when they issue credit
    cards to individuals and they are in a better financial
    position to absorb losses, which to them is a cost of doing
    business.'' \84\
    ---------------------------------------------------------------------------
        \80\ 11 U.S.C. Sec. Sec. 523(a)(6), (9), (13).
        \81\ Letter from Marlene A. Young, Executive Director, NOVA, to the
    Honorable Henry J. Hyde, Chair, House Comm. on the Judiciary (Apr. 26,
    1999).
        \82\ Letter from David Beatty, Director of Public Policy, The
    National Center for Victims of Crime, to the Honorable Jerrold Nadler,
    Ranking Member, House Subcomm. on Commercial and Admin. Law (Apr. 28,
    1999).
        \83\ Letter from Karolyn V. Nunnallee, National President, MADD, to
    Members of Congress (Apr. 26, 1999).
        \84\ Id.
    ---------------------------------------------------------------------------
                5. The Bill Does not Address Abuses of the Bankruptcy
                        System by Creditors
        Perhaps the bill's most glaring omission is its failure to
    fully address the problem of abusive lending practices. At the
    same time the legislation responds to every conceivable debtor
    excess--whether real or imagined--it largely ignores the
    transgressions of the credit industry. The only significant
    ``reform'' with regard to lending industry disclosure is that
    requirement that credit card companies provide the consumer
    with an ``800'' number to call to ascertain payment information
    along with unrealistic examples of credit card debt paydowns
    (which may not reflect the actual situation of the debtor and
    thus prove misleading), and as a series of boilerplate warnings
    regarding real estate loans and teaser rates.\85\
    ---------------------------------------------------------------------------
        \85\ H.R. 333, Title XIII.
    ---------------------------------------------------------------------------
        As noted at the outset, the overwhelming weight of
    authority establishes that it is the massive increase in
    consumer debt, not any change in bankruptcy laws, which has
    brought about the increases in consumer filings. Indeed, there
    is an almost perfect correlation between the increasing amount
    of consumer debt and the number of consumer bankruptcy filings.
    For example, between 1993 and 1998, bank credit card loans in
    the United States more than doubled from $223 billion to nearly
    $500 billion, and personal bankruptcy filings increased
    accordingly.\86\ The same basic correlation holds from 1946
    through 1998, as the below chart indicates:
    ---------------------------------------------------------------------------
        \86\ March 16, 1999 Hearing (written statement of Joe Lee, Charts
    5-6). In 1993, banks issued credit card loans in the amount of $223
    billion; in the same year, there were approximately 900,000 consumer
    bankruptcy filings. Id. (citing the FDIC and the Administrative Office
    of the U.S. Courts). In 1998, banks issued $455 billion in credit card
    loans; that year, there were 1.4 million consumer bankruptcy filings.
    Id.

        Review of this data indicates that the primary factor that
    led to the increase in bankruptcy filings after 1978 was not
    the enactment of the revised bankruptcy laws, but the
    deregulation of credit. The deregulation resulted from the
    Supreme Court decision in Marquette National Bank of
    Minneapolis v. First Omaha Service Corp.,\87\ which held that
    out-of-state banks were not subject to the usury laws of the
    State where the consumer was located. This decision led credit
    card concerns to relocate to States with lax usury laws that
    gave banks the ability to charge exorbitant interest rates in
    all 50 States. Subsequently, other legal changes permitted a
    broad range of new entities to get into the ever-growing, and
    lucrative, credit card business.\88\ Among other things, we
    know that it was this unprecedented increase in high-cost
    credit, not the changed bankruptcy laws, that led to the change
    by virtue of Canada's experience. In Canada, bankruptcy filings
    began to explode in the late 1960's, simultaneous with the
    entry of VISA and MasterCard into that nation and the growth in
    credit card lending. There was no change in Canada's laws that
    could account for the increase.
    ---------------------------------------------------------------------------
        \87\ 439 U.S. 299 (1978).
        \88\ See March 16, 1999 Hearing (written statement of Joe Lee at 1-
    3).
    ---------------------------------------------------------------------------
        This deregulation of credit and the accompanying explosion
    in credit availability--the number of credit card solicitations
    in 1998 reached 3.5 billion, an increase of 15 percent from the
    prior year \89\--and consumer debt, have been accompanied by a
    wide variety of credit card abuses. For example, solicitations
    of minors and college students are a particular problem. Credit
    card companies purposefully solicit students and other minors
    who have little ability to pay their debts. Illustrative of the
    seriousness with which credit card companies target students is
    the following topic from the 1998 Card Marketing Conference:
    ---------------------------------------------------------------------------
        \89\ Press Release of the National Consumer Law Center, Consumers
    Union, Consumer Federation of America, and U.S. PIRG (Apr. 19, 1999).

            Targeting Teens: ``You Never Forget Your First Card!''
            Most teens never forget their first love. Nor do they
            forget the issuer who dares to accept their
            application. Their brand loyalty and propensity to
            spend make consumers in their mid- to late-teens priced
            prospects for many card issuers.\90\
    ---------------------------------------------------------------------------
        \90\ Id. (quoting Agenda for Card Marketing Conference ``98 (Nov.
    9-11, 1998)). Between 1990 and 1995, the average student credit card
    debt more than doubled from $900 to $2,100. By 1997, graduate students
    averaged seven cards and carried a total balance of $5,800. That is in
    addition to school loans, which are increasingly being used to pay off
    students' credit card debt. To support average post-college debts and
    other expenses, graduates need to earn more than $38,000--$4,000 more
    than the national average. ``Bankrupt at 24, Susan Carpenter, LA Times
    January 24, 2001.

    The credit card tactics are myriad, including offering gifts
    such as mugs, Slinkees, T-shirts, and Frisbees.\91\ Campus
    groups managing credit card tables receive large cash payments
    from credit card companies.\92\ Such tactics apparently work,
    as 61% of students responsible for their own bills have
    indicated that they received credit cards at college.\93\ Some
    colleges have become so fed up with card marketing practices
    that they banned the credit card companies from their campus
    \94\--although they cannot stop mail solicitations.
    ---------------------------------------------------------------------------
        \91\ Id.
        \92\ Id.
        \93\ U.S. Public Interest Research Group, The Campus Credit Card
    Trap: Results of a PIRG Survey of College Students and Credit Cards
    (Sept. 1998).
        \94\ Press Release of the National Consumer Law Center, Consumers
    Union, Consumer Federation of America, and U.S. PIRG (Apr. 19, 1999).
    ---------------------------------------------------------------------------
        To make matters worse, credit card companies even go so far
    as to solicit business from the developmentally disabled.\95\
    One developmentally-disabled man, aged 35, has the reading and
    mathematic skills of a second-grader and an annual income of
    $7,000 from Social Security disability benefits; nevertheless,
    he has thirteen credit cards, generating a debt of $11,745.\96\
    When his counselor asked the bank to lower his credit limit to
    $500, his limit was instead raised to $4,900.\97\ Credit card
    companies have no answer for how this occurs other than to say
    that they screen all applicants to ensure they can handle the
    risk; \98\ clearly, however, credit card companies have not
    been doing a sufficient job of screening their applicants.
    Unfortunately, H.R. 333 does nothing to meaningfully discourage
    any of these practices.
    ---------------------------------------------------------------------------
        \95\ Dan Herbeck, Where Credit Isn't Due: Developmentally-Disable
    Become Victims, Buffalo News, Apr. 7, 1998, at 1A.
        \96\ Id.
        \97\ Id.
        \98\ Id.
    ---------------------------------------------------------------------------
        The bill also ignores the problem of credit card companies
    lending to individuals with already substantial debts and
    little prospect of repayment. Gary Klein of the National
    Consumer Law Center noted ``offering additional credit . . . to
    families already struggling to pay their debts hurts not only
    borrowers, but also the borrowers' honest creditors if the new
    credit pushes the family over the edge. Similarly, failure by
    one creditor to seriously consider payment arrangements outside
    bankruptcy for families facing hardship may lead to a
    bankruptcy filing which affects all creditors.'' \99\ One
    credit card company goes so far as to solicit debt counselors
    and offers them $10 for each chapter 7 client who requests a
    VISA card.\100\
    ---------------------------------------------------------------------------
        \99\ March 11, 1999 Hearing (written statement of Gary Klein,
    National Consumer Law Center).
        \100\ Letter from American Bankruptcy Service to Michael Schwartz
    (Dec. 18, 1998).
    ---------------------------------------------------------------------------
        A particularly pernicious credit card practice occurs in
    the so-called ``subprime'' market, where lenders seek out
    riskier borrowers and offer home equity financing at loan to
    value ratios in excess of 100%. Another lending abuse targets
    low income and minority neighborhoods with ``serial''
    refinancing loans that carry high interest rates and other
    onerous terms.\101\ In essence this causes poor individuals to
    place their homes at risk in order to finance their credit card
    purchases.
    ---------------------------------------------------------------------------
        \101\ March 18, 1999 Hearing (written statement of Damon A.
    Silvers, AFL-CIO, n.9 (citing Debra Nussbaum, ``Lenders Laud the Value
    of Home Sweet Equity,'' N.Y. Times, Mar. 22, 1998, Sec. 3 at 10;
    Richard W. Stevenson, ``How Serial Refinancings Can Rob Equity,'' N.Y.
    Times, Mar. 22, 1998, Sec. 3 at 10. See also Julia Patterson Forrester,
    ``Mortgaging the American Dream: A critical Evaluation of the Federal
    Government's Promotion of Home Equity Financing,'' 69 Tulane L. Rev.
    373 (1994))).
    ---------------------------------------------------------------------------
        These problems are compounded by the fact that credit card
    companies fail to disclose clearly on their account statements
    the total amount and total time it would take to pay off
    balances if only the minimum amount due was paid each month.
    Unlike mortgage loans and car loans, credit card loans do not
    disclose the amortization rates or the total interest that will
    be paid if the cardholder makes only the minimum monthly
    payment. As a result, using a typical minimum monthly payment
    rate on a credit card, it could take 34 years to pay off a
    $2,500 loan, and total payments would exceed 300 percent of the
    original principle. This is why many lenders encourage minimum
    payments that do not pay down the loan.
        Finally, the legislation fails to address adequately the
    problem of abuse in the area of reaffirmation agreements, by
    for example, banning their use with respect to unsecured and
    dischargeable loans. Although it requires lengthy and confusing
    ``disclosures'' intended to assure that debtors entering into a
    reaffirmation agreement understand all aspects of signing the
    agreement, it allows creditors to refuse to disgorge funds
    received even in many cases of illegality and exempts credit
    unions from all the disclosure requirements and from any
    restrictions on unduly burdensome reaffirmations. This failing
    is especially glaring in view of the fact that the bill will
    provide numerous opportunities for creditors to coerce
    reaffirmations making the provisions of this bill, which will
    render it more difficult to obtain effective remedies against
    abusive creditors like Sears, even less defensible.\102\
    ---------------------------------------------------------------------------
        \102\ See Leslie Kaufman, Sears to Pay Fine of $60 Million in
    Bankruptcy Fraud Lawsuit, N.Y. Times, Feb. 10, 1999, at C2.
    ---------------------------------------------------------------------------

                            III. BUSINESS PROVISIONS

        Under current law, businesses may use chapter 11 of the
    Bankruptcy Code in an effort to obtain relief from the
    creditors while they seek to develop a plan to reorder their
    affairs and pay as much of their debts as their operations will
    allow. Under this chapter, businesses obtain an ``automatic
    stay,'' which forestalls creditor collection efforts. During
    this time period, debtors have an opportunity to examine their
    contracts and leases and determine which ones to assume and
    which ones to reject (with rejection leading to a claim for
    damages). Debtors are subject to a number of requirements
    during this period, such as the formation of creditor
    committees and various ongoing financial disclosures.
        The goal of chapter 11 is to determine whether there is
    ongoing business value that can be preserved to pay off
    creditors while maintaining as many jobs and contractual
    relationships as possible. To this end, the debtor is given an
    exclusive 120-day period (unless lengthened or shortened for
    cause) in which to develop a reorganization plan that satisfies
    a host of statutory requirements and convince a majority of the
    creditors that the plan is in their best interests and is
    preferable to a liquidation ``fire sale.''
        In 1994, Congress enacted two exceptions to the general
    rules of chapter 11. The first related to ``small businesses,''
    defined as entities engaged in commercial or business
    activities whose aggregate debts do not exceed $2 million.
    Debtors that voluntarily elect to be treated as small
    businesses are permitted to dispense with creditor committees,
    receive only a 100-day plan exclusivity period, and are
    entitled to more flexible provisions for disclosure and
    solicitation for acceptances of their proposed reorganization
    plan. In 1994, Congress also developed a special set of rules
    applicable to ``single asset real estate,'' generally defined
    as cases in which the principal asset is a single piece of real
    estate subject to debt of no more than $4 million. In cases
    falling within this definition, secured creditors are permitted
    to foreclose on their collateral unless the debtor files a
    reorganization plan which is likely to be confirmed or
    commences payment on the secured loan within a 90-day period.
    This exception to chapter 11 procedures was justified on the
    grounds that single asset real estate cases were seen as
    essentially private two-party loan disputes, which did not
    implicate ongoing businesses or jobs.
    A. General Business Concerns
        The business provisions of the bill would effectuate a
    number of changes in the manner in which corporations,
    partnerships and other business entities are permitted to
    reorganize their financial affairs. Groups such as the AFL-CIO
    and the National Bankruptcy Conference have raised numerous
    concerns regarding the business titles of the legislation and
    their likely negative impact on financially troubled
    businesses, particularly during an economic downturn as we are
    presently experiencing. These include concerns about the
    expansion of remedies available to secured creditors in the
    transportation industry; \103\ the imposition of mandatory
    deadlines for extensions of ``exclusivity''; \104\ amendments
    regarding asset securitization limiting the assets available to
    a debtor during a bankruptcy case; \105\ limits on repeat
    filings for troubled small businesses,\106\ and provisions
    giving utility companies an enhanced position in
    bankruptcy.\107\ In general, the AFL-CIO has warned:
    ---------------------------------------------------------------------------
        \103\ March 18, 1999 Hearing (written statement of Damon A.
    Silvers, AFL-CIO); March 17, 1999 Hearing (written statement of Kenneth
    Klee, National Bankruptcy Conference).
        \104\ H.R. 333, Sec. 411.
        \105\ H.R. 333, Sec. 912.
        \106\ H.R. 333, Sec. 441.
        \107\ H.R. 333, Sec. 417.

            When this committee last considered by matter in 1999,
            our economy was going through an unprecedented period
            of growth and prosperity. Today, we are in far more
            uncertain times, and large employers throughout the
            United State are seeking the protection of the
            bankruptcy laws. Ten major steelmakers have filed for
            bankruptcy since 1998. Already 10,000 jobs have been
            lost at these firms alone during this period. Since
            September 1, 2000, major retail, apparel and textile
            firms, paper manufacturers and airlines have filed
            under Chapter 11--firms such as LTV and Wheeling-
            Pittsburgh Steel, Pillowtex, Bradlees, Montgomery Ward,
            TWA, Owens-Corning and Armstrong Industries. Hundred of
            thousands of jobs and the economic future of
            communities all across America directly depend on these
            firms being able to successfully reorganize. While the
            reasons for each bankruptcy are unique to the firm and
            the industry, such as these firms' futures depends on
            the successful functions of the business bankruptcy
            system. In these circumstances, America's working
            families cannot be exposed to the risks of H.R. 333, a
            one-sided, ill-considered revision of the bankruptcy
            code.\108\
    ---------------------------------------------------------------------------
        \108\ Feb. 8, 2001 Hearing (written statement of Damon Silvers,
    Associate General Counsel, AFL-CIO).

        Similar concerns relate to the power of creditors who lease
    retail property. Section 404 grants lessors of commercial
    property the ability to coerce debtor-tenants into deciding
    prematurely whether to assume or reject a lease. In a retail
    insolvency, a debtor may need to wait beyond the 210-day
    period--120 days with the ability to gain a 90-day extension
    upon a motion for cause and with the lessor's consent--until
    the holiday season is complete to determine which locations
    have a realistic chance to succeed; a trustee or debtor in
    possession may decide to assume and reject some of the leases
    based upon this practical experience. If the trustee or debtor
    in possession assumes a nonresidential lease in chapter 11, and
    the case subsequently converts to chapter 7, under the bill,
    the rent due for a 1-year period following rejection of the
    lease becomes an administrative expense for compensation,
    gaining priority over all other unsecured claims and limiting
    the opportunity for other unsecured creditors to receive
    compensation. By giving the lessor veto power at the end of 210
    days, as the bill now does, the legislation would have the
    effect of giving a single creditor inordinate bargaining power
    among creditors and with the debtor.
        Another significant problem stems from language added in
    last year's conference which vastly expands the opportunity of
    creditors to assert that their debt is nondischargebable in a
    corporate reorganization. Section 321(d) of the bill subjects
    corporations to the same exceptions to discharge rules as
    individuals are under section 523 of the Bankruptcy Code. The
    section 523 exceptions to discharge were drafted with
    individuals, not corporations, in mind, and many of the
    provisions involve matters--such as specific intent--which are
    not appropriate for a large business. The changes made by
    section 321(d) could have the effect of making it much more
    difficult for companies to be able to restructure debts
    involving, for example, liability actions where fraud may be
    alleged. In turn, this would make reorganization far more
    difficult, costing many innocent workers their jobs.
    B. Small Business Provisions
        With respect to small business, H.R. 333 would expand the
    definition of covered small business to those companies having
    debts of less than $3 million,\109\ subsuming more than 80% of
    all chapter 11 cases.\110\ It would also make the small
    business requirements mandatory (rather than optional) and
    mandate the operation of numerous additional requirements on
    debtors.\111\ For example, under H.R. 333, small business
    debtors would be required to provide balance sheets, statements
    of operations, cash-flow statements, and income tax returns
    within 3 days after filing a bankruptcy petition, the time
    period the debtor has the exclusive right to file a plan of
    reorganization would be modified (to 180 days without the
    possibility of extension), and the standards for being able to
    seek an extension of this time period would be substantially
    narrowed.\112\
    ---------------------------------------------------------------------------
        \109\ H.R. 333, Sec. 432 (proposed amendment to 11 U.S.C.
    Sec. 101(51D)).
        \110\ See March 18, 1999 Hearing (written statement of Jere W.
    Glover, Chief Counsel for Advocacy, SBA).
        \111\ H.R. 333, Sec. 436 (proposed 11 U.S.C. Sec. 1116).
        \112\ H.R. 333, Sec. 437 (proposed amendment to 11 U.S.C.
    Sec. 1121(e)).
    ---------------------------------------------------------------------------
        It is for these reasons that both the AFL-CIO and a number
    of other organizations representing both debtor and creditor
    interests are opposed to, or have serious concerns with, the
    small business provisions of the bill. The AFL-CIO testified:

            The Bankruptcy Code already contains several provisions
            applicable to small businesses. These are principally
            designed to streamline the bankruptcy process for less
            complex cases, and apply on a voluntary basis to
            businesses with debts not exceeding $2 million. In
            sharp contrast, the proposed amendments in H.R. 333 are
            mandatory, anti-reorganization and hostile to small
            business. They would add strict time limits and
            extensive mandatory requirements for filing and
            confirming a reorganization plan. Chapter 11 cases
            could be converted or dismissed from bankruptcy
            altogether for failure to meet these and other new
            requirements. Harsh new rules limiting subsequent
            bankruptcy filings are also proposed, despite the lack
            of any credible evidence that ``serial filing'' is a
            problem among business bankruptcies. As burdensome as
            these new strictures would be, they are made more
            onerous by severely limiting the court's exercise of
            discretion to manage these cases. Rules for obtaining
            relief from these provisions create a high burden for
            the debtor and would curtail the court's authority to
            meet the exigencies of a particular case.\113\
    ---------------------------------------------------------------------------
        \113\ Feb. 8, 2001 Hearing (written statement of Damon Silvers,
    Associate General Counsel, AFL-CIO).

        It is important to recall that Congress has previously
    enacted laws that have made it far more difficult for debtors
    to unduly delay filing a plan of reorganization, and these
    appear to have had a salutary effect. The proposed rigid
    deadline in the bill go much farther and will undoubtedly work
    to detriment of debtors involved in complex reorganizations and
    force unnecessary liquidations and job losses. In turn, these
    changes will lead to the premature liquidation of small
    businesses with the attendant loss of jobs.
    C. Single-Asset Real Estate Provisions
        A similar concern relates to single-asset real estate
    (``SARE'') debtors. The legislation would significantly expand
    the definition of SARE by eliminating the $4 million debt cap
    pursuant to a ``technical correction'' in section 1201(5) of
    Title XIII of H.R. 333, would take in SARE bankruptcies below
    that cap and treat them as small businesses.
        As a result of these changes, a much wider range of real
    estate operations would be required to conform with the SARE
    and small business requirements when they seek to reorganize,
    notwithstanding the fact that those requirements were drafted
    with a much smaller and simpler entity in mind. Large operating
    entities such as Rockefeller Center, as well as hotels and
    nursing homes or any business with a significant real estate
    component, could be considered SARE and put back on the track
    set forth in Sec. 362(d)(3) of the Bankruptcy Code. It would
    also create new incentives for lenders to require that all of
    their real estate borrowers place their holdings in the single
    asset form in order to avoid ordinary bankruptcy rules in the
    future. The AFL-CIO noted, ``the significant limiting factor in
    the application of these rules has been the $4 million cap.
    [Eliminating] the cap would place a wide variety of properties
    . . . at risk of foreclosure and threaten jobs at these
    properties. Absent rules that specifically exclude properties
    housing significant business enterprises, there should be no
    expansion in the definition of single asset real estate
    debtor.'' \114\
    ---------------------------------------------------------------------------
        \114\ March 18, 1999 Hearing (written statement of Damon A.
    Silvers, Associate General Counsel, AFL-CIO).
    ---------------------------------------------------------------------------
        By design, the SARE changes will ``broaden[] the scope of
    single asset real estate debtors subject to rules which
    increase the threat of disruptive summary foreclosures of
    commercial property.'' \115\ This, in turn, would likely lead
    to significant job losses. Even if a hotel or nursing home
    remains in existence, the new owner would not necessarily be
    required to honor any previously negotiated collective-
    bargaining agreements applicable to employees at the facility.
    In the case of a large real estate operation, premature
    foreclosure could also allow the new owner to terminate many
    leases, leading to further job losses to the extent the
    business is relying on these leases.
    ---------------------------------------------------------------------------
        \115\ Letter from Peggy Taylor, Director of Legislation, AFL-CIO,
    to the Honorable Henry J. Hyde, Chair, House Comm. on the Judiciary
    (Apr. 20, 1999).
    ---------------------------------------------------------------------------

                               IV. TAX PROVISIONS

        The Bankruptcy Code seeks to effectuate a delicate balance
    between the rights of the Internal Revenue Service and State
    tax agencies to the repayment of any taxes, interest, and
    penalties owed them, and the rights of other creditors and the
    ability of individuals and corporations to be financially
    rehabilitated for the benefit of all parties. Title VII of the
    bill, on balance, manifests a strong preference for the IRS and
    other taxing authorities to the detriment of other participants
    in the bankruptcy system. Concerns have been expressed that,
    not only does H.R. 333 generally enhance the rights and
    position of the IRS and State authorities in bankruptcy, but
    the bill grants the IRS certain rights in bankruptcy cases that
    it does not enjoy outside of bankruptcy, and vests the IRS with
    new enforcement powers that ordinary creditors do not posses.
    Of particular concern is the fact that the bill varies in many
    significant respects from the nonpartisan, and often unanimous,
    recommendations of the Bankruptcy Commission and its Tax
    Advisory Committee.
        Arguably one of the bill's most important provisions
    affecting business bankruptcies appears in Section 708 of Title
    VII. This section provides that a corporation will not be
    discharged from a tax or customs duty where the debtor made a
    fraudulent return or willfully attempted to evade or defeat the
    tax or duty. More significantly, by referencing any debt in
    section 523(a)(2) of the Code, the provision could even
    encompass claims that were fraudulently incurred that are not
    tax claims. In its critique of section 708, the National
    Bankruptcy Conference wrote:

            A rule such as the one proposed in Sec. 708 advantages
            one creditor at the expense of others. It is a recipe
            for certain mischief, especially in large
            reorganizations. There is no public policy reason to
            grant this kind of leverage to some creditors as the
            purpose in making these assertions transparently will
            likely be to obtain a better deal that other
            creditors.\116\
    ---------------------------------------------------------------------------
        \116\ National Bankruptcy Conference, Report on H.R. 2415, 106th
    Cong., 2d Sess (H. Rept. 106-970) at 16 (2001).

        In addition, Paul Asofsky, who served as the Chair of the
    Task Force on the Tax Recommendations of the National
    Bankruptcy Review Commission of the American Bar Association's
    Tax Section, testifying about predecessor legislation on behalf
    of the American Bar Association's Section on Taxation, observed
    that: ``[T]here are many provisions in this legislation with
    which we agree as a matter of principle, but the specific
    provisions are either ambiguously drafted or cut against the
    grain of the principal proposal, causing us to oppose what
    should be noncontroversial proposals.'' \117\
    ---------------------------------------------------------------------------
        \117\ March 18, 1999 Hearing (written statement of Paul Asofsky).
    ---------------------------------------------------------------------------
        Mr. Asofsky provided a somewhat more detailed discussion of
    his concerns in a letter to the subcommittee.\118\ Section 704
    of H.R. 333 provides for a significantly higher uniform
    interest rate to be applied to tax claims in a bankruptcy case.
    The Tax Advisory Committee, which included governmental
    representatives, concluded that the rate for all types of tax
    claims should be the regular tax deficiency rate for Federal
    income tax purposes. The bill, however, provides that the rate
    shall be determined by applicable bankruptcy law. Of greater
    concern, local governments can set their own interest rates,
    many of which are substantially higher than either of the IRS
    rates.\119\
    ---------------------------------------------------------------------------
        \118\ Letter from Paul Asofsky to the Honorable Jerrold Nadler,
    Ranking Member, House Subcomm. on Commercial and Admin. Law (Feb. 5,
    1999) [hereinafter Asofsky Letter].
        \119\ Id. at 3-4.
    ---------------------------------------------------------------------------
        Section 707 severely limits the ``superdischarge''
    available to debtors in chapter 13. It would prevent a debtor
    from discharging tax debts, which is now permitted in chapter
    13, but not in chapter 7. Eliminating the benefit of the
    superdischarge also eliminates the single greatest incentive
    for an individual debtor to choose chapter 13. As Mr. Asofsky
    observed,

            [T]he problem faced by many taxpayers who are
            delinquent in their obligations is that the IRS
            standard allowances for installment payment agreements
            \120\ clearly do not leave many taxpayers with the
            minimum amounts necessary to provide for basic
            necessities, and so called ``offers in compromise'' are
            very difficult to obtain. Thus, for the most desperate
            of taxpayers, the chapter 13 superdischarge affords a
            safety net which is the only thing that provides them
            with the possibility of living somewhat of a normal
            life in dignity . . . elimination of the chapter 13
            superdischarge would be devastating to large numbers of
            unfortunate individual debtors.\121\
    ---------------------------------------------------------------------------
        \120\ These are the same standards used in the means test in
    section 102 of H.R. 333.
        \121\ Asofsky Letter at 4.

        Section 717 requires disclosure of the tax consequences of
    a chapter 11 plan of reorganization. Although originally an
    uncontroversial idea, the bill adds extra requirements which
    will likely cause confusion and may be impossible for debtors
    to comply with fully. The section now requires ``a discussion
    of the potential material Federal tax consequences of the plan
    to the debtor, any successor to the debtor, and a hypothetical
    investor typical of the holders of claims or interest in the
    case.'' The use of a vague term such as ``discussion''--
    although an improvement over the requirement in the earlier
    version of a ``full discussion''--will likely lead to extensive
    litigation as these statements are scrutinized. In some
    instances, the precise tax consequences of a plan at all levels
    of government, and for a ``typical'' holder of claim, may be
    difficult to produce with great precision.\122\
    ---------------------------------------------------------------------------
        \122\ Id. at 5-6.
    ---------------------------------------------------------------------------
        Finally, section 718 requires that a debtor actually have
    commenced an action against the taxing authority to determine
    the amount of a disputed tax before a setoff can be prevented.
    Absent such an action by the debtor, a governmental entity
    generally is free to ``setoff'' any prepetition refund with a
    liability. The Advisory Committee had recommended that such
    setoff should only be permitted in cases where the liability
    was undisputed. The bill goes much further and to the
    disadvantage of the debtor and other, non-governmental
    creditors.

                                   CONCLUSION

        For more than 100 years, Congress has carefully considered
    the bankruptcy laws and legislated on a deliberate and
    bipartisan basis. In the past, Congress has elected also to
    preserve carefully an insolvency system that provides a fresh
    start for honest, hard-working debtors, protects on-going
    businesses and jobs, and balances the rights of and between
    debtors and creditors. Because H.R. 333 departs from these
    principles, we respectfully dissent.

                                       John Conyers, Jr.
                                       Howard L. Berman.
                                       Jerrold Nadler.
                                       Melvin L. Watt.
                                       Sheila Jackson Lee.
                                       Anthony D. Weiner.
                                       Bobby Scott.
                                       Zoe Lofgren.
                                       Maxine Waters.
                                       William D. Delahunt.
                                       Tammy Baldwin.

                          ADDITIONAL DISSENTING VIEWS

        In addition to the concerns raised in the general
    dissenting views, we are disappointed by the committee's
    refusal to put an end to one of the most notorious abuses of
    the bankruptcy system--the ``financial planning'' strategy by
    which debtors purchase expensive homes in states which allow an
    unlimited homestead exemption under 11 U.S.C. Sec. 522 (b) (2)
    (A), declare bankruptcy, and continue to enjoy a life of luxury
    while their creditors get little or nothing.
        During the committee markup, Mr. Delahunt offered an
    amendment to eliminate this abuse--and implement a key
    recommendation of the National Bankruptcy Review Commission
    \1\--by placing a $250,000 national cap on the homestead
    exemption.\2\ At the request of Mr. Watt, Mr. Delahunt sought
    and received unanimous consent to modify his amendment to set
    the cap at $500,000. The amendment thus would have increased
    the cap so as to accommodate every one of the 45 states that
    place a cap on the exemption. But in exchange for this more
    generous dispensation, it sought to remove from the bill two
    loopholes which undercut the cap, effectively ensuring that it
    will have no effect on the activities of the individuals who
    have abused the exemption in the past. These loopholes exempt
    from the cap (1) transactions occurring more than 2 years prior
    to the bankruptcy filing; and (2) transactions occurring within
    the 2-year pre-filing period which transfer equity from one
    principal residence to another principal residence within the
    same state.\3\
    ---------------------------------------------------------------------------
        \1\ Recommendation 1.2.2 (Homestead Property), Nat'l Bankr. Rev.
    Comm'n, Final Report: Bankruptcy: The Next Twenty Years 125 (1997).
        \2\ During the 106th Congress, Mr. Delahunt offered an amendment at
    the subcommittee markup of H.R. 833 which would have placed a $100,000
    national cap on the homestead exemption. Mr. Watt proposed that the cap
    be set at $250,000, and with this modification the Delahunt amendment
    was agreed to by a vote of 10-2. At full committee, Ms. Jackson-Lee
    offered an amendment to negate the Delahunt-Watt provision to the
    extent that it purports to ``modify or supersede any provision of State
    constitutional law that prohibits forced sale of a homestead for the
    payment of debts.'' Mr. Bryant offered a substitute amendment providing
    that the cap shall not apply in states which ``opt out'' by enacting a
    subsequent statute. After extensive debate, the Bryant amendment was
    agreed to by a vote of 18-15.
        During the 105th Congress, Mr. Delahunt had offered a similar
    amendment at the full committee markup of H.R. 3150 which was agreed to
    by voice vote. However, during floor consideration, the House agreed,
    by a vote of 222-204, to an amendment by Messrs. Gekas, Smith of Texas
    and McCollum, which eliminated the Delahunt provision and put in its
    place a provision that reduced the value of an interest in exempt
    property ``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.'' A version of this provision expanding
    the 730-day period to 7 years has been retained as section 308 of the
    present bill.
        \3\ It is these qualifications which caused the National Bankruptcy
    Conference to criticize the homestead provision that was included in
    the conference report on H.R. 2415 in the 106th Congress and is
    retained in H.R. 333. (``[T]his legislation lacks the straightforward
    solution to this abuse--a dollar cap on the value of the homestead that
    can be shielded in bankruptcy. For this reason, H.R. 2415 does not
    change the outcome of many of the cases that the press has singled out
    as the clearest case of bankruptcy abuse.'') National Bankruptcy
    Conference, Report on H.R. 2415 14-15.
    ---------------------------------------------------------------------------
        As the bill presently stands, it runs counter to the stated
    goals of bankruptcy reform, perpetuating an abuse so flagrant
    and notorious as to bring the entire system into disrepute.
    Proponents of the ``means test,'' and other provisions included
    in H.R. 333, seek to eliminate what some have characterized as
    the use of the Bankruptcy Code as a ``financial planning
    tool.'' Yet if we are truly serious about reform, we cannot
    confine our attention to those at the bottom of the economic
    ladder.
        Rather, we should start with individuals like Marvin
    Warner, a former ambassador to Switzerland and the owner of a
    failed Ohio Savings & Loan, who paid off only a fraction of
    $300 million in bankruptcy claims while keeping his multi-
    million-dollar horse ranch near Ocala, Florida.\4\
    ---------------------------------------------------------------------------
        \4\ Larry Rohter, Rich Debtors Finding Shelter Under a Populist
    Florida Law, N.Y. Times, July 25, 1993, at A1.
    ---------------------------------------------------------------------------
        Or Martin A. Siegel, a former Wall Street investment banker
    convicted of insider trading. While facing a $2.75 billion
    civil suit, he bought a $3.25 million, 7,000-square-foot
    beachfront home in Ponte Vedra Beach.\5\
    ---------------------------------------------------------------------------
        \5\ Id.
    ---------------------------------------------------------------------------
        Or former baseball commissioner Bowie Kuhn, whose Manhattan
    law firm went into bankruptcy. After creditors seized his
    weekend house in the Hamptons and were about to attach his $1.2
    million home in Ridgewood, New Jersey, Kuhn acquired a million-
    dollar house in Florida with five bedrooms and five baths.\6\
    ---------------------------------------------------------------------------
        \6\ Id.
    ---------------------------------------------------------------------------
        Or Dr. Carlos Garcia-Rivera, a Miami physician with no
    malpractice insurance, who was named in four separate
    malpractice actions, filed for bankruptcy protection, and kept
    a $500,000 home with a 100-foot swimming pool.\7\
    ---------------------------------------------------------------------------
        \7\ David J. Morrow, Key to a Cozier Bankruptcy: Location,
    Location, Location, N.Y. Times, Jan. 7, 1998, at A1.
    ---------------------------------------------------------------------------
        Or the Dallas developer, Talmadge Wayne Tinsley, who filed
    under chapter 7 after incurring $60 million in debts. Tinsley
    objected to the Texas law that permitted him to keep only one
    acre of his $3.5 million, 3.1-acre magnolia-lined estate. But
    that acre included a five-bedroom, six-and-a-half-bath mansion
    with two studies, a pool and a guest house.\8\
    ---------------------------------------------------------------------------
        \8\ Id.
    ---------------------------------------------------------------------------
        Or the movie actor, Burt Reynolds, who declared bankruptcy
    in 1996, claiming more than $10 million in debt. Reynolds kept
    a $2.5 million home--appropriately named ``Valhalla''--while
    his creditors received 20 cents on the dollar.\9\
    ---------------------------------------------------------------------------
        \9\ Eliot Kleinberg, Reynolds Gets Out from under Bankruptcy, The
    Palm Beach Post, Oct. 8, 1998.
    ---------------------------------------------------------------------------
        Or Paul Bilzerian, who used Florida's unlimited homestead
    exemption to avoid his creditors. He filed for bankruptcy in
    1991, and filed again last month. He retains his $5 million
    Florida home, and can completely avoid the $200 million in debt
    owed his creditors, including the IRS.\10\
    ---------------------------------------------------------------------------
        \10\ Written statement of Brady C. Williamson at 6, Hearing on S.
    220 before the Sen. Jud. Comm., Feb. 8, 2001.
    ---------------------------------------------------------------------------
        The situation in Florida has become so notorious that one
    Miami bankruptcy judge told the New York Times, ``You could
    shelter the Taj Mahal in this state and no one could do
    anything about it.'' \11\ As the Wall Street Journal noted
    recently concerning the Kuhn case, ``the bill that Congress
    will soon send to a welcoming President Bush would make [pre-
    bankruptcy planning using the unlimited homestead exemption]
    more diifficult, but that's symbolic. Few people anticipating
    bankruptcy have the cash to pull off that maneuver.\12\
    ---------------------------------------------------------------------------
        \11\ Judge A. Jay Cristol, quoted in Rohter, supra note 3.
        \12\ David Wessel, A Law's Muddled Course, The Wall Street Journal,
    at 1 (Feb. 22, 2001).
    ---------------------------------------------------------------------------
        This is a national problem that demands a uniform solution.
    Without a nationwide cap, debtors who live in the 45 states
    that cap the exemption at $200,000 or less are free to relocate
    to one of the five so-called ``debtors' paradises'' that have
    no cap at all.\13\
    ---------------------------------------------------------------------------
        \13\ The following are the state exemption levels (per household,
    i.e., for joint debtors with two dependents), as of January 1, 2000. In
    18 jurisdictions, the debtor may choose between the state exemption and
    a Federal exemption (currently $16,150 per debtor):

          Unlimited: Florida, Iowa, Kansas, South Dakota, Texas
          $200,000: Minnesota
          $125,000: Nevada
          $100,000: Arizona, Massachusetts, Rhode Island
           $80,000: North Dakota
           $75,000: California, Connecticut, Mississippi, Vermont
           $60,000: New Mexico, Montana
           $54,000: Alaska
           $50,000: Idaho
           $40,000: Wisconsin, Utah (if jointly owned), Washington
           $33,000: Oregon
           $30,000: Colorado, Hawaii, New Hampshire, Virgin Islands
           $20,000: Utah (if individually owned)
           $15,000: Indiana, Louisiana
           $12,500: Maine, Nebraska
           $10,000: New York, North Carolina, South Carolina, Wyoming
            $8,000: Missouri
            $7,500: Illinois, Tennessee
            $6,500: Virginia
            $5,000: Alabama, Delaware, Georgia, Kentucky, Ohio,
    ---------------------------------------------------------------------------
               $0: District of Columbia, New Jersey

    Source: John H. Williamson, Attorney's Handbook on Consumer Bankruptcy
    and Chapter 13 (2000).
        Some have suggested that a Federal cap is a ``violation of
    states' rights.'' \14\ Yet the Bankruptcy Code is a Federal
    statutory scheme, and the system it envisions is one which is
    administered by the Federal courts. To defer to the states on
    such a matter is like legislating a Federal income tax and
    leaving it to the state legislatures to determine what will
    count as a business deduction. Such an arrangement invites
    forum shopping and encourages gross inequities in the treatment
    of debtors who live in different states.
    ---------------------------------------------------------------------------
        \14\ See, e.g., Letter from 21 members of the Texas Congressional
    Delegation to Chairman Henry Hyde and Ranking Member John Conyers, Jr.
    (Apr. 19, 1999) (on file with the House Judiciary Committee).
    ---------------------------------------------------------------------------
        It is important to recognize that the proposed Delahunt
    amendment would have no effect whatsoever on the 45
    jurisdictions that currently place their own cap on the
    exemption. But it will discourage residents of those
    jurisdictions from moving to one of the five states with no cap
    at all in order to take advantage of this enormous loophole in
    the law.
        Nor will unscrupulous debtors be unduly hindered by
    provision in section 308 of the bill, which disallows the
    exemption if the individual converted the property within 7
    years of the filing of the petition but only to the extent that
    the nonexempt assets were converted ``with the intent to
    hinder, delay, or defraud a creditor.'' Those already resident
    in a state with no exemption cap are unaffected by the
    limitation except for ``any amount of interest that was
    acquired by the debtor during the 2-year period preceding the
    filing of the petition which exceeds the aggregate $100,000 in
    value.'' \15\ Interests transferred from another in-state
    residence are exempted from that limitation.\16\ And wealthy
    debtors from other states who are sophisticated enough to plan
    ahead can simply wait the 730 days and then file their
    petition. Debtors who have owned their homestead for 2 years or
    more can continue to use it to ``hinder, delay, or defraud''
    their creditors out of millions of dollars.
    ---------------------------------------------------------------------------
        \15\ Sec. 322(a).
        \16\ Id.
    ---------------------------------------------------------------------------
        During the committee debate, some speakers argued that
    these abuses are not common. That is true. We do not suggest
    that they are daily occurrences. But the fact that a particular
    form of misconduct occurs infrequently is not an argument that
    it should be condoned. By condoning these spectacular abuses by
    a handful of wealthy debtors, we bring the fairness and
    rationality of the entire system into disrepute.

                                       John Conyers, Jr.
                                       Howard L. Berman.
                                       Jerrold Nadler.
                                       Melvin L. Watt.
                                       Anthony D. Weiner.
                                       Barney Frank.
                                       Bobby Scott.
                                       Maxine Waters.
                                       William D. Delahunt.
                                       Tammy Baldwin.