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109th Congress                                             Rept. 109-31
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

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



 
                    BANKRUPTCY ABUSE PREVENTION AND 
                    CONSUMER PROTECTION ACT OF 2005

                                _______
                                

 April 8, 2005.--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, ADDITIONAL DISSENTING VIEWS, 
                     AND ADDITIONAL MINORITY VIEWS

                         [To accompany S. 256]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on the Judiciary, to whom was referred the bill 
(S. 256) to amend title 11 of the United States Code, and for 
other purposes, having considered the same, reports favorably 
thereon without amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     3
Hearings.........................................................    22
Committee Consideration..........................................    22
Votes of the Committee...........................................    22
Committee Oversight Findings.....................................    33
New Budget Authority and Tax Expenditures........................    33
Congressional Budget Office Cost Estimate........................    33
Performance Goals and Objectives.................................    47
Constitutional Authority Statement...............................    47
Section-by-Section Analysis and Discussion.......................    47
Changes in Existing Law Made by the Bill, as Reported............   155
Committee Jurisdiction Letters...................................   370
Markup Transcript................................................   373
Dissenting Views.................................................   537
Additional Dissenting Views......................................   591
Additional Minority Views........................................   597

                          Purpose and Summary

    S. 256, the ``Bankruptcy Abuse Prevention and Consumer 
Protection Act of 2005,'' 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 ensure that the system is fair for 
both debtors and creditors.
    With respect to the interests of creditors, the proposed 
reforms respond to many of the factors contributing to the 
increase in consumer bankruptcy filings, such as lack of 
personal financial accountability,\1\ the proliferation of 
serial filings, and the absence of effective oversight to 
eliminate abuse in the system. The heart of the bill's consumer 
bankruptcy reforms consists of the implementation of an income/
expense screening mechanism (``needs-based bankruptcy relief'' 
or ``means testing''), which is intended to ensure that debtors 
repay creditors the maximum they can afford. S. 256 also 
establishes new eligibility standards for consumer bankruptcy 
relief and includes provisions intended to deter serial and 
abusive bankruptcy filings. It substantially augments the 
responsibilities of those charged with administering consumer 
bankruptcy cases as well as those who counsel debtors with 
respect to obtaining such relief. In addition, the bill caps 
the amount of homestead equity a debtor may shield from 
creditors, under certain circumstances.
---------------------------------------------------------------------------
    \1\ 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. 98 (1999) (statement of Prof. Todd Zywicki).
    S. 256 also includes various consumer protection reforms. 
The bill penalizes a creditor who unreasonably refuses to 
negotiate a pre-bankruptcy debt repayment plan with a debtor. 
It strengthens the disclosure requirements for reaffirmation 
agreements (agreements by which debtors obligate themselves to 
repay otherwise dischargeable debts) so that debtors will be 
better informed about their rights and responsibilities. The 
legislation requires certain monthly credit card billing 
statements to include specified explanatory statements 
regarding the increased amount of interest and repayment time 
associated with making minimum payments. The bill requires 
certain home equity loan and credit card solicitations to 
include enhanced consumer disclosures. It also prohibits a 
creditor from terminating an open end consumer credit plan 
simply because the consumer has not incurred finance charges on 
the account. S. 256 allows debtors to shelter from the claims 
of creditors certain education IRA plans and retirement pension 
funds. It requires debtors to receive credit counseling before 
they can be eligible for bankruptcy relief so that they will 
make an informed choice about bankruptcy, its alternatives, and 
consequences. The bill also requires debtors, after they have 
filed for bankruptcy, to participate in financial management 
instructional courses so they can hopefully avoid future 
financial distress.
    With respect to business bankruptcy, S. 256 includes 
several significant provisions intended to heighten 
administrative scrutiny and judicial oversight of small 
business bankruptcy cases, which often are the least likely to 
reorganize successfully. In addition, it contains provisions 
designed to reduce systemic risk in the financial marketplace, 
the enactment of which Federal Reserve Board Chairman Alan 
Greenspan described as being ``extremely important.'' \2\ The 
bill includes heightened protections for family farmers facing 
financial distress and allows family fishermen to qualify for a 
specialized form of bankruptcy relief currently available only 
to family farmers. The bill also includes provisions concerning 
transnational insolvencies, bankrupt health care providers, the 
treatment of tax claims, and data collection. In response to 
the exponential increase in bankruptcy filings, the bill 
authorizes the creation of 28 additional bankruptcy judgeships.
---------------------------------------------------------------------------
    \2\ Letter from Alan Greenspan, Chairman, Federal Reserve Board, to 
F. James Sensenbrenner, Jr., Chairman, Committee on the Judiciary 
(Sept. 3, 2002) (on file with the Subcommittee on Commercial and 
Administrative Law).
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                Background and Need for the Legislation

    On February 1, 2005, Senator Charles Grassley (R-IA) (for 
himself and seven original cosponsors) introduced S. 256, the 
``Bankruptcy Abuse Prevention and Consumer Protection Act of 
2005.'' Thereafter, F. James Sensenbrenner, Jr., Chairman of 
the House Committee on the Judiciary, (for himself and 60 
original cosponsors) introduced legislation (H.R. 685) 
identical to S. 256 on February 9, 2005.
    S. 256, as introduced, is substantively identical to 
legislation that the House passed in the prior Congress on two 
separate occasions with overwhelming bipartisan support.\3\ It 
is also substantively similar to a modified version of a 
bankruptcy reform conference report that the House passed in 
the 107th Congress by a vote of 244 to 116.\4\
---------------------------------------------------------------------------
    \3\ On March 19, 2003, the House passed H.R. 975, the ``Bankruptcy 
Abuse Prevention and Consumer Prevention Act of 2003,'' by a vote of 
315 to 113. 149 Cong. Rec. H2099-00 (daily ed. Mar. 19, 2003). 
Thereafter, the House, on January 28, 2004, passed S. 1920, as amended, 
the text of which was substituted with the text of H.R. 975, as passed 
by the House, by a vote of 265 to 99. 150 Cong. Rec. H218-19 (daily ed. 
Jan. 28, 2004).
    \4\ H.R. Rep. No. 107-617 (2002). The modifications consisted of 
the deletion of two provisions, one dealing with unlawful protest 
activities and the other authorizing additional bankruptcy judgeships. 
The text of the conference report, as modified, was introduced as H.R. 
5545, the ``Bankruptcy Abuse Prevention and Consumer Protection Act of 
2003.'' H.R. 5545, 107th Cong. (2002). In turn, the text of H.R. 5545 
was substituted as an amendment to H.R. 333. The House, thereafter, 
passed H.R. 333, as amended. 148 Cong. Rec. H8876-77 (daily ed. Nov. 
14, 2002).
---------------------------------------------------------------------------

                  FACTORS SUPPORTING BANKRUPTCY REFORM

    Representing the most comprehensive set of reforms in more 
than 25 years, S. 256's consumer bankruptcy provisions respond 
to several factors. First, the recent escalation of consumer 
bankruptcy filings does not appear to be just a temporary 
event, but part of a generally consistent upward trend.\5\ In 
1998, for example, bankruptcy filings exceeded one million for 
the first time in our nation's history. Over the past decade, 
the number of bankruptcy filings has nearly doubled to more 
than 1.6 million cases filed in fiscal year 2004.\6\ As a 
result, there is a growing perception that bankruptcy relief 
may be too readily available and is sometimes used as a first 
resort, rather than a last resort.\7\ Despite the view of 
opponents of bankruptcy reform that abuse in the system is not 
widespread and that most bankruptcy filings result from causes 
beyond debtors' control, such as family illness, job loss or 
disruption, or divorce,\8\ the Committee concluded that reforms 
were nevertheless necessary.
---------------------------------------------------------------------------
    \5\ Press Release, Administrative Office of the U.S. Courts, Record 
Breaking Bankruptcy Filings Reported in Calendar Year 2002, at 1 (Feb. 
14, 2003) (noting that ``[b]ankruptcy filings continue to break 
historic records'').
    \6\ See Press Release, Administrative Office of the U.S. Courts, 
Bankruptcy Filings Down in Fiscal Year 2004, at 1 (Dec. 3, 2004) 
(noting that ``[d]espite the drop in filings, bankruptcies remain at 
historic highs, well above the 1.5 million record first set in 2002''); 
Becky Yerak, Bankrupt Filings in E. Mich. Skyrocket; High Debt, Slow 
Economy Spur 22% Increase in 2002, Biggest Jump in the United States, 
The Detroit News, Feb. 24, 2003, at 1A (noting that in the Eastern 
District of Michigan alone, bankruptcy filings for 2002 increased by 22 
percent over the prior year).
    \7\ See, e.g., Becky Yerak, Bankrupt Filings in E. Mich. Skyrocket; 
High Debt, Slow Economy Spur 22% Increase in 2002, Biggest Jump in the 
United States, The Detroit News, Feb. 24, 2003, at 1A (noting that 
``[t]he stigma of filing for bankruptcy continues to abate while, at 
the same time, lenders impose few if any credit restrictions'').
    \8\ See, e.g., Bankruptcy Abuse Prevention and Consumer Protection 
Act of 2005: Hearing on S. 256 Before the Senate Comm. on the 
Judiciary, 109th Cong. (2005) (statement of Prof. Elizabeth Warren).
---------------------------------------------------------------------------
    Second, there are significant losses asserted to be 
associated with bankruptcy filings. As one witness explained 
during the Senate Judiciary Committee's hearing on S. 256 
earlier this year:

        Like all other business expenses, when creditors are 
        unable to collect debts because of bankruptcy, some of 
        those losses are inevitably passed on to responsible 
        Americans who live up to their financial obligations. 
        Every phone bill, electric bill, mortgage, furniture 
        purchase, medical bill, and car loan contains an 
        implicit bankruptcy ``tax'' that the rest of us pay to 
        subsidize those who do not pay their bills. Exactly how 
        much of these bankruptcy losses is passed on from 
        lenders to consumer borrowers is unclear, but economics 
        tells us that at least some of it is. We all pay for 
        bankruptcy abuse in higher down payments, higher 
        interest rates, and higher costs for goods and 
        services.\9\
---------------------------------------------------------------------------
    \9\ Bankruptcy Abuse Prevention and Consumer Protection Act of 
2005: Hearing on S. 256 Before the Senate Comm. on the Judiciary, 109th 
Cong. (2005) (prepared statement of Prof. Todd Zywicki).

According to some analyses, the increase in consumer bankruptcy 
filings has adverse financial consequences for our nation's 
economy. For instance, it was estimated that in 1997 alone more 
than $44 billion of debt was discharged by debtors who filed 
for bankruptcy relief,\10\ a figure when amortized on a yearly 
basis amounts to a loss of at least $110 million every day.\11\ 
These losses, according to one estimate, translate into a $400 
annual ``tax'' on every household in our nation.\12\ In 2003, 
the Nilson Report (a credit industry newsletter) announced that 
issuers of proprietary and general purpose credit cards ``lost 
$18.9 billion in 2002 from consumer bankruptcy filings,'' an 
increase of 15.1 percent over the prior year.\13\ The Credit 
Union National Association (CUNA) reported that credit unions, 
as of 2002, lost ``nearly $3 billion from bankruptcies'' since 
Congress began its consideration of bankruptcy reform 
legislation in 1998.\14\ CUNA estimates that over 40% of all 
credit union losses in 2004 will be bankruptcy-related, and 
those losses will total approximately $900 million.\15\
---------------------------------------------------------------------------
    \10\ Bankruptcy Reform Act of 1998 (Pt. I): Hearings on H.R. 3150 
Before the Subcomm. on Commercial and Administrative Law of the House 
Comm. on the Judiciary, 105th Cong. 147 (1998) (statement of Mark 
Lauritano, Senior Vice President, WEFA, Inc.).
    \11\ 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) (statement of Dean 
Sheaffer on behalf of the National Retail Federation).
    \12\ Bankruptcy Reform Act of 1998 (Pt. I): Hearings on H.R. 3150 
Before the Subcomm. on Commercial and Administrative Law of the House 
Comm. on the Judiciary, 105th Cong. 147 (1998) (statement of Mark 
Lauritano, Senior Vice President, WEFA, Inc.).
    \13\ Bankruptcy Losses on Cards, The Nilson Report, Jan. 2003, at 
1.
    \14\ John K. McKechnie, III, Letter to Editor, Credit Union J. 6 
(June 24, 2002); see William R. Mapother, Counseling Could Overturn 
Losses, Credit Union Mag. 34 (Dec. 2002) (quoting CUNA President Dan 
Mica).
    \15\ Bankruptcy Abuse Prevention and Consumer Protection Act of 
2005: Hearing on S. 256 Before the Senate Comm. on the Judiciary, 109th 
Cong. (2005) (prepared statement of Kenneth Beine).
---------------------------------------------------------------------------
    A third factor motivating comprehensive reform is that the 
present bankruptcy system has loopholes and incentives that 
allow and--sometimes--even encourage opportunistic personal 
filings and abuse. A civil enforcement initiative undertaken in 
2002 by the United States Trustee Program (a component of the 
Justice Department charged with administrative oversight of 
bankruptcy cases) has ``consistently identified'' such problems 
as ``debtor misconduct and abuse, misconduct by attorneys and 
other professionals, problems associated with bankruptcy 
petition preparers, and instances where a debtor's discharge 
should be challenged.'' \16\ According to the United States 
Trustee Program, ``Abuse of the system is more widespread than 
many would have estimated.'' \17\ Such abuse ultimately hurts 
consumers as well as creditors.
---------------------------------------------------------------------------
    \16\ Antonia G. Darling & Mark A. Redmiles, Protecting the 
Integrity of the System: the Civil Enforcement Initiative, Am. Bankr. 
Institute J. 12 (Sept. 2002).
    \17\ J. Christopher Marshall, Civil Enforcement: An Early Report, 
Journal of the Nat'l Ass'n of Bankr. Trustees (NABTalk) 39 (Fall 2002).
---------------------------------------------------------------------------
    A fourth factor relates to the fact that some bankruptcy 
debtors are able to repay a significant portion of their debts, 
according to several studies.\18\ Current law, however, has no 
clear mandate requiring these debtors to repay their debts. 
Accordingly, ``[w]hile there is a universal agreement among the 
courts that an individual debtor's ability to repay his or her 
debts from future earnings is, at the very least, a factor in 
determining whether substantial abuse would occur in a chapter 
7 case, there are differences among the courts as to the extent 
to which they rely on a debtor's ability to repay.'' \19\
---------------------------------------------------------------------------
    \18\ See, e.g., Bankruptcy Reform Act of 1999 (Pt. 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 have 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'').
    \19\ Robert C. Furr & Marc P. Barmat, 11 U.S.C. Section 707(b)--The 
U.S. Trustee's Weapon Against Abuse, Nat'l Ass'n Bankr. Trustees 
(NABTalk) 11, 14 (Winter 2002-03).
---------------------------------------------------------------------------

         PRIOR CONGRESSIONAL CONSIDERATION OF BANKRUPTCY REFORM

    Proposed reforms to bankruptcy law and practice have been 
under consideration by Congress for nearly eight years \20\ and 
have generally enjoyed broad support from the business 
community, banking and financial services industries as well as 
other groups such as family farmers and child support 
enforcement agencies. In Congress, support for bankruptcy 
reform legislation has likewise been overwhelming, bipartisan 
and bicameral.
---------------------------------------------------------------------------
    \20\ Comprehensive bankruptcy reform legislation (H.R. 2500, the 
``Responsible Borrower Protection Bankruptcy Act'') was first formally 
introduced in the House on September 18, 1997. H.R. 2500, 105th Cong. 
(1997).
---------------------------------------------------------------------------
    Since the 105th Congress, the House has passed bankruptcy 
reform legislation on eight separate occasions. 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 veto-proof margins.\21\ In the 106th Congress, the 
House passed H.R. 833, the successor to H.R. 3150, by a veto-
proof margin of 313 to 108 \22\ and agreed to the conference 
report \23\ by voice vote.\24\ Although the Senate subsequently 
passed this legislation by a vote of 70 to 28,\25\ President 
Clinton pocket-vetoed it. In the 107th Congress, the House 
again registered its overwhelming support for bankruptcy reform 
on two more occasions. On March 1, 2001, the House passed H.R. 
333, the ``Bankruptcy Abuse Prevention and Consumer Protection 
Act,'' by a vote of 306 to 108.\26\ The House thereafter passed 
a modified version of the conference report on H.R. 333, as 
previously noted.\27\ In the last Congress, the House passed 
H.R. 975, the ``Bankruptcy Abuse Prevention and Consumer 
Protection Act of 2003,'' by a vote of 315 to 113 and S. 1920, 
which consisted of the text of H.R. 975, as passed by the 
House, by a vote of 265 to 99.\28\
---------------------------------------------------------------------------
    \21\ 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).
    \22\ 145 Cong. Rec. H2771 (daily ed. May 5, 1999).
    \23\ H.R. Rep. No. 106-970 (2000).
    \24\ 146 Cong. Rec. H9840 (daily ed. Oct. 12, 2000).
    \25\ 146 Cong. Rec. S11730 (daily ed. Dec. 7, 2000).
    \26\ 147 Cong. Rec. H600-01 (daily ed. Mar. 1, 2001).
    \27\ See supra note 3.
    \28\ 149 Cong. Rec. H2099-00 (daily ed. Mar. 19, 2003);150 Cong. 
Rec. H218-19 (daily ed. Jan. 28, 2004).
---------------------------------------------------------------------------
    Likewise, the Senate has on numerous occasions expressed 
strong bipartisan support for bankruptcy reform legislation. In 
the 105th Congress, the Senate passed bankruptcy reform 
legislation by a vote of 97 to 1.\29\ In the 106th Congress, 
the Senate passed similar legislation by a vote of 83 to 14 
\30\ and a subsequent conference report by a vote of 70 to 
28.\31\ In the 107th Congress, the Senate passed a bankruptcy 
reform bill by a vote of 82 to 16.\32\ Last month, the Senate 
passed S. 256, as amended, by a vote of 74 to 25.\33\
---------------------------------------------------------------------------
    \29\ 144 Cong. Rec. S10767 (daily ed. Sept. 23, 1998).
    \30\ 146 Cong. Rec. S255 (daily ed. Feb. 2, 2000).
    \31\ 146 Cong. Rec. S11730 (daily ed. Dec. 7, 2000).
    \32\ 147 Cong. Rec. S2379 (daily ed. Mar. 15, 2001).
    \33\ 151 Cong. Rec. S2474 (daily ed. Mar. 10, 2005).
---------------------------------------------------------------------------
    The Committee and the Subcommittee on Commercial and 
Administrative Law (Subcommittee), beginning in the 105th 
Congress, have held a total of 18 days of hearings on the 
operation of the bankruptcy system and the need for reform.\34\ 
Eleven of these hearings were devoted solely to consideration 
of S. 256's predecessors, H.R. 3150 (105th Congress), H.R. 833 
(106th Congress), H.R. 333 (107th Congress), and H.R. 975 
(108th Congress). 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.
---------------------------------------------------------------------------
    \34\ The dates and subject matters of these hearings are as 
follows:

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

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

October 9, 1997:
  Hearing on H.R. 2592, the ``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, the ``Religious Liberty and Charitable Donation 
Protection Act of 1997.''

March 10-11, 18-19, 1998:

  Hearings on H.R. 3150, the ``Bankruptcy Reform Act of 1998,'' H.R. 
3146, the ``Consumer Lenders and Borrowers Bankruptcy Accountability 
Act of 1998,'' and H.R. 2500, the ``Responsible Borrower Protection 
Bankruptcy Act.''

March 11-12, 18-19, 1999:
  Hearings on H.R. 833, the ``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.''

March 4, 2003:
  Hearing on H.R. 975, the ``Bankruptcy Abuse Prevention and Consumer 
Protection Act of 2003'' and the need for bankruptcy reform.
    The Senate likewise has held numerous hearings on the 
subject of bankruptcy reform and related issues. Since the 
105th Congress, the Senate has held eleven hearings, including 
a hearing held earlier this year on S. 256.\35\ In fact, the 
inaugural hearing on H.R. 833 during the 106th Congress was 
held jointly by the Subcommittee together with the Senate 
Subcommittee on Administrative Oversight and the Courts on 
March 11, 1999,\36\ marking the first time in more than 60 
years that a bicameral hearing was held on the subject of 
bankruptcy reform.\37\
---------------------------------------------------------------------------
    \35\ The Subcommittee on Administrative Oversight and the Courts of 
the Senate Committee on the Judiciary conducted the following hearings:

April 11, 1997:
  Hearing on the increase in personal bankruptcies and the crisis in 
consumer credit.

August 1, 1997:
  Hearing to review the negative impact of bankruptcy on educational 
funding.

August 8, 1997:
  Hearing regarding bankruptcy laws for family farmers.

September 22, 1997:
  Hearing on the Bankruptcy Code's effect on religious freedom and a 
review of the need for additional bankruptcy judgeships.

October 21, 1997:
  Hearing to review the recommendations of the National Bankruptcy 
Review Commission.

December 7, 1997:
  Hearing regarding international bankruptcy laws.

March 11, 1998:
  Hearing on S. 1301, ``The Consumer Bankruptcy Reform Act: Seeking 
Fair and Practical Solutions to the Consumer Bankruptcy Crisis.''

May 19, 1998:
  Hearing to review business bankruptcy issues.

March 11, 1999:
  Hearing on H.R. 833, the ``Bankruptcy Reform Act of 1999,'' held 
jointly with the Subcommittee on Commercial and Administrative Law of 
the House Committee on the Judiciary.

November 2, 1999:
  Oversight hearing on additional bankruptcy judgeship needs held 
jointly with the Subcommittee on Commercial and Administrative Law of 
the House Committee on the Judiciary.

February 10, 2005:
  Hearing on S. 256, the ``Bankruptcy Abuse Prevention and Consumer 
Protection Act of 2005.''
---------------------------------------------------------------------------
    \36\ Representatives on behalf of the Commercial Law League of 
America, CUNA, 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: 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).
    \37\ Senators testifying at the hearing included Charles Grassley 
(R-IA), Joseph Biden (D-DE) and Christopher Dodd (D-CT). House Members 
included Jim Moran (D-VA), Pete Sessions (R-TX) and Nick Smith (R-MI). 
Id.
---------------------------------------------------------------------------
    It is also important to note that bankruptcy reform 
legislation is the product of extensive bipartisan and 
bicameral negotiation and compromise. For example, conferees 
during the 106th Congress spent nearly seven months engaged in 
an informal conference to reconcile differences between the 
House and Senate passed versions of bankruptcy reform 
legislation. In the 107th Congress, conferees formally met on 
three occasions and ultimately agreed--after an 11-month period 
of negotiations--to a bipartisan conference report.\38\
---------------------------------------------------------------------------
    \38\ H.R. Rep. No. 107-617 (2002). Signatories on behalf of the 
House included: F. James Sensenbrenner, Jr. (R-WI), Henry Hyde (R-IL), 
George Gekas (R-PA), Lamar Smith (R-TX), Steve Chabot (R-OH), Bob Barr 
(R-GA), Rick Boucher (D-VA), Michael Oxley (R-OH), Spencer Bachus (R-
AL), Billy Tauzin (R-LA), Joe Barton (R-TX), John Boehner (R-OH), and 
Michael Castle (R-DE). Signatories on behalf of the Senate included: 
Patrick Leahy (D-VT), Joe Biden (D-DE), Charles Schumer (D-NY), Orrin 
Hatch (R-UT), Chuck Grassley (R-IA), Jon Kyl (R-AZ), Mike DeWine (R-
OH), Jeff Sessions (R-AL), and Mitch McConnell (R-KY).
---------------------------------------------------------------------------
    On February 10, 2005, the Senate Committee on the Judiciary 
held a hearing on S. 256 that provided an opportunity to review 
the reasons why the current bankruptcy system needs reform and 
how this legislation would implement those reforms.\39\ 
Testimony was received from eight witnesses, including: Kenneth 
Beine on behalf of CUNA; Maria Vullo, a partner with the New 
York law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP; 
Malcom Bennett on behalf of the National Multi Housing Council/
National Apartment Association; Philip Strauss on behalf of the 
National Child Support Enforcement Association; Dave McCall on 
behalf of the United Steel Workers of America, AFL-CIO; R. 
Michael Stewart Menzies, Sr. on behalf of the Independent 
Community Bankers of America; Prof. Elizabeth Warren, Leo 
Gottlieb Professor of Law at Harvard Law School; and Prof. Todd 
J. Zywicki, Visiting Professor of Law at Georgetown University 
Law Center.
---------------------------------------------------------------------------
    \39\ Bankruptcy Abuse Prevention and Consumer Protection Act of 
2005: Hearing on S. 256 Before the Subcomm. on Administrative Oversight 
and the Courts of the Senate Comm. on the Judiciary, 109th Cong. 
(2005).
---------------------------------------------------------------------------
    Among the matters considered at the hearing were: (1) the 
adequacy of the current bankruptcy system with respect to the 
detection of fraud and abuse; (2) how abuse and fraud in the 
current bankruptcy system impact on American businesses and our 
nation's citizens generally; (3) whether the legislation 
adversely impacts individuals deserving of bankruptcy relief; 
(4) whether the proposed reforms would assist those who are 
charged with administrative oversight of bankruptcy cases and 
law enforcement matters; and (5) whether, given current 
economic circumstances, the need for comprehensive bankruptcy 
reform still exists.
    On February 17, 2005, the Senate Judiciary Committee marked 
up S. 256 and ordered the bill, as amended, to be favorably 
reported by a vote of 12 to 5. Over the course of the markup, 
five amendments were passed. These amendments consisted of the 
following:

        1. an amendment by Senator Edward Kennedy (D-MA) 
        clarifying that a debtor's reasonably necessary 
        expenses for health insurance, disability insurance, 
        and health savings accounts for the debtor and for the 
        debtor's spouse and dependents are allowed expenses 
        under the bill's needs-based test;

        2. an amendment by Senator Kennedy limiting retention 
        bonuses, severance pay, and other payments to insiders 
        of the debtor, under certain circumstances;

        3. an amendment by Senator Russell Feingold (D-WI) 
        increasing the monetary threshold with respect to the 
        venue of a proceeding to recover a consumer debt;

        4. an amendment by Senator Patrick Leahy (D-VT) 
        clarifying that a debt based on a Federal or state 
        securities law violation is nondischargeable; and

        5. an amendment by Senator Kennedy requiring the 
        United States trustee to apply to the court for the 
        appointment of a chapter 11 trustee if there are 
        reasonable grounds to suspect fraud, under certain 
        circumstances.

    On March 10, 2005, the Senate passed S. 256, as amended, by 
a vote of 74 to 25. Nearly 130 amendments were filed. Of the 
amendments that were offered, 24 failed, 24 were withdrawn, 
eight were passed either by vote or unanimous consent. The 
amendments that were accepted consisted of the following:

        1. an amendment by Senator Jeff Sessions (R-AL) 
        clarifying that the special circumstances exception to 
        the bill's needs-based test includes a debtor with a 
        serious medical condition or a debtor on active duty in 
        the military to the extent these factors justify 
        adjustment to income or expenses as well as clarifying 
        the safe harbor from the needs-based test with respect 
        to veterans;

        2. an amendment by Senator Leahy restricting public 
        access to certain personal information regarding an 
        individual contained in bankruptcy case files to the 
        extent the court finds that disclosure of such 
        information would create undue risk of identity theft 
        or other unlawful injury to such individual or the 
        individual's property;

        3. an amendment by Senator Arlen Specter (R-PA) 
        increasing the filing fees for chapter 7 and chapter 11 
        bankruptcy cases, reducing the filing fees for chapter 
        13, and adjusting the allocation of such fees among 
        various governmental entities;

        4. an amendment by Senator Feingold providing for the 
        automatic periodic adjustment for inflation of certain 
        monetary amounts specified in the Bankruptcy Code;

        5. an amendment by Senator Feingold authorizing a 
        court to: (a) seal all public records pertaining to a 
        fraudulent involuntary bankruptcy petition, under 
        certain circumstances, (b) prohibit any consumer 
        reporting agency from issuing any consumer report 
        containing any reference to such petition; and (c) 
        expunge all records pertaining to such petition upon 
        the expiration of the statute of limitations for the 
        crimes associated with the filing of a fraudulent 
        involuntary bankruptcy petition. It also amends the 
        Federal criminal statute to make it a criminal offense 
        to file a fraudulent involuntary bankruptcy petition; 
        \40\
---------------------------------------------------------------------------
    \40\ This amendment is similar to legislation considered by the 
House in the 108th Congress. H.R. 1529, 108th Cong. (2003). The bill 
was ordered favorably reported without amendment by the House Judiciary 
Committee, H.R. Rep. No. 108-110 (2003), and passed by voice vote by 
the House. 149 Cong. Rec. H5104 (daily ed. June 10, 2003). The 
principal difference between this legislation and section 332 of the 
Act is that the bill would have permitted the court to expunge the case 
upon dismissal of the fraudulent involuntary petition.

        6. an amendment by Senator Feingold creating an 
        exception to the bill's mandatory consumer credit 
        counseling and financial management training 
        requirements for a debtor who is unable to complete 
        these requirements because of incapacity, disability, 
---------------------------------------------------------------------------
        or active duty in a military combat zone;

        7. an amendment by Senator Richard Durbin (D-IL) 
        creating an exception from the bill's needs-based test 
        for a disabled veteran whose indebtedness occurred 
        primarily during a period when the individual was on 
        active duty or performing a homeland defense activity; 
        and

        8. an amendment by Senator James Talent (R-MO) 
        authorizing a bankruptcy trustee to avoid any transfer 
        of property by a debtor to a self-settled trust made 
        within ten years preceding the filing of the debtor's 
        bankruptcy case if the debtor is a beneficiary of such 
        trust and the debtor made such transfer with actual 
        intent to hinder, delay, or defraud a creditor.

                    HIGHLIGHTS OF BANKRUPTCY REFORMS

Consumer Creditor Bankruptcy Protections.
    Needs-Based Reforms. Chapter 7 is a form of bankruptcy 
relief by which an individual debtor receives an immediate 
unconditional discharge of personal liability for certain debts 
in exchange for relinquishing his or her nonexempt assets to a 
bankruptcy trustee for liquidation and distribution to 
creditors.\41\ 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. 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.\42\
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    \41\ 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).
    \42\ Bankruptcy Act of 1898, 30 Stat. 544 (1898) (repealed 1978). 
The rationale of an unconditional discharge was explained by Congress 
more than 100 years ago:

      [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.

H.R. Rep. No. 55-65, at 43 (1897).
    The concept of needs-based bankruptcy relief has long been 
debated in the United States. President Herbert Hoover, for 
instance, recommended to Congress in 1932, ``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.'' 
\43\ 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 propose a plan to 
repay creditors out of future earnings.\44\
---------------------------------------------------------------------------
    \43\ President's Special Message to the Congress on Reform of 
Judicial Procedure, 69 Pub. Papers 83, 90 (Feb. 29, 1932).
    \44\ Chandler Act of 1938, 52 Stat. 840 (1938).
---------------------------------------------------------------------------
    Over the ensuing years, there continued to be repeated 
expressions of support for and opposition to means-testing 
bankruptcy reform.\45\ In 1967, various organizations 
testifying before Congress in support of such reform included 
the American Bar Association, the American Bankers Association, 
the Chamber of Commerce of the United States, CUNA, the 
National Federation of Independent Businesses, and the American 
Industrial Bankers Association.\46\ 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.'' \47\ The 
Bankruptcy Reform Act of 1978 \48\ retained the principle that 
a debtor's decision to choose relief premised on repayment to 
creditors should be ``completely voluntary.'' \49\
---------------------------------------------------------------------------
    \45\ 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'').
    \46\ Hearings on H.R. 1057 and H.R. 5771 Before the Subcomm. No. 4 
of the House Comm. on the Judiciary, 90th Cong. (1967).
    \47\ 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 159 
(1973).
    \48\ Pub. L. No. 95-598, 92 Stat. 2549 (1978).
    \49\ 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 the Bankruptcy Code as originally enacted in 1978 
provided that a chapter 7 case could only be dismissed for 
``cause,'' the Code was amended in 1984 to permit the court to 
dismiss a chapter 7 case for ``substantial abuse.'' \50\ This 
provision, codified in section 707(b) of the Bankruptcy 
Code,\51\ was added ``as part of a package of consumer credit 
amendments designed to reduce perceived abuses in the use of 
chapter 7.'' \52\ 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.'' \53\ In 1986, 
section 707(b) was further amended to allow a United States 
trustee (a Department of Justice official) to move for 
dismissal.\54\
---------------------------------------------------------------------------
    \50\ Bankruptcy Amendments and Federal Judgeship Act of 1984, Pub. 
L. No. 98-353, Sec. 312, 98 Stat. 333, 335 (1984).
    \51\ 11 U.S.C. Sec. 707(b).
    \52\ 6 Lawrence P. King et al., Collier on Bankruptcy 
Sec. 707.LH[2], at 707-30 (15th ed. rev. 2002).
    \53\ Id. at Sec. 707.04.
    \54\ Bankruptcy Judges, United States Trustees, and Family Farmer 
Bankruptcy Act of 1986, Pub. L. No. 99-554, Sec. 219, 100 Stat. 3088, 
3101 (1986).
---------------------------------------------------------------------------
    The utility of section 707(b) is limited for several 
reasons. Under current law, neither the court nor the United 
States trustee is required to file a motion to dismiss a 
chapter 7 case for substantial abuse under section 707(b). In 
addition, other parties in interest, such as chapter 7 trustees 
and creditors, are prohibited from filing such motions. In 
fact, section 707(b) specifies that a motion under that 
provision may not even be made ``at the request or suggestion 
of any party in interest.'' \55\ The standard for dismissal--
substantial abuse--is inherently vague, which has lead to its 
disparate interpretation and application by the bankruptcy 
bench.\56\ 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; \57\ others do not.\58\ A further reason 
militating against filing section 707(b) motions is that the 
Bankruptcy Code codifies a presumption that favors granting a 
debtor a discharge.\59\
---------------------------------------------------------------------------
    \55\ 11 U.S.C. Sec. 707(b).
    \56\ 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); Robert C. Furr & Marc P. 
Barmat, 11 U.S.C. Section 707(b)--The U.S. Trustee's Weapon Against 
Abuse, Nat'l Ass'n Bankr. Trustees (NABTalk) 11, 14 (Winter 2002-03).
    \57\ See, e.g., Zolg v. Kelly (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'').
    \58\ 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 [sic] 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.
    \59\ 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 since the 105th Congress, 
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 were 
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).
    Needs-based reforms would amend 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 other party in interest (including 
a creditor), to dismiss a chapter 7 case for abuse if it was 
filed by an individual debtor whose debts are primarily 
consumer debts. Alternatively, the chapter 7 case could be 
converted to a case under chapter 11 or chapter 13 on consent 
of the debtor.
    In addition, these reforms contemplate replacing the 
current law's presumption in favor of the debtor with a 
mandatory presumption of abuse that would arise under certain 
conditions. As amended, section 707(b) of the Bankruptcy Code 
would require a court to presume that abuse exists if the 
amount of the debtor's remaining income, after certain expenses 
and other specified amounts are deducted from the debtor's 
current monthly income (a defined term) \60\ 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. Section 102 mandates that the 
debtor's expenses include reasonably necessary expenditures for 
health insurance, disability insurance, and health savings 
accounts for the debtor, the debtor's spouse, and dependents of 
the debtor. In addition, the debtor's expenses must include 
those 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 to other specified expenses,\61\ 
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 \62\ as Necessary Expenses \63\ 
under the National \64\ and Local Standards \65\ categories and 
the debtor's actual monthly expenditures for items categorized 
as Other Necessary Expenses.\66\
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    \60\ Section 102(b) of the bill 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 six-month period 
preceding the bankruptcy filing. 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. It also 
excludes payments to victims of international terrorism or domestic 
terrorism (as defined in 18 U.S.C. Sec. 2331) on account of their 
status as victims of such terrorism.
    \61\ Under section 102(a), a debtor's monthly expenses may also 
include:

 an additional five percent of the food and clothing expense 
allowances under the Internal Revenue Service National Standards 
---------------------------------------------------------------------------
expenses category, if demonstrated to be reasonable and necessary;

 the debtor's average monthly payments on account of secured 
debts, including any additional payments to secured creditors that a 
chapter 13 debtor must make to retain possession of a debtor's primary 
residence, motor vehicle, or other property necessary for the support 
of the debtor and the debtor's dependents that collateralizes such 
debts;

 claims and expenses entitled to priority under section 507 of 
the Bankruptcy Code, such as child support and alimony;

 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 otherwise unable to pay such expenses;

 housing and utility expenses in excess of those specified by 
the Internal Revenue Service, under certain circumstances;

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

 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, under certain circumstances.
---------------------------------------------------------------------------
    \62\ Internal Revenue Service, Internal Revenue Manual--Financial 
Analysis Handbook pt. 5.15.1 (rev. May 1, 2004).
    \63\ The Internal Revenue Manual defines the term ``necessary 
expenses'' as expenses:

      that are necessary to provide for a taxpayer's and his or 
      her family's health and welfare and/or production of 
      income. The expenses must be reasonable. The total 
      necessary expenses establish the minimum a taxpayer and 
---------------------------------------------------------------------------
      family need to live.

Id. at pt. 5.15.1.7.
---------------------------------------------------------------------------
    \64\ The Internal Revenue Manual's ``National Standards'' establish 
standards for five types of expenses: food (includes all meals, home 
and away), housekeeping supplies (includes laundry and cleaning 
supplies; other household products such as cleaning and toilet tissue, 
paper towels and napkins; lawn and garden supplies; postage and 
stationary), apparel and services (includes shoes and clothing, laundry 
and dry cleaning, and shoe repair), personal care products and services 
(includes hair care products, haircuts, oral hygiene products, electric 
personal care appliances), and miscellaneous (a discretionary allowance 
of $100 for one person and $25 for each additional person in a 
taxpayer's family). Except for miscellaneous expenses, these expense 
standards are derived from Bureau of Labor Statistics Consumer 
Expenditure Survey and are stratified by income and household size. Id. 
at pt. 5.15.1.8.
    \65\ ``Local Standards,'' under the Internal Revenue Manual, 
establish expense standards for housing (e.g., mortgage or rent, 
property taxes, interest, parking, necessary maintenance and repair, 
homeowner's or renter's insurance, and homeowner dues and condominium 
fees) and transportation expenditures (e.g., vehicle insurance, vehicle 
payment, maintenance, fuel, state and local registration, parking fees, 
tolls, driver's license fees, and public transportation). Utilities 
(e.g., gas, electricity, water, fuel, oil, bottled gas, wood and other 
fuels, trash and garbage collection, septic cleaning, and telephone) 
are included under the housing expense category. Housing standards are 
established for each county within a state. Transportation standards 
are determined on a regional basis. Id. at pt. 5.15.1.9.
    \66\ The Internal Revenue Manual does not establish monetary 
amounts with regard to necessary expenses that it characterizes as 
``Other Expenses.'' Rather, it provides a non-exclusive list of these 
expenses, that must otherwise satisfy the ``necessary expense test,'' 
described in note 63 supra. The list includes expenditures for certain 
accounting and legal fees, child care, dependent care for an elderly or 
disabled person, health care, taxes, court-ordered payments, life 
insurance, involuntary deductions (e.g., union dues, uniforms, work 
shoes), charitable contributions, and certain education expenses. Id. 
at pt. 5.15.1.10.
---------------------------------------------------------------------------
    The means test permits the mandatory presumption of abuse 
to be rebutted only if: (1) the debtor demonstrates special 
circumstances justifying 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 caused 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.\67\ Special circumstances include such factors 
as whether the debtor has a serious medical condition or is on 
active duty in the Armed Services to the extent these factors 
justify adjustment to income or expenses.
---------------------------------------------------------------------------
    \67\ The debtor must itemize and provide documentation of each 
additional expense or income adjustment as well as explain 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 constitute an abuse, 
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 the debtor's counsel in 
filing the chapter 7 case violated Federal Rule of Bankruptcy 
Procedure 9011,\68\ S. 256 authorizes the court to order the 
attorney to reimburse the trustee for all reasonable costs in 
prosecuting the motion, including reasonable attorneys' fees. 
In addition, the court may assess an appropriate civil 
penalty.\69\
---------------------------------------------------------------------------
    \68\ Fed. R. Bankr. P. 9011. This rule is the bankruptcy analog to 
Federal Rule of Civil Procedure 11, which authorizes a court to impose 
sanctions against an attorney or party who commences a frivolous 
actions or files other inappropriate documents in violation of this 
Rule's requirements.
    \69\ Section 102(a) of S. 256 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 and 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'' apply to the means test. One 
provides that only a judge, United States trustee, bankruptcy 
administrator, or private trustee may file a motion to dismiss 
a chapter 7 case under section 707(b) of the Bankruptcy Code if 
the 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 a chapter 7 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 (including the circumstance where the 
debtor is a veteran) 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.\70\ In addition, the bill 
includes a safe harbor from the bill's needs-based test for a 
disabled veteran whose indebtedness occurred primarily during a 
period when the individual was on active duty (as defined in 10 
U.S.C. Sec. 101(d)(1)) or performing a homeland defense 
activity (as defined in 32 U.S.C. Sec. 901(1)).
---------------------------------------------------------------------------
    \70\  In a case that is not a joint case, current monthly income of 
the debtor's spouse is not considered if the debtor and the debtor's 
spouse are separated under applicable nonbankruptcy law or the debtor 
and the debtor's spouse are living separate and apart (other than for 
the purpose of evading this provision) and the debtor files a statement 
under penalty of perjury containing certain specified information.
---------------------------------------------------------------------------
    Other Reforms Dealing with Abuse. S. 256 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, S. 256 prevents 
the discharge of debts based on fraud, embezzlement, and 
malicious injury in a chapter 13 case. Other abuse reforms 
include a provision authorizing the court to dismiss a chapter 
7 case filed by an individual debtor convicted of a crime of 
violence or a drug trafficking crime on motion of the victim, 
under certain circumstances. And, the court, as a condition of 
confirming a chapter 13 plan, must find that the debtor filed 
the chapter 13 case in good faith.
    The bill also restricts the so-called ``mansion loophole.'' 
Under current bankruptcy law, debtors living in certain states 
can shield from their creditors virtually all of the equity in 
their homes. In light of this, some debtors actually relocate 
to these states just to take advantage of their ``mansion 
loophole'' laws. S. 256 closes this loophole for abuse by 
requiring a debtor to be a domiciliary in the state for at 
least two years before he or she can claim that state's 
homestead exemption; the current requirement can be as little 
as 91 days.\71\ The bill further reduces the opportunity for 
abuse by requiring a debtor to own the homestead for at least 
40 months before he or she can use state exemption law; current 
law imposes no such requirement.\72\ S. 256 prevents securities 
law violators and others who have engaged in criminal conduct 
from shielding their homestead assets from those whom they have 
defrauded or injured. If a debtor was convicted of a felony, 
violated a securities law, or committed a criminal act, 
intentional tort, or engaged in reckless misconduct that caused 
serious physical injury or death, the bill overrides state 
homestead exemption law and caps the debtor's homestead 
exemption at $125,000. To the extent a debtor's homestead 
exemption was obtained through the fraudulent conversion of 
nonexempt assets (e.g., cash) during the ten-year period 
preceding the filing of the bankruptcy case, S. 256 requires 
such exemption to be reduced by the amount attributable to the 
debtor's fraud.
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    \71\ See 11 U.S.C. Sec. 522(b)(2)(2)(A).
    \72\ If the debtor owns the homestead for less than 40 months, the 
provision imposes a $125,000 homestead cap. In effect, this provision 
overrides state exemption law authorizing a homestead exemption in 
excess of this amount and allows such law to control if it authorizes a 
homestead exemption in a lesser amount.
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    S. 256 also authorizes a trustee to avoid any transfer of 
property that a debtor made to a self-settled trust (of which 
the debtor is a beneficiary) within the ten-year period 
preceding the filing of the debtor's bankruptcy case if the 
debtor made the transfer with actual intent to hinder, delay, 
or defraud a creditor of the debtor.
    Protections for Creditors--In General. S. 256 includes 
provisions intended to provide greater protections for 
creditors, while ensuring that the claims of those creditors 
entitled to priority treatment, such as spousal and child 
support claimants, are not adversely impacted. These include 
provisions: (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; and (3) 
implementing various provisions designed to improve the 
accuracy of the information contained in debtors' schedules, 
statements of financial affairs. They also clarify 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).
    Enforcement of Family Support Obligations. S. 256 accords 
domestic and child support claimants a broad spectrum of 
special protections. The legislation creates a uniform and 
expanded definition of domestic support obligations to include 
debts that accrue both before or after a bankruptcy case is 
filed. It gives the highest payment priority for these debts 
(current law only accords them a seventh-level priority),\73\ 
with allowance for the payment of trustee administrative 
expenses, under certain conditions. In addition, the bill 
mandates that a debtor must be current on postpetition domestic 
support obligations to confirm a chapter 11, chapter 12 (family 
farmer) or chapter 13 plan of reorganization. To facilitate the 
domestic support collection efforts by governmental units, the 
legislation 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. The legislation, 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.
---------------------------------------------------------------------------
    \73\ 11 U.S.C. Sec. 507(a)(7).
---------------------------------------------------------------------------
    Protections for Secured Creditors. S. 256's protections for 
secured creditors include a prohibition against bifurcating a 
secured debt incurred within the 910-day 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, S. 256 prohibits 
bifurcation of specified secured debts if incurred during the 
one-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.\74\ S. 256 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.
---------------------------------------------------------------------------
    \74\ Redemption is a method by which a chapter 7 debtor can retain 
certain types of personal property by paying the holder of a lien on 
such property the allowed amount of the holder's secured lien. 11 
U.S.C. Sec. 722.
---------------------------------------------------------------------------
    Protections for Lessors. With respect to the interests of 
lessors, S. 256 requires chapter 13 debtors to remain current 
on their personal property leases and to 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 large and small residential 
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 Bankruptcy Protections. The bill's consumer 
protections include provisions strengthening professionalism 
standards for attorneys and others who assist consumer debtors 
with their bankruptcy cases. S. 256 mandates that certain 
services and specified notices be given to consumers by 
professionals and others who provide bankruptcy assistance. To 
ensure compliance with these provisions, the bill institutes 
various enforcement mechanisms.
    In addition, S. 256 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.
    S. 256 contains provisions to help debtors better 
understand their rights and obligations with respect to 
reaffirmation agreements. To enforce these protections, the 
bill requires the Attorney General to designate a United States 
Attorney for each judicial district and a FBI agent for each 
field office to have primary law enforcement responsibility 
regarding abusive reaffirmation practices, among other matters.
    The legislation also expands a debtor's ability to exempt 
certain tax-qualified retirement accounts and pensions. It 
creates a new provision that allows a consumer debtor to exempt 
certain education IRAs and state tuition plans for his or her 
child's postsecondary education from the claims of creditors.
    Most importantly, S. 256 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 \75\--before they decide to file for bankruptcy 
relief. The bill also requires debtors, after they file for 
bankruptcy relief, to receive financial management training 
that will provide them with guidance about how to manage their 
finances, so that they can avoid future financial difficulties. 
The mandatory credit counseling and financial management 
training requirements do not apply if the debtor is unable to 
complete these requirements because of incapacity or 
disability, or because he or she is on active duty in a 
military combat zone.
---------------------------------------------------------------------------
    \75\ Under current law, for example, a bankruptcy filing may be 
reported on a consumer's credit report for ten years. 15 U.S.C. 
Sec. 1681c (2002).
---------------------------------------------------------------------------
    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.
Highlights of Business Bankruptcy Reforms.
    S. 256 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. S. 256 establishes a 
new form of bankruptcy relief for transnational insolvencies 
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. S. 256 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. For the first time, it also allows certain family 
fishermen to qualify for chapter 12 relief.
    Protections Against Excessive Payments To a Debtor's 
Insiders and Fraud by a Debtor's Management. S. 256 
significantly restricts a corporate debtor's ability to pay 
bonuses, severance payments, and other payments to insiders of 
the debtor after the bankruptcy case is filed and requires the 
court to approve any such payment. In addition, it requires the 
United States trustee to apply for the appointment of a trustee 
if there are reasonable grounds to suspect that current members 
of a chapter 11 debtor's governing body, chief executive 
officer, chief financial officer, or members of the debtor's 
governing body who selected the debtor's chief executive 
officer or chief financial officer participated in actual 
fraud, dishonesty, or criminal conduct in the management of the 
debtor or the debtor's public financial reporting.
    Protections for Employees. S. 256 provides heightened 
protections for employees. It requires certain back pay awards 
granted as a result of a debtor's violation of Federal or state 
law to receive one of the highest payment priorities in a 
bankruptcy case. In addition, the bill streamlines the 
appointment of an ERISA administrator for an employee benefit 
plan, under certain circumstances, to minimize the disruption 
that results when an employer files for bankruptcy relief. S. 
256 also increases the monetary cap on wage and employee 
benefit claims entitled to priority under the Bankruptcy Code 
from $4,650 to $10,000 and lengthens the reachback period for 
wage claims from 90 days to 180 days. The bill amends the 
Bankruptcy Code to facilitate the recovery of avoidable 
transfers and excessive pre- and post-petition compensation, 
such as bonuses, paid to insiders of a debtor. In addition, S. 
256 limits the ability of chapter 11 debtors to unilaterally 
terminate retiree benefit plans on the eve of bankruptcy.
    Small Business/Single Asset Real Estate Debtors. S. 256 
includes provisions with respect to small business and single 
asset real estate debtors largely derived from recommendations 
of the National Bankruptcy Review Commission.\76\
---------------------------------------------------------------------------
    \76\ See generally Report of the National Bankruptcy Review 
Commission, at 303-706 (Oct. 20, 1997).
---------------------------------------------------------------------------
    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. S. 256 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.
    With regard to the Bankruptcy Code's treatment of single 
asset real estate debtors, S. 256 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, S. 256 
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. S. 256 contains a series of provisions 
pertaining to the treatment of certain financial transactions 
under the Bankruptcy Code and relevant banking laws.\77\ These 
provisions are intended to reduce ``systemic risk'' in the 
banking system and financial marketplace.\78\ 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, to 
allow the expeditious termination or netting of certain types 
of financial transactions. Many of these provisions are derived 
from recommendations issued by the President's Working Group on 
Financial Markets \79\ and revisions espoused by the financial 
industry.
---------------------------------------------------------------------------
    \77\ In addition to the Bankruptcy Code, the bill amends the 
Federal Deposit Insurance Act, the Financial Institutions Reform, 
Recovery and Enforcement Act of 1989, the Federal Deposit Insurance 
Corporation Improvement Act of 1991, the Federal Reserve Act, and the 
Securities Investor Protection Act of 1971.
    \78\ The report on H.R. 4393, a bill substantially similar to title 
IX of S. 256 that was introduced in the 105th Congress, 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.R. Rep. No. 105-688, pt. 1, at 2 (1998).
---------------------------------------------------------------------------
    \79\ 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.
---------------------------------------------------------------------------
    Family Farmers and Family Fishermen. S. 256 helps small 
family farmers facing financial distress. While current 
bankruptcy law has a specialized form of bankruptcy relief--
chapter 12--that is specifically designed for family farmers, 
its benefits for farmers are limited because of its restrictive 
eligibility requirements. S. 256 responds to this problem in 
several key respects: it more than doubles the debt eligibility 
limit and requires it to be periodically adjusted for 
inflation; it lowers the requisite percentage of a farmer's 
income that must be derived from farming operations; and it 
gives farmers more flexibility with respect to how certain 
creditors can be repaid. As a result, many more deserving 
family farmers facing financial hard times will be able to 
avail themselves of chapter 12. In addition, S. 256 makes 
chapter 12 a permanent component of the bankruptcy laws and 
extends the benefits of this form of bankruptcy relief to 
family fishermen.
    Transnational Insolvencies. In response to the increasing 
globalization of business enterprises and operations, S. 256 
establishes a separate chapter under the Bankruptcy Code 
devoted to transnational insolvencies. These provisions are 
intended to provide greater legal certainty for trade and 
investment as well as to provide for the fair and efficient 
administration of these cases. They reflect consensus 
recommendations of the National Bankruptcy Review 
Commission.\80\
---------------------------------------------------------------------------
    \80\ Report of the National Bankruptcy Review Commission, at 351-70 
(Oct. 20, 1997).
---------------------------------------------------------------------------
    Protections for Small Business Owners. Under current 
bankruptcy law, a business can be sued by a bankruptcy trustee 
and forced to pay back--as a preferential transfer--monies 
previously paid to it by a firm that later files for bankruptcy 
protection. S. 256 contains provisions making it easier--
particularly for small businesses--to defend against these 
suits. These provisions largely reflect recommendations of the 
National Bankruptcy Review Commission.\81\
---------------------------------------------------------------------------
    \81\ Id. at 793-803.
---------------------------------------------------------------------------
    Health Care Providers. S. 256 adds a provision to the 
Bankruptcy Code intended to give patients of bankrupt health 
care providers various protections. These include provisions 
specifying requirements for the disposal of patient records so 
that a patient's privacy and the confidentiality of such 
records when they are in the custody of a health care business 
in bankruptcy are protected. 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 state agency. If warranted, it also 
authorizes the court to order the appointment of an ombudsman 
to monitor 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.
    Privacy Protections. Under current law, nearly every item 
of information filed in a bankruptcy case is made available to 
the public. S. 256 restricts public access to certain personal 
information pertaining to an individual contained a bankruptcy 
case file to the extent the court finds that disclosure of such 
information would create undue risk of identity theft or other 
unlawful injury to the individual or the individual's property. 
In addition, the bill prohibits the disclosure of the names of 
the debtor's minor children and requires such information to be 
kept in a nonpublic record, which can be made available for 
inspection only by the court and certain other designated 
entities. Further, S. 256 prohibits the sale of customers' 
personally identifiable information by a business debtor unless 
certain conditions are satisfied.
    Additional Bankruptcy Judgeships. S. 256 authorizes 28 
additional bankruptcy judgeships on a temporary basis and 
extends three currently existing temporary judgeships.\82\ This 
provision responds to the 59 percent increase in the caseload 
of bankruptcy judges since 1992, reported by the Administrative 
Office of the United States Courts.\83\
---------------------------------------------------------------------------
    \82\ Districts authorized additional bankruptcy judgeships under S. 
256 include the following: Eastern District of California (one), 
Central District of California (three), Delaware (four), Southern 
District of Florida (two), Southern District of Georgia (one), Maryland 
(three), Eastern District of Michigan (one), Southern District of 
Mississippi (one), New Jersey (one), Nevada (one), Eastern District of 
New York (one), Northern District of New York (one), Southern District 
of New York (one), Eastern District of North Carolina (one), Eastern 
District of Pennsylvania (one), Middle District of Pennsylvania (one), 
Puerto Rico (one), South Carolina (one), Western District of Tennessee 
(one), Eastern District of Virginia (one).
    \83\ Press Release, Administrative Office of the U.S. Courts, 
Record Breaking Bankruptcy Filings Reported in Calendar Year 2002 (Feb. 
14, 2003) (noting that ``no new bankruptcy judgeships have been created 
since 1992'').
---------------------------------------------------------------------------
    Miscellaneous Provisions. Under current law, an appeal from 
a bankruptcy court decision must be heard by a Federal district 
court or bankruptcy appellate panel before it may be heard by a 
Federal court of appeals. S. 256 authorizes a direct appeal 
from a bankruptcy court decision to the court of appeals, under 
certain circumstances. Other general provisions include 
allowing attorneys to share compensation with bona fide public 
service attorney referral programs, and mandating that a 
bankruptcy court conduct scheduling conferences in a bankruptcy 
case if necessary to further its expeditious and economical 
resolution. In addition, the bill requires the United States 
Trustee Program to compile various statistics regarding chapter 
7, 11 and 13 cases and to make these data available to the 
public. S. 256 also permits a court to seal all public records 
pertaining to a fraudulent involuntary bankruptcy petition, 
under certain circumstances, and to prohibit a consumer 
reporting agency from issuing a consumer report containing any 
reference to such petition.

                                Hearings

    The Committee on the Judiciary held no hearings on S. 256.

                        Committee Consideration

    On March 16, 2005, the Committee met in open session and 
ordered favorably reported the bill S. 256 without an amendment 
by a recorded vote of 22 to 13, a quorum being present.

                         Votes of the Committee

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee notes that the 
following roll call votes occurred during the Committee's 
consideration of S. 256.
    1. An amendment by Mr. Conyers disallowing: (a) claims 
resulting from an assignment of a debtor's right to receive 
military pay, or military pension or disability benefits; (b) 
certain claims owed by a servicemember or a dependent of a 
servicemember that are either secured or conditioned upon a 
personal check held for future deposit or electronic access to 
a bank account; or (3) claims owed by a servicemember or 
dependent of a servicemember requiring the payment of interest 
and other charges in excess of 36 percent. The amendment also 
allows the discharge of certain debts based on the debtor's 
right to receive military pay, or military pension or 
disability benefits. Defeated 15 to 20.

                                                   ROLLCALL NO. 1
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble.......................................................                              X
Mr. Smith (Texas)...............................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................
Mr. Chabot......................................................                              X
Mr. Lungren.....................................................                              X
Mr. Jenkins.....................................................                              X
Mr. Cannon......................................................                              X
Mr. Bachus......................................................                              X
Mr. Inglis......................................................                              X
Mr. Hostettler..................................................                              X
Mr. Green.......................................................
Mr. Keller......................................................                              X
Mr. Issa........................................................                              X
Mr. Flake.......................................................                              X
Mr. Pence.......................................................                              X
Mr. Forbes......................................................                              X
Mr. King........................................................                              X
Mr. Feeney......................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................                              X
Mr. Conyers.....................................................              X
Mr. Berman......................................................              X
Mr. Boucher.....................................................
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................              X
Mr. Meehan......................................................              X
Mr. Delahunt....................................................              X
Mr. Wexler......................................................
Mr. Weiner......................................................              X
Mr. Schiff......................................................              X
Ms. Sanchez.....................................................              X
Mr. Smith.......................................................              X
Mr. Van Hollen..................................................              X
Mr. Sensenbrenner, Chairman.....................................                              X
                                                                 -----------------------------------------------
    Total.......................................................             15              20
----------------------------------------------------------------------------------------------------------------

    2. An amendment by Mr. Watt and Mr. Delahunt disallowing a 
claim for a debt based on an extension of credit on which the 
annual rate of interest in excess of 50 percent was imposed or 
in excess of a limit on allowable interest under applicable 
nonbankruptcy law. Defeated 9 to 15.

                                                   ROLLCALL NO. 2
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble.......................................................                              X
Mr. Smith (Texas)...............................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................
Mr. Chabot......................................................                              X
Mr. Lungren.....................................................                              X
Mr. Jenkins.....................................................                              X
Mr. Cannon......................................................                              X
Mr. Bachus......................................................
Mr. Inglis......................................................
Mr. Hostettler..................................................                              X
Mr. Green.......................................................                              X
Mr. Keller......................................................
Mr. Issa........................................................                              X
Mr. Flake.......................................................
Mr. Pence.......................................................
Mr. Forbes......................................................
Mr. King........................................................                              X
Mr. Feeney......................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................                              X
Mr. Conyers.....................................................              X
Mr. Berman......................................................
Mr. Boucher.....................................................
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................
Mr. Meehan......................................................              X
Mr. Delahunt....................................................              X
Mr. Wexler......................................................
Mr. Weiner......................................................
Mr. Schiff......................................................              X
Ms. Sanchez.....................................................              X
Mr. Smith (Washington)..........................................
Mr. Van Hollen..................................................
Mr. Sensenbrenner, Chairman.....................................                              X
                                                                 -----------------------------------------------
    Total.......................................................              9              15
----------------------------------------------------------------------------------------------------------------

    3. An amendment by Mr. Watt amending section 102 of the 
bill to permit a debtor to claim as an expense, in addition to 
elementary and secondary school educational expenses, the 
actual tuition costs per each child (exclusive of room and 
board) to attend a postsecondary education institution, and 
certain other educational programs. Defeated 10 to 17.

                                                   ROLLCALL NO. 3
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble.......................................................                              X
Mr. Smith (Texas)...............................................
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................
Mr. Chabot......................................................                              X
Mr. Lungren.....................................................                              X
Mr. Jenkins.....................................................                              X
Mr. Cannon......................................................                              X
Mr. Bachus......................................................                              X
Mr. Inglis......................................................
Mr. Hostettler..................................................                              X
Mr. Green.......................................................                              X
Mr. Keller......................................................                              X
Mr. Issa........................................................                              X
Mr. Flake.......................................................
Mr. Pence.......................................................
Mr. Forbes......................................................
Mr. King........................................................                              X
Mr. Feeney......................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................                              X
Mr. Conyers.....................................................              X
Mr. Berman......................................................
Mr. Boucher.....................................................                              X
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................
Mr. Meehan......................................................              X
Mr. Delahunt....................................................              X
Mr. Wexler......................................................
Mr. Weiner......................................................              X
Mr. Schiff......................................................              X
Ms. Sanchez.....................................................              X
Mr. Smith (Washington)..........................................
Mr. Van Hollen..................................................
Mr. Sensenbrenner, Chairman.....................................                              X
                                                                 -----------------------------------------------
    Total.......................................................             10              17
----------------------------------------------------------------------------------------------------------------

    4. An amendment by Mr. Nadler amending sections 404, 411, 
417, 436, 437, and 438 of the bill to permit the court, under 
specified circumstances, to extend certain time periods 
specified therein. Defeated 13 to 18.

                                                   ROLLCALL NO. 4
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble.......................................................                              X
Mr. Smith (Texas)...............................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................
Mr. Chabot......................................................                              X
Mr. Lungren.....................................................                              X
Mr. Jenkins.....................................................                              X
Mr. Cannon......................................................                              X
Mr. Bachus......................................................                              X
Mr. Inglis......................................................                              X
Mr. Hostettler..................................................                              X
Mr. Green.......................................................                              X
Mr. Keller......................................................                              X
Mr. Issa........................................................                              X
Mr. Flake.......................................................
Mr. Pence.......................................................
Mr. Forbes......................................................
Mr. King........................................................                              X
Mr. Feeney......................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................                              X
Mr. Conyers.....................................................              X
Mr. Berman......................................................              X
Mr. Boucher.....................................................
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................
Ms. Jackson Lee.................................................
Ms. Waters......................................................              X
Mr. Meehan......................................................              X
Mr. Delahunt....................................................              X
Mr. Wexler......................................................              X
Mr. Weiner......................................................              X
Mr. Schiff......................................................              X
Ms. Sanchez.....................................................              X
Mr. Smith (Washington)..........................................              X
Mr. Van Hollen..................................................
Mr. Sensenbrenner, Chairman.....................................                              X
                                                                 -----------------------------------------------
    Total.......................................................             13              18
----------------------------------------------------------------------------------------------------------------

    5. An amendment by Mr. Schiff amending section 102 of the 
bill to prohibit a judge, United States trustee, trustee, or 
other party in interest from dismissing a chapter 7 case on the 
basis of the debtor's ability to repay if the debtor is an 
identity theft victim, under certain circumstances. Defeated 13 
to 15.

                                                   ROLLCALL NO. 5
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble.......................................................                              X
Mr. Smith (Texas)...............................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................
Mr. Chabot......................................................                              X
Mr. Lungren.....................................................                              X
Mr. Jenkins.....................................................                              X
Mr. Cannon......................................................                              X
Mr. Bachus......................................................                              X
Mr. Inglis......................................................                              X
Mr. Hostettler..................................................
Mr. Green.......................................................                              X
Mr. Keller......................................................
Mr. Issa........................................................
Mr. Flake.......................................................
Mr. Pence.......................................................
Mr. Forbes......................................................
Mr. King........................................................                              X
Mr. Feeney......................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................                              X
Mr. Conyers.....................................................              X
Mr. Berman......................................................              X
Mr. Boucher.....................................................
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................
Ms. Jackson Lee.................................................
Ms. Waters......................................................              X
Mr. Meehan......................................................              X
Mr. Delahunt....................................................              X
Mr. Wexler......................................................
Mr. Weiner......................................................              X
Mr. Schiff......................................................              X
Ms. Sanchez.....................................................              X
Mr. Smith (Washington)..........................................              X
Mr. Van Hollen..................................................              X
Mr. Sensenbrenner, Chairman.....................................                              X
                                                                 -----------------------------------------------
    Total.......................................................             13              15
----------------------------------------------------------------------------------------------------------------

    6. An amendment by Mr. Delahunt amending Bankruptcy Code 
section 548 to authorize a trustee to avoid a transfer of an 
interest of a debtor made within the ten-year period preceding 
the bankruptcy filing to an asset protection trust if the 
amount of the transfer or aggregate amount of all transfers 
during such period exceeds $125,000, with certain exceptions. 
Defeated 10 to 15.

                                                   ROLLCALL NO. 6
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble.......................................................                              X
Mr. Smith (Texas)...............................................
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................
Mr. Chabot......................................................                              X
Mr. Lungren.....................................................                              X
Mr. Jenkins.....................................................                              X
Mr. Cannon......................................................                              X
Mr. Bachus......................................................
Mr. Inglis......................................................
Mr. Hostettler..................................................                              X
Mr. Green.......................................................
Mr. Keller......................................................                              X
Mr. Issa........................................................
Mr. Flake.......................................................                              X
Mr. Pence.......................................................
Mr. Forbes......................................................                              X
Mr. King........................................................                              X
Mr. Feeney......................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................
Mr. Conyers.....................................................              X
Mr. Berman......................................................              X
Mr. Boucher.....................................................                              X
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................              X
Mr. Meehan......................................................
Mr. Delahunt....................................................              X
Mr. Wexler......................................................
Mr. Weiner......................................................              X
Mr. Schiff......................................................              X
Ms. Sanchez.....................................................
Mr. Smith (Washington)..........................................
Mr. Van Hollen..................................................
Mr. Sensenbrenner, Chairman.....................................                              X
                                                                 -----------------------------------------------
    Total.......................................................             10              15
----------------------------------------------------------------------------------------------------------------

    7. An amendment by Mr. Berman and Mr. Meehan amending 
Bankruptcy Code section 522 to create a uniform Federal 
homestead exemption floor in the amount of $150,000 for a 
medically distressed debtor. Defeated 13 to 18.

                                                   ROLLCALL NO. 7
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble.......................................................                              X
Mr. Smith (Texas)...............................................
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................
Mr. Chabot......................................................
Mr. Lungren.....................................................                              X
Mr. Jenkins.....................................................                              X
Mr. Cannon......................................................                              X
Mr. Bachus......................................................                              X
Mr. Inglis......................................................                              X
Mr. Hostettler..................................................                              X
Mr. Green.......................................................                              X
Mr. Keller......................................................                              X
Mr. Issa........................................................                              X
Mr. Flake.......................................................                              X
Mr. Pence.......................................................
Mr. Forbes......................................................                              X
Mr. King........................................................                              X
Mr. Feeney......................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................
Mr. Conyers.....................................................              X
Mr. Berman......................................................              X
Mr. Boucher.....................................................                              X
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................              X
Mr. Meehan......................................................              X
Mr. Delahunt....................................................              X
Mr. Wexler......................................................              X
Mr. Weiner......................................................              X
Mr. Schiff......................................................              X
Ms. Sanchez.....................................................
Mr. Smith (Washington)..........................................
Mr. Van Hollen..................................................              X
Mr. Sensenbrenner, Chairman.....................................                              X
                                                                 -----------------------------------------------
    Total.......................................................             13              18
----------------------------------------------------------------------------------------------------------------

    8. An amendment by Mr. Nadler amending Bankruptcy Code 
section 523(a) to provide that a debt that results from any 
judgment, order, consent order, or decree entered in any 
Federal or state court or contained in any settlement agreement 
entered into by the debtor that arises from: (a) the violation 
of certain specified offenses under title 18 of the United 
States Code; (b) an offense under state law that would be a 
civil rights crime (as described in the preceding clause); (c) 
a violation under 42 U.S.C. Sec. 1983; or (d) the intentional 
actions of a debtor that violate a valid court order enforcing 
a civil rights law described in (a) or (b). It also amends 
Bankruptcy Code section 523(a)(13) to include an order of 
restitution under the criminal law of a state. Defeated 11 to 
17.

                                                   ROLLCALL NO. 8
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble.......................................................                              X
Mr. Smith (Texas)...............................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................
Mr. Chabot......................................................                              X
Mr. Lungren.....................................................                              X
Mr. Jenkins.....................................................                              X
Mr. Cannon......................................................                              X
Mr. Bachus......................................................                              X
Mr. Inglis......................................................
Mr. Hostettler..................................................                              X
Mr. Green.......................................................                              X
Mr. Keller......................................................
Mr. Issa........................................................
Mr. Flake.......................................................
Mr. Pence.......................................................
Mr. Forbes......................................................                              X
Mr. King........................................................                              X
Mr. Feeney......................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................                              X
Mr. Conyers.....................................................              X
Mr. Berman......................................................              X
Mr. Boucher.....................................................                              X
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................
Ms. Jackson Lee.................................................
Ms. Waters......................................................              X
Mr. Meehan......................................................              X
Mr. Delahunt....................................................              X
Mr. Wexler......................................................              X
Mr. Weiner......................................................              X
Mr. Schiff......................................................              X
Ms. Sanchez.....................................................
Mr. Smith (Washington)..........................................
Mr. Van Hollen..................................................
Mr. Sensenbrenner, Chairman.....................................                              X
                                                                 -----------------------------------------------
    Total.......................................................             11              17
----------------------------------------------------------------------------------------------------------------

    9. An amendment by Mr. Meehan amending section 102 of the 
bill to provide that the needs-based requirements under 
Bankruptcy Code section 707(b)(2)(A) through (C) (as amended by 
section 102) shall not apply to, and the court may not dismiss 
or convert a chapter 7 case filed by, a debtor who is a 
disabled veteran based on any form of means testing, under 
certain specified circumstances. Defeated 12 to 19.

                                                   ROLLCALL NO. 9
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble.......................................................                              X
Mr. Smith (Texas)...............................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................
Mr. Chabot......................................................                              X
Mr. Lungren.....................................................                              X
Mr. Jenkins.....................................................                              X
Mr. Cannon......................................................                              X
Mr. Bachus......................................................                              X
Mr. Inglis......................................................                              X
Mr. Hostettler..................................................                              X
Mr. Green.......................................................
Mr. Keller......................................................                              X
Mr. Issa........................................................                              X
Mr. Flake.......................................................
Mr. Pence.......................................................
Mr. Forbes......................................................                              X
Mr. King........................................................                              X
Mr. Feeney......................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................                              X
Mr. Conyers.....................................................              X
Mr. Berman......................................................              X
Mr. Boucher.....................................................                              X
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................              X
Mr. Meehan......................................................              X
Mr. Delahunt....................................................
Mr. Wexler......................................................
Mr. Weiner......................................................              X
Mr. Schiff......................................................              X
Ms. Sanchez.....................................................              X
Mr. Smith (Washington)..........................................
Mr. Van Hollen..................................................              X
Mr. Sensenbrenner, Chairman.....................................                              X
                                                                 -----------------------------------------------
    Total.......................................................             12              19
----------------------------------------------------------------------------------------------------------------

    10. An amendment by Ms. Jackson Lee amending section 102 of 
the bill to increase the amount of actual expenses a chapter 7 
debtor may claim under the provision's needs-based test for 
certain educational costs for a debtor's dependent child from 
$1,500 to $3,000. Defeated 12 to 21.

                                                   ROLLCALL NO. 10
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble.......................................................                              X
Mr. Smith (Texas)...............................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................                              X
Mr. Chabot......................................................                              X
Mr. Lungren.....................................................                              X
Mr. Jenkins.....................................................                              X
Mr. Cannon......................................................                              X
Mr. Bachus......................................................                              X
Mr. Inglis......................................................                              X
Mr. Hostettler..................................................
Mr. Green.......................................................                              X
Mr. Keller......................................................                              X
Mr. Issa........................................................                              X
Mr. Flake.......................................................
Mr. Pence.......................................................                              X
Mr. Forbes......................................................                              X
Mr. King........................................................                              X
Mr. Feeney......................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................                              X
Mr. Conyers.....................................................              X
Mr. Berman......................................................              X
Mr. Boucher.....................................................                              X
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................              X
Mr. Meehan......................................................
Mr. Delahunt....................................................
Mr. Wexler......................................................
Mr. Weiner......................................................              X
Mr. Schiff......................................................              X
Ms. Sanchez.....................................................              X
Mr. Smith (Was1hington).........................................              X
Mr. Van Hollen..................................................              X
Mr. Sensenbrenner, Chairman.....................................                              X
                                                                 -----------------------------------------------
    Total.......................................................             12              21
----------------------------------------------------------------------------------------------------------------

    11. Three en bloc amendments by Ms. Jackson Lee as follows: 
(a) amending Bankruptcy Code section 523(a) to provide that a 
debt arising from certain sex offenses in which the victim was 
an individual who had not attained the age of 17 years is 
nondischargeable; (b) amending Bankruptcy Code section 523(a) 
to provide that a debt arising from a judicial, administrative, 
or other action related to the consumption or consumer purchase 
of a tobacco product that is based in whole or in part on false 
pretenses, a false representation, or actual fraud is 
nondischargeable; and (c) amending section 708 of the bill to 
provide that the confirmation of a chapter 11 plan under 
Bankruptcy Code section 1141 does not discharge a debtor that 
is corporation from a debt specified in Bankruptcy Code section 
523(a)(9). Defeated 9 to 20.

                                                   ROLLCALL NO. 11
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble.......................................................                              X
Mr. Smith (Texas)...............................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................                              X
Mr. Chabot......................................................                              X
Mr. Lungren.....................................................                              X
Mr. Jenkins.....................................................                              X
Mr. Cannon......................................................                              X
Mr. Bachus......................................................                              X
Mr. Inglis......................................................                              X
Mr. Hostettler..................................................
Mr. Green.......................................................
Mr. Keller......................................................                              X
Mr. Issa........................................................                              X
Mr. Flake.......................................................
Mr. Pence.......................................................                              X
Mr. Forbes......................................................                              X
Mr. King........................................................                              X
Mr. Feeney......................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................                              X
Mr. Conyers.....................................................              X
Mr. Berman......................................................              X
Mr. Boucher.....................................................                              X
Mr. Nadler......................................................
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................              X
Mr. Meehan......................................................              X
Mr. Delahunt....................................................
Mr. Wexler......................................................
Mr. Weiner......................................................              X
Mr. Schiff......................................................
Ms. Sanchez.....................................................
Mr. Smith (Washington)..........................................
Mr. Van Hollen..................................................              X
Mr. Sensenbrenner, Chairman.....................................                              X
                                                                 -----------------------------------------------
    Total.......................................................              9              20
----------------------------------------------------------------------------------------------------------------

    12. Motion to report S. 256 favorably. Passed 22 to 13.

                                                   ROLLCALL NO. 12
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble.......................................................              X
Mr. Smith (Texas)...............................................              X
Mr. Gallegly....................................................              X
Mr. Goodlatte...................................................              X
Mr. Chabot......................................................              X
Mr. Lungren.....................................................              X
Mr. Jenkins.....................................................              X
Mr. Cannon......................................................              X
Mr. Bachus......................................................              X
Mr. Inglis......................................................              X
Mr. Hostettler..................................................
Mr. Green.......................................................              X
Mr. Keller......................................................              X
Mr. Issa........................................................              X
Mr. Flake.......................................................              X
Mr. Pence.......................................................              X
Mr. Forbes......................................................              X
Mr. King........................................................              X
Mr. Feeney......................................................              X
Mr. Franks......................................................              X
Mr. Gohmert.....................................................              X
Mr. Conyers.....................................................                              X
Mr. Berman......................................................                              X
Mr. Boucher.....................................................              X
Mr. Nadler......................................................                              X
Mr. Scott.......................................................                              X
Mr. Watt........................................................                              X
Ms. Lofgren.....................................................
Ms. Jackson Lee.................................................                              X
Ms. Waters......................................................                              X
Mr. Meehan......................................................                              X
Mr. Delahunt....................................................                              X
Mr. Wexler......................................................
Mr. Weiner......................................................                              X
Mr. Schiff......................................................                              X
Ms. Sanchez.....................................................                              X
Mr. Smith (Washington)..........................................
Mr. Van Hollen..................................................                              X
Mr. Sensenbrenner, Chairman.....................................              X
                                                                 -----------------------------------------------
    Total.......................................................             22              13
----------------------------------------------------------------------------------------------------------------

                      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.

               New Budget Authority and Tax Expenditures

    In compliance with clause 3(c)(2) of Rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of budget authority, or tax expenditures or 
revenues contained in the cost estimate prepared by the 
Director of the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of Rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, S. 256, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, April 4, 2005.
Hon. F. James Sensenbrenner, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 256, the 
``Bankruptcy Abuse Prevention and Consumer Protection Act of 
2005,'' as reported by the House Committee on the Judiciary. 
This version of S. 256 is identical to the legislation as 
passed by the Senate on March 10, 2005.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Gregory 
Waring (for Federal spending), who can be reached at 226-2860, 
Annabelle Bartsch (for Federal revenues), who can be reached at 
226-2720, Melissa Merrell (for the State and local impact), who 
can be reached at 225-3220, and Paige Piper/Bach (for the 
private-sector impact), who can be reached at 226-2940.
            Sincerely,
                                       Douglas Holtz-Eakin.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member
S. 256--Bankruptcy Abuse Prevention and Consumer Protection Act of 
        2005.

                                SUMMARY

    CBO estimates that implementing S. 256 would result in 
gross discretionary costs of $392 million over the 2006-2010 
period, primarily to pay for increased responsibilities of the 
United States Trustees (U.S. Trustees), assuming appropriation 
of the necessary amounts. At the same time, the act would 
increase the fees charged for filing certain bankruptcy cases 
and would change how some of these fees are currently recorded 
in the budget during the first 5 years after enactment. We 
estimate that implementing the act would increase the amount of 
bankruptcy fees that are treated as an offset to appropriations 
by $75 million over the 5-year period, resulting in an 
estimated net increase in discretionary spending of 
approximately $318 million over this period.
    In addition, CBO estimates that enacting S. 256 would 
increase revenues by about $60 million over the 2006-2010 
period and by about $140 million over the 2006-2015 period 
primarily because of provisions that temporarily amend the 
Treasury's allocation of filing fees. Finally, enactment of S. 
256 would authorize additional judgeships, and we estimate that 
the mandatory pay and benefits for those positions would cost 
$26 million over the next 5 years and $45 million over the 
2006-2015 period.
    On balance and assuming appropriation of the necessary 
amounts to implement the act, CBO estimates that its enactment 
would increase budget deficits by about $280 million over the 
2006-2010 period.
    S. 256 contains two intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA), but CBO estimates 
that the costs would be insignificant and would not exceed the 
threshold established in UMRA ($62 million in 2005, adjusted 
annually for inflation). Overall, CBO expects that enacting 
this bill would benefit State and local governments by 
enhancing their ability to collect outstanding obligations in 
bankruptcy cases.
    S. 256 would impose private-sector mandates, as defined in 
UMRA, on bankruptcy attorneys, creditors, bankruptcy petition 
preparers, debt-relief agencies, consumer reporting agencies, 
and credit and charge-card companies. CBO estimates that the 
direct costs of those mandates would exceed the annual 
threshold established by UMRA ($123 million in 2005, adjusted 
annually for inflation).

                            MAJOR PROVISIONS

    In addition to establishing means-testing for determining 
eligibility for chapter 7 bankruptcy relief, S. 256 would:

         Require the Executive Office for the U.S. 
        Trustees to establish a test program to educate debtors 
        on financial management;

         Authorize 28 new temporary judgeships and 
        extend four existing judgeships;

         Permit courts to waive chapter 7 filing fees 
        and other fees for debtors who could not pay such fees 
        in installments;

         Require that at least one of every 250 
        bankruptcy cases under chapter 13 or chapter 7 be 
        audited by an independent certified public accountant;

         Require the Administrative Office of the 
        United States Courts (AOUSC) to receive and maintain 
        tax returns for certain chapter 7 and chapter 13 
        debtors;

         Require the AOUSC and the U.S. Trustees to 
        collect and publish certain statistics on bankruptcy 
        cases; and

         Increase chapter 7 and chapter 11 bankruptcy 
        filing fees, decrease chapter 13 filing fees, and 
        change the budgetary treatment of such fees over a 
        specified period of time.

    Other provisions would make various changes affecting the 
bankruptcy provisions for municipalities and the treatment of 
tax liabilities in bankruptcy cases.

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    As shown in Table 1, CBO estimates that implementing S. 256 
would result in a net increase in discretionary spending of 
about $318 million over the 2006-2010 period, subject to future 
appropriation actions. In addition, we estimate that mandatory 
spending for the salaries and benefits of bankruptcy judges 
would increase by less than $100,000 in 2005 and by $26 million 
over the 2006-2010 period. Enacting the legislation's 
provisions for adjusting filing fees would increase revenues by 
about $60 million over the next 5 years. The costs of this 
legislation fall within budget function 750 (administration of 
justice).

             TABLE 1. ESTIMATED BUDGETARY EFFECTS OF S. 256
                 By Fiscal Year, in Millions of Dollars
------------------------------------------------------------------------
                                 2005   2006   2007   2008   2009   2010
------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Means-Testing (Section 102)
  Estimated Authorization           0     16     24     39     39     36
 Level
  Estimated Outlays                 0     14     23     39     39     36

Studies by U.S. Trustees, GAO,
 and SBA (Sections 103, 230,
 and 443)
  Estimated Authorization           0      1      *      0      0      0
 Level
  Estimated Outlays                 0      1      *      0      0      0

Debtor Financial Management
 Training (Section 105)
  Estimated Authorization           0      3      1      0      0      0
 Level
  Estimated Outlays                 0      2      1      *      0      0

Credit Counseling
 Certification (Section 106)
  Estimated Authorization           0      4      7      8      8      7
 Level
  Estimated Outlays                 0      4      6      8      8      7

Maintenance of Tax Returns
 (Section 315)
  Estimated Authorization           0      2      2      2      2      2
 Level
  Estimated Outlays                 0      2      2      2      2      2

Changes in Bankruptcy Filing
 Fees (Sections 325 and 418)
  Estimated Authorization           0    -46    -49      6      7      7
 Level
  Estimated Outlays                 0    -46    -49      6      7      7

U.S. Trustee Site Visits
 (Section 439)
  Estimated Authorization           0      3      3      3      3      3
 Level
  Estimated Outlays                 0      3      3      3      3      3

Compiling and Publishing Data
 (Sections 601-602)
  Estimated Authorization           0      1      7      8      8      8
 Level
  Estimated Outlays                 0      1      7      8      8      8

Audit Procedures (Section 603)
  Estimated Authorization           0      0     16     17     17     16
 Level
  Estimated Outlays                 0      0     16     17     17     16

Additional Judgeships--Support
 Costs (Section 1223)
  Estimated Authorization           *      8     17     17     18     18
 Level
  Estimated Outlays                 *      7     16     17     18     18

FTC Toll-Free Hotline (Section
 1301)
  Estimated Authorization           0      2      1      1      1      1
 Level
  Estimated Outlays                 0      2      1      1      1      1

  Total Discretionary Changes
    Estimated Authorization         *     -6     29    101    103     98
 Level
    Estimated Outlays               *    -10     26    101    103     98

CHANGES IN DIRECT SPENDING
Additional Judgeships (Section
 1223)
  Estimated Budget Authority        *      3      6      6      6      6
  Estimated Outlays                 *      3      5      6      6      6

CHANGES IN REVENUES
Changes in Revenue from Filing
 Fees
  Estimated Revenues                0     -6    -12     30     24     24
------------------------------------------------------------------------
NOTES: GAO = Government Accountability Office; SBA = Small Business
  Administration; FTC = Federal Trade Commission. * = less than
  $500,000.

                           BASIS OF ESTIMATE

    For this estimate, CBO assumes that S. 256 will be enacted 
by July 2005 and that the amounts necessary to implement the 
act will be appropriated for each fiscal year. Many of the 
act's new provisions would be effective 180 days after 
enactment. However, a few provisions would be effective 18 
months after enactment. CBO assumes those provisions would take 
effect in fiscal year 2007.
Spending Subject to Appropriation
    Most of the estimated increases in discretionary spending 
under S. 256 would be required to fund the additional workload 
that would be imposed on the U.S. Trustees. Those increases 
would be partially offset for fiscal years 2006 and 2007 by 
changes in bankruptcy filing fees that would be recorded as 
offsetting collections under the act. CBO estimates that 
implementing S. 256 would result in a net increase in 
discretionary costs of about $318 million over the 2006-2010 
period, with most of the increase falling after 2007.
    Means-Testing (Section 102). This section would establish a 
system of means-testing for determining a debtor's eligibility 
for relief under chapter 7. Under the proposed means test, if 
the amount of debtor income remaining after certain expenses 
and other specified amounts are deducted from the debtor's 
current monthly income exceeds the threshold specified in 
section 102, then the debtor would be presumed ineligible for 
chapter 7 relief. A debtor who could not demonstrate ``special 
circumstances,'' which would cause the expected disposable 
income to fall below the threshold, could file under other 
chapters of the bankruptcy code.
    Although the private trustees would be responsible for 
conducting the initial review of a debtor's income and expenses 
and filing the majority of motions for dismissal or conversion, 
CBO expects that the workload of the U.S. Trustees would 
increase under the means-testing provision. The U. S. Trustees 
would provide increased oversight of the work performed by the 
private trustees, file additional motions for dismissal or 
conversion, and take part in additional litigation that is 
expected to occur as the courts and debtors debate allowable 
expenses and other related issues. Although CBO cannot predict 
the amount of such litigation, we expect that, during the first 
few years following enactment of the act, the amount of 
litigation could be significant as parties test the new law's 
standards. In subsequent years, litigation could begin to 
subside as precedents are established. Based on information 
from the U.S. Trustees, CBO estimates that the U.S. Trustees 
would require 200 additional attorneys, paralegals, and 
analysts to address the increased workload. As a result, CBO 
estimates that implementing this provision would cost about 
$150 million over the 2006-2010 period, assuming appropriation 
of the necessary funds.
    Studies by the U.S. Trustees, Government Accountability 
Office (GAO), and Small Business Administration (SBA) (Sections 
103, 205, 230, and 443). Section 103 would require the U.S. 
Trustees to conduct a study regarding the use of Internal 
Revenue Service expense standards for determining a debtor's 
current monthly expenses and the impact of those standards on 
debtors and bankruptcy courts. Section 230 would require GAO to 
conduct a study regarding the feasibility of requiring trustees 
to provide the Office of Child Support Enforcement information 
about outstanding child support obligations of debtors. Section 
205 would require GAO to conduct a study on the treatment of 
consumers by creditors with respect to reaffirmation 
agreements. Section 443 would require the Administrator of SBA, 
in consultation with the Attorney General, the U.S. Trustees, 
and the AOUSC, to conduct a study on small business bankruptcy 
issues. Based on information from the U.S. Trustees, GAO, and 
SBA, CBO estimates that completing the necessary studies would 
cost about $1 million in 2006 and less than $500,000 in 2007, 
subject to the availability of appropriated funds.
    Debtor Financial Management Test Training Program (Section 
105). This section would require the U.S. Trustees to establish 
a test training program to educate debtors on financial 
management. The test training program would be authorized for 
six judicial districts over an 18-month period. Based on 
information from the U.S. Trustees, CBO estimates that about 
90,000 debtors would participate if such a program were 
administered by the U.S. Trustees in fiscal years 2006 and 
2007. At a projected cost of about $40 per debtor, CBO 
estimates that implementing this provision would cost nearly $4 
million over the 2006-2007 period.
    Credit Counseling Certification (Section 106). This section 
would require the U.S. Trustees to certify, on an annual basis, 
that certain credit counseling services could provide adequate 
services to potential debtors. Based on information from the 
U.S. Trustees, CBO estimates that the U.S. Trustees would 
require additional attorneys and analysts to handle the greater 
workload associated with certification. CBO estimates that 
implementing this provision would cost $33 million over the 
2006-2010 period.
    Maintenance of Tax Returns (Section 315). This section 
would authorize the AOUSC to receive and retain debtors' tax 
returns for the year prior to the commencement of the 
bankruptcy for chapter 7 and chapter 13 filings. Such 
collection and storage of tax returns would commence only at 
the request of a creditor. Based on information from the AOUSC, 
CBO expects that creditors will request tax information in 
about 25 percent of such cases. CBO estimates that implementing 
section 315 would cost $10 million over the 2006-2010 period to 
store and provide access to about two million tax returns.
    Changes in Bankruptcy Filing Fees (Sections 325 and 418). 
Section 325 would increase chapter 7 and chapter 11 bankruptcy 
filing fees, decrease the chapter 13 filing fee, and change the 
distribution of such fees during the first 5 years after 
enactment. Considering the expected reduction in the use of 
chapter 7 because of means-testing and a provision in section 
418 that would allow fee waivers, CBO estimates that 
implementing the new fee structure and changes in fee 
classifications would result in a net increase in offsetting 
collections totaling $75 million over the 2006-2010 period.
    Current Law Filing Fees. Under current law, the filing fee 
for chapter 7 and chapter 13 is $155 and is divided between the 
U.S. Trustee System Fund (recorded as an offsetting 
collection), the AOUSC (recorded as an offsetting receipt), the 
private trustee assigned to the case, and the remainder is 
recorded as a governmental receipt (i.e., revenue). The filing 
fee for chapter 11 relief is currently set at $800 and is 
divided between the U.S. Trustee System Fund and the AOUSC, and 
the remainder is also recorded as a governmental receipt. 
Section 325 would change the filing fees for chapters 7, 13, 
and 11 to $200, $1,000, and $150, respectively.
    Distribution of Filing Fees. During the first 2 years after 
enactment, the S. 256 would allow the U.S. Trustee System Fund 
to retain (as an offset to appropriations) a larger portion of 
the current-law chapter 7, 13, and 11 filing fees. At the same 
time, the act would temporarily reduce for 2 years the 
percentage of current-law filing fees allocated to the AOUSC, 
and, because current law sets the private trustee's portion of 
the filing fee at a flat amount ($45), no portion of the 
current-law filing fees would be recorded as governmental 
receipts during fiscal years 2006 and 2007. After 2 years, the 
distribution of the filing fees under S. 256 would revert to 
the distribution formula in current law.
    Under S. 256, the general fund of the Treasury would 
receive any increase in bankruptcy filing fees due to enactment 
of the legislation over the 2006-2010 period. Beginning in 
2011, the full amount of the proposed fees would be allocated 
according to the formula specified in current law. Of the $200 
fee for chapter 7 filers, about $55 would be recorded as an 
offsetting collection to the appropriation for the U.S. 
Trustees System Fund, and almost $68 would be recorded as an 
offsetting receipt and spent without further appropriation by 
the AOUSC. The private trustee assigned to the case would 
receive $45 and the remainder of the fee would be recorded as a 
governmental receipt. Of the $150 fee for a chapter 13 case, 
the U.S. Trustee System Fund would receive about $41, and the 
AOUSC would receive almost $51 per case to spend without 
further appropriation. Finally, of the $1,000 fee per chapter 
11 case, the U.S. Trustee System Fund would receive $500, the 
AOUSC would receive $250, and the remainder of the fee would be 
recorded as a governmental receipt.
    Fee Waivers. Section 418 would permit a bankruptcy court or 
district court to waive the chapter 7 filing fee and other fees 
for a debtor who is unable to pay such fees in installments. 
Based on information from the AOUSC, CBO expects that, in 
fiscal year 2006, chapter 7 filing fees would be waived for 
about 3.5 percent of all chapter 7 filers and that the 
percentage waived would gradually increase to about 10 percent 
by fiscal year 2009.
    U.S. Trustee Site Visits in Chapter 11 Cases (Section 439). 
This section would expand the responsibilities of the U.S. 
Trustees in small business bankruptcy cases to include site 
visits to inspect the debtor's premises, review records, and 
verify that the debtor has filed tax returns. Based on 
information from the U.S. Trustees, CBO estimates that 
implementing section 439 would require about 20 additional 
analysts to conduct over 2,300 site visits each year. CBO 
estimates that implementing this provision would cost about $15 
million over the 2006-2010 period for the salaries, benefits, 
and travel expenses associated with those additional personnel.
    Compilation and Publication of Bankruptcy Data and 
Statistics (Sections 601-602). Beginning 18 months after 
enactment, the act would require the AOUSC to collect data on 
chapter 7, chapter 11, and chapter 13 cases and the U.S. 
Trustees to make such information available to the public. CBO 
estimates that it would cost about $32 million over the 2006-
2010 period to meet these requirements. Of the total estimated 
cost, about $25 million would be required for additional legal 
clerks, analysts, and data base support. The remainder would be 
incurred by the U.S. Trustees for compiling data and providing 
Internet access to records pertaining to bankruptcy cases.
    Audit Procedures (Section 603). Beginning 18 months after 
enactment, S. 256 would require that at least one out of every 
250 bankruptcy cases under chapter 7 and chapter 13, plus other 
selected cases under those chapters, be audited by an 
independent certified public accountant. Based on information 
from the U.S. Trustees, CBO estimates that less than 1 percent 
of about 1.6 million cases a year would be subject to potential 
audits. Each audit would cost roughly $1,000 (in 2005 dollars). 
CBO also expects that the U.S. Trustees would need about 10 
additional analysts and attorneys to support the follow-up work 
associated with the audits. We estimate that implementing this 
provision would cost $66 million over the 2006-2010 period.
    Additional Judgeships--Support Costs (Section 1223). This 
provision would extend four temporary bankruptcy judgeships and 
authorize 28 new temporary bankruptcy judgeships. Based on 
information from the AOUSC, CBO assumes that about half of the 
28 new positions would be filled by the beginning of fiscal 
year 2006 and the rest would be filled by the start of fiscal 
year 2007. Also, we anticipate that all four temporary 
judgeships would be filled by fiscal year 2007. We expect that 
discretionary expenditures for support costs associated with 
each judgeship would average about $500,000 annually (in 2005 
dollars). CBO estimates that the administrative support of 
additional bankruptcy judges would cost less than $200,000 in 
fiscal year 2005 and $76 million over the 2006-2010 period. 
(Salaries and benefits for the judges are classified as 
mandatory spending, and those costs are described below.)
    Federal Trade Commission Toll-Free Hotline (Section 1301). 
This section would require the Federal Trade Commission (FTC) 
to operate a toll-free number for consumers to calculate how 
long it would take to pay off a credit card debt if they were 
to make only the minimum monthly payments. Based on information 
from the FTC about the demand for similar services, CBO expects 
that the FTC would receive about 20,000 calls each month. CBO 
estimates that the equipment and personnel necessary to serve 
this volume of inquires would cost $2 million in 2006 and $6 
million over the 2006-2010 period, subject to appropriation of 
the necessary amounts.
Direct Spending and Revenues
    By adding additional judgeships and changing the budgetary 
classification of bankruptcy filing fees, CBO estimates that 
enacting S. 256 would increase direct spending by about $45 
million over the 2006-2015 period and increase revenues by 
approximately $140 million over the 2006-2015 period as shown 
in Table 2.

                     TABLE 2. ESTIMATED CHANGES IN DIRECT SPENDING AND REVENUES UNDER S. 256
                                     By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
                                      2005   2006   2007   2008   2009   2010   2011   2012   2013   2014   2015
----------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING
Additional Judgeships (Section
 1223)
  Estimated Budget Authority             *      3      6      6      6      6      6      5      3      3      2
  Estimated Outlays                      *      3      5      6      6      6      6      5      3      3      2

CHANGES IN REVENUES
Changes in Revenue from Filing Fees
  Estimated Revenues                     0     -6    -12     30     24     24     16     16     16     16     16
----------------------------------------------------------------------------------------------------------------
NOTE: * = less than $500,000.

    Additional Judgeships (Section 1223).  CBO estimates that 
enacting the means-testing provision (section 102) would impose 
some additional workload on the courts. Section 128 would 
authorize 28 new temporary bankruptcy judgeships and extend 
four existing temporary judgeships. Based on information from 
the AOUSC and other bankruptcy experts, CBO expects that the 
increase in the number of bankruptcy judges would be sufficient 
to meet the increased workload. Assuming that the salary and 
benefits of a bankruptcy judge would average about $177,000 a 
year (in 2005 dollars), CBO estimates that the mandatory costs 
associated with the salaries and benefits of those additional 
judgeships would be less than $100,000 in fiscal year 2005, 
about $26 million over the 2006-2010 period, and about $45 
million over the 2006-2015 period.
    Changes in Bankruptcy Filing Fees (Sections 102, 325, and 
418). Section 325 would increase the fees charged for filing 
bankruptcy cases and change the classification of where 
bankruptcy filing fees are recorded in the budget. Under 
current law, filing fees are divided between the U.S. Trustee 
System Fund, the AOUSC, the private trustee assigned to the 
case, and the remainder are recorded as governmental receipts 
(i.e., revenues). The percentage of the fees allocated to those 
different parts of the budget varies by chapter.
    During the first 5 years of the new fee structure proposed 
in S. 256, the increase in the chapter 7, chapter 11, and 
chapter 13 filing fees above the amounts expected to be 
collected under current law would be recorded as revenues. 
During the first 2 years after enactment of S. 256, however, 
the portion of the fees charged under current law for chapters 
7, 13, and 11 that are now recorded as revenues would be 
recorded as offsetting collections or offsetting receipts. The 
allocation of those fees would return to the same allocation as 
under current law after 2 years. In sum, CBO estimates that 
enacting S. 256 would increase revenues by about $60 million 
over the 2006-2010 period and by about $144 million over the 
2006-2015 period. (The change in offsetting receipts would be 
matched by additional spending, resulting in no net change in 
direct spending.)
    Tax Provisions (Title VII). Title VII of S. 256 would alter 
several provisions related to tax claims. It would alter the 
treatment of certain tax liens, disallow the discharge of taxes 
resulting from fraudulent tax returns under chapter 11 or 
chapter 13 of the bankruptcy code, require periodic cash 
payments of priority tax claims, and specify the rate of 
interest on tax claims. Title VII also would change the status 
of assessment periods for tax claims and would alter various 
administrative requirements. Based on information from the 
Internal Revenue Service and the Joint Committee on Taxation, 
CBO estimates that these provisions would increase revenues, 
but that any increase would be negligible.

        ESTIMATED IMPACT ON STATE, LOCAL, AND TRIBAL GOVERNMENTS

    S. 256 contains intergovernmental mandates as defined in 
UMRA, but CBO estimates that any resulting costs would not be 
significant and would not exceed the threshold established in 
UMRA ($62 million in 2005, adjusted annually for inflation). 
Overall, CBO expects that enacting this act would benefit State 
and local governments by enhancing their ability to collect 
outstanding obligations in bankruptcy cases.
Mandates
    Section 227 of the act would preempt State laws governing 
contracts between a debt relief agency and a debtor but only to 
the extent that those State laws are inconsistent with the 
Federal requirements set forth in S. 256. Such preemptions are 
mandates as defined in UMRA. Because the preemption would not 
require States to take any action, CBO estimates that the costs 
to comply with this mandate would not be significant.
    Section 719 would require State and local income tax 
procedures to conform to the Internal Revenue Code with regard 
to dividing tax liabilities and responsibilities between the 
estate and the debtor, the tax consequences of partnerships and 
transfers of property, and the taxable period of the debtor. 
CBO estimates that this provision would increase costs for the 
administration of State and local tax laws but would not 
require State and local tax rates to conform to the Federal 
rates. Such administrative costs would not be significant and 
would likely be offset by increased collections by State and 
local governments.
Other Impacts
    The changes to bankruptcy law in the act would affect State 
and local governments primarily as creditors and holders of 
claims against debtors for taxes or child support payments. In 
addition, it would change some of the State statutes that 
govern which of a debtor's assets are protected from creditors 
in a bankruptcy proceeding.
    According to the Federation of Tax Administrators, while 
total bankruptcy filings have increased in the last decade, the 
proportion of claims collected by States from taxpayers in 
bankruptcy has remained relatively constant--about 5 percent of 
claims owed. CBO cannot predict how much more money might be 
collected under this legislation; however, we think that it is 
likely that State and local governments would collect a greater 
share of future claims than they would under current law.
    Domestic Support Obligations. S. 256 would enhance a 
State's ability to collect domestic support obligations, 
including child support. Domestic support obligations owed to 
State or local governments would be given priority over all 
other claims except those same obligations owed to individuals. 
The act would make those debts nondischargeable (not able to be 
written-off at the end of bankruptcy). The act also would 
require that filers under chapter 11 and 13 cases pay domestic 
support obligations owed to government agencies or individuals 
in order to receive a discharge of outstanding debts. In 
addition, under S. 256, the automatic stay that is triggered by 
filing bankruptcy would not apply to domestic support 
obligations owed by debtors or withheld from regular income as 
it currently does. The act also would require bankruptcy 
trustees to notify individuals with domestic support claims of 
their right to use the services of a State child support 
enforcement agency and to notify the agency that it has done 
so. The last known address of the debtor would be a part of the 
notification.
    Exemptions. Although bankruptcy is regulated according to 
Federal statute, States are allowed to provide debtors with 
certain exemptions for property, insurance, and other items 
that are different from those allowed under the Federal 
bankruptcy code. (Exempt property remains in possession of the 
debtor and is not available to pay off creditors.) In some 
States debtors can choose the Federal or State exemption; other 
States require a debtor to use only the State exemptions. The 
act would reduce the value of a debtor's homestead exemption 
under certain circumstances. It also would place a monetary cap 
on the value of certain property that the debtor may claim as 
exempt under State or local law. The act would exempt certain 
types of retirement and education savings as well as 
contributions to specified employee benefit plans.
    These exemption standards would apply regardless of the 
State policy on exemptions. The new property-value limitations 
could make more money available to creditors in some cases, 
while the exemptions on some retirement, education, and other 
savings generally would make less money available.
    Time Limits on Tax Collection. Under some circumstances, a 
tax claim can qualify for priority status, making it more 
likely that a State or local government can collect the debt. 
However, this status is granted only if a tax is assessed 
within a specific period of time from the date of the 
bankruptcy filing. If that filing is subsequently dismissed and 
a new filing is made, the tax claim may lose its priority 
status. The act would make adjustments to this provision, 
allowing more time to pass in some circumstances, thus 
increasing the likelihood that State or local tax claims would 
maintain their priority status.
    Taxes and Administrative Expenses. Under current law, 
certain expenses and the priority of claims reduce the funds 
that would otherwise be available to pay tax liens on property. 
The act would increase the priority of those liens in certain 
circumstances against certain expenses and claims, thereby 
making it more likely that funds would remain available to 
cover tax obligations. The act would allow State and local 
governments to claim administrative expenses for costs incurred 
by closing a health care business. The act would provide for a 
more uniform interest rate on all tax claims and administrative 
expenses, determined in accordance with applicable 
nonbankruptcy law rather than at the discretion of a bankruptcy 
judge.
    Tax Return Filing. A number of provisions in the act would 
require debtors to have filed tax returns before a bankruptcy 
case may continue. Those provisions would help States identify 
potential claims in bankruptcy cases where they may be owed 
delinquent taxes.
    Priority of Payments. In some circumstances under current 
law, debtors have borrowed money or incurred some new 
obligation that is dischargeable (able to be written-off at the 
end of bankruptcy) to pay for an obligation that would not be 
dischargeable. S. 256 would give the new debt the same priority 
as the underlying debt. If the underlying debt had a priority 
higher than that of State or local tax liabilities, State and 
local governments could lose access to some funds. However, it 
is possible that the underlying debt could be for a tax claim, 
in which case, the taxing authority would face no loss. Because 
it is unclear what types of nondischargeable debts are covered 
by new debt and the degree to which this new provision would 
discourage such activity, CBO can estimate neither the 
direction nor the magnitude of the provision's impact on States 
and localities.
    Municipal Bankruptcy. Title V would clarify regulations 
governing municipal bankruptcy actions and allow municipalities 
that have filed for bankruptcy to liquidate certain financial 
contracts.
    Fuel Tax Claims. Under current law, all States owed fuel 
tax under the International Fuel Tax Agreement must file 
separate claims against debtors under the bankruptcy code. A 
provision in title VII would allow a State designated under the 
agreement to file a single claim on behalf of all States owed 
the fuel taxes. That provision would simplify the filing 
process.
    Single Asset Cases. Title XII includes a provision that 
would allow expedited bankruptcy proceedings in certain cases 
where the debtor's principal asset is some form of real estate. 
Enacting this provision could benefit State and local 
governments to the extent that real property is returned to 
productive tax rolls earlier.

                 ESTIMATED IMPACT ON THE PRIVATE SECTOR

    S. 256 would establish means-testing of individual debtors 
for determining eligibility for relief under chapter 7 of the 
bankruptcy code. Under UMRA, duties arising from participation 
in voluntary Federal programs are not mandates. The bankruptcy 
process is largely voluntary for debtors, and debtor-initiated 
bankruptcies are equivalent to participation in a voluntary 
Federal program. Consequently, new duties imposed by the act on 
individuals who file as debtors do not meet the definition of 
private-sector mandates, and additional cost for debtors would 
not be counted as direct costs for purposes of UMRA.
Mandates
    S. 256 would impose private-sector mandates on bankruptcy 
attorneys, creditors, preparers of bankruptcy petitions, debt-
relief agencies, consumer reporting agencies, and credit and 
charge-card companies. Under the act:

         Consumer bankruptcy attorneys would have to 
        make reasonable inquires to confirm that the 
        information in documents they submit to the court or to 
        the bankruptcy trustee is well-grounded in fact;

         Creditors would have to make disclosures in 
        their agreements with debtors and provide certain 
        notices to the courts and debtors;

         Preparers of bankruptcy petitions and debt-
        relief agencies would also have to provide certain 
        notices to debtors;

         Federal bankruptcy judges would have the 
        authority to prohibit consumer reporting agencies from 
        issuing a report containing any information relating to 
        certain involuntary bankruptcy petitions the court has 
        dismissed; and

         Credit and charge-card companies would have 
        to disclose specified information in monthly billing 
        statements, introductory rate offers for new accounts, 
        Internet-based solicitations, credit extensions secured 
        by a dwelling, and for late payment deadlines and 
        penalties.

    In addition, the act would prohibit credit and charge-card 
companies from terminating a consumer credit account before its 
expiration date because the consumer has not incurred finance 
charges. CBO estimates that the direct costs of the mandates in 
the act would exceed the annual threshold established by UMRA 
($123 million in 2005, adjusted annually for inflation).
    Requirements For Attorneys. Section 102 of the act would 
make bankruptcy attorneys liable for misleading statements and 
inaccuracies in schedules and documents submitted to the court 
or to the trustee. To avoid sanctions and potential civil 
penalties, attorneys would need to verify the information given 
to them by their clients regarding the list of creditors, 
assets and liabilities, and income and expenditures. Completing 
a reasonable investigation of debtors' financial affairs and, 
for chapter 7 cases, computing debtor eligibility, would 
require attorneys to expend additional effort. Information from 
the American Bar Association indicates that this requirement 
would increase attorney costs by $150 to $500 per case. Based 
on the 1.6 million projected filings under chapter 7 
(liquidation) and chapter 13 (rehabilitation), CBO estimates 
that the direct cost of complying with this mandate would be 
between $240 million and $800 million in fiscal year 2007, the 
first full year of implementation, and would remain in that 
range through fiscal year 2010. CBO expects that some of the 
additional costs incurred by attorneys would most likely be 
passed on to their clients.
    Notice and Disclosure Requirements. The act would require 
certain notices to be disclosed as part of the bankruptcy 
process. Section 203 would require a creditor with an unsecured 
consumer debt seeking a reaffirmation agreement with a debtor 
to provide certain disclosures. The agreement reaffirms the 
debt discharged in bankruptcy between a holder of a claim and 
the debtor. Those disclosures must be made clearly and 
conspicuously in writing and include certain advisories and 
explanations. The required disclosures could be incorporated 
into existing standard reaffirmation agreements. Section 221 
would require preparers of bankruptcy petitions who are not 
attorneys to give debtors written notice explaining that the 
preparer may not provide legal advice. Section 228 would 
require a debt-relief agency providing bankruptcy assistance to 
give certain written notices to those assisted and to execute 
written contracts. The act also would require such agencies 
also to supply certain advisories and explanations regarding 
the bankruptcy process. Most attorneys and debt-relief 
counselors currently provide similar information, and CBO 
estimates that the direct costs of complying with those 
mandates would be small.
    S. 256 also would require credit lenders to provide 
additional disclosures to consumers. It would require credit 
and charge-card companies to include certain disclosures in 
billing statements with respect to various open-end credit 
plans regarding the disadvantages of making only the minimum 
payment. Other disclosures would be required to be included in 
application and solicitation materials involving introductory 
rate offers, Internet-based credit card solicitations, credit 
extensions secured by a dwelling, and for late payment 
deadlines and penalties. Based on information from credit 
lenders, CBO estimates that the incremental costs of complying 
with the additional disclosure requirements would not be 
substantial.
    Prohibition on Consumer Reporting Agencies. Section 332 
would give Federal bankruptcy judges the authority to prohibit 
consumer reporting agencies from issuing a report containing 
any information relating certain involuntary bankruptcy 
petitions the court has dismissed. In the event that the court 
uses such authority, the duty to comply with the prohibition 
would be considered a private-sector mandate under UMRA. 
According to industry representatives, the current practice of 
consumer reporting agencies is to not report any information 
when a court dismisses an involuntary bankruptcy petition. 
Therefore, CBO estimates that the cost of complying with such a 
mandate would be minimal if any.
    Requirement for Closing Credit Accounts. In addition, S. 
256 would prohibit termination of a credit account before its 
expiration date because the consumer has not incurred finance 
charges. According to industry representatives, credit and 
charge-card companies do not close accounts based solely on the 
fact that a consumer has not incurred any finance charges. 
Thus, CBO expects there would be no direct cost to comply with 
this prohibition.
Other Impacts on the Private Sector
    S. 256 also contains many provisions that would benefit 
creditors. Most significant for creditors are provisions that 
are expected to shift some debtors from chapter 7 to chapter 13 
bankruptcy proceedings and provisions that would expand the 
types of debts that would be nondischargeable. By expanding the 
types of debts that are nondischargeable, some creditors would 
continue to receive payments on debts that would be discharged 
under current law. Means-testing in the bankruptcy system would 
likely result in more individuals being required to seek relief 
under chapter 13 rather than chapter 7. Because chapter 13 
requires debtors to develop a plan to repay creditors over a 
specified period, the total pool of funds available for 
distribution for creditors would likely increase. As long as 
the likelihood of repayment by debtors and the pool of funds 
increases by an amount greater than the cost to creditors of 
administering the new bankruptcy code, creditors would be made 
better off under the act.

                         PREVIOUS CBO ESTIMATE

    On February 28, 2005, CBO transmitted a cost estimate for 
S. 256 as ordered reported by the Senate Committee on the 
Judiciary on February 17, 2005. The House Committee on the 
Judiciary approved the same version of S. 256 as passed by the 
Senate on March 10, 2005. The Senate-passed version of the 
legislation and the version ordered reported by the Senate 
Judiciary Committee have different provisions regarding the 
distribution of bankruptcy filing fees. Our cost estimates 
reflect those differences.
    The private-sector mandates and cost estimates in the two 
versions of S. 256 are identical, except for the mandate in 
section 332 of the House Judiciary version. That mandate, 
prohibiting consumer reporting agencies from issuing a report 
containing any information relating to certain involuntary 
bankruptcy petitions the court has dismissed, was not in the 
previous version. CBO estimates that the aggregate cost of 
mandates in each version of S. 256 would exceed UMRA's annual 
threshold for private-sector mandates.

                         ESTIMATE PREPARED BY:

Federal Spending: Gregory Waring (226-2860)
Federal Revenues: Annabelle Bartsch (226-2720)
Impact on State, Local, and Tribal Governments: Melissa Merrell 
    (225-3220)
Impact on the Private Sector: Paige Piper/Bach (226-2940)

                         ESTIMATE APPROVED BY:

Peter H. Fontaine
Deputy Assistant Director for Budget Analysis

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
Rule XIII of the Rules of the House of Representatives, S. 256 
is intended to improve the bankruptcy system by deterring 
abuse, setting enhanced standards for bankruptcy professionals, 
and streamlining case administration. It authorizes the 
appointment of 28 temporary bankruptcy judgeships to address 
the 59 percent increase in the caseload of bankruptcy judges 
since 1992, when additional bankruptcy judgeships were last 
authorized.

                   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.

               Section-by-Section Analysis and Discussion

Sec. 1. Short Title; References; Table of Contents. The short 
title of this measure is the Bankruptcy Abuse Prevention and 
Consumer Protection Act of 2005 ( the ``Act'').

                    TITLE I. NEEDS-BASED BANKRUPTCY

Sec. 101. Conversion. Under current law, section 706(c) of the 
Bankruptcy Code provides that a court may not convert a chapter 
7 case unless the debtor requests such conversion. Section 101 
of the Act amends this provision to allow a chapter 7 case to 
be converted to a case under chapter 12 or chapter 13 on 
request or consent of the debtor.

Section 102. Dismissal or Conversion. Section 102 implements 
needs-based debt relief, the legislation's principal consumer 
bankruptcy reform. Under section 707(b) of the Bankruptcy Code, 
a chapter 7 case filed by a debtor who is an individual may be 
dismissed for substantial abuse only on motion of the court or 
the United States trustee. It specifically prohibits such 
dismissal at the suggestion of any party in interest.
    Section 102 of the Act revises current law in several 
significant respects. First, it amends section 707(b) of the 
Bankruptcy Code to permit--in addition to the court and the 
United States trustee--a trustee, bankruptcy administrator, or 
a party in interest to seek dismissal or conversion of a 
chapter 7 case to one under chapter 11 or 13 on consent of the 
debtor, under certain circumstances. In addition, section 102 
of the Act changes the current standard for dismissal from 
``substantial abuse'' to ``abuse.'' Section 102 of the Act also 
amends Bankruptcy Code section 707(b) to mandate a presumption 
of abuse if the debtor's current monthly income (reduced by 
certain specified amounts) when multiplied by 60 is not less 
than the lesser of 25 percent of the debtor's nonpriority 
unsecured claims or $6,000 (whichever is greater), or $10,000.
    To determine whether the presumption of abuse applies under 
section 707(b) of the Bankruptcy Code, section 102(a) of the 
Act specifies certain monthly expense amounts that are to be 
deducted from the debtor's ``current monthly income'' (a 
defined term). These expense items include:

         the applicable monthly expenses for the 
        debtor as well as for the debtor's dependents and 
        spouse in a joint case (if the spouse is not otherwise 
        a dependent) specified under the Internal Revenue 
        Service's National Standards (with provision for an 
        additional five percent for food and clothing if the 
        debtor can demonstrate that such additional amount is 
        reasonable and necessary) and the IRS Local Standards;

         the actual monthly expenses for the debtor, 
        the debtor's dependents, and the debtor's spouse in a 
        joint case (if the spouse is not otherwise a dependent) 
        for the categories specified by the Internal Revenue 
        Service as Other Necessary Expenses;

         reasonably necessary expenses incurred to 
        maintain the safety of the debtor and the debtor's 
        family from family violence as specified in section 309 
        of the Family Violence Prevention and Services Act or 
        other applicable Federal law, with provision for the 
        confidentiality of these expenses;

         reasonably necessary expenses for health 
        insurance, disability insurance, and health savings 
        account expenditures for the debtor, the debtor's 
        spouse, and dependents of the debtor;

         the debtor's average monthly payments on 
        account of secured debts and priority claims as 
        explained below; and

         if the debtor is eligible to be a debtor 
        under chapter 13, the actual administrative expenses 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.

    With respect to secured debts, Section 102(a)(2)(C) of the 
Act specifies that the debtor's average monthly payments on 
account of secured debts is calculated as the sum of the 
following divided by 60: (1) all amounts scheduled as 
contractually due to secured creditors for each month of the 
60-month period following filing of the case; and (2) any 
additional payments necessary, in filing a plan under chapter 
13, 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.
    With respect to priority claims, section 102(a)(2)(C) of 
the Act specifies that the debtor's expenses for payment of 
such claims (including child support and alimony claims) is 
calculated as the total of such debts divided by 60.
    The provision permits a debtor, if applicable, to deduct 
from current monthly income 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 
(providing such individual is unable to pay for these 
expenses).
    Under section 102, a debtor may also deduct the actual 
expenses for each dependent child of a debtor to attend a 
private or public elementary or secondary school up to $1,500 
per child if the debtor: (1) documents such expenses, and (2) 
provides a detailed explanation of why such expenses are 
reasonable and necessary. In addition, the debtor must explain 
why such expenses are not already accounted for under any of 
the Internal Revenue Service National and Local Standards, and 
Other Expenses categories.
    Other expenses that a debtor may claim include additional 
housing and utilities allowances based on the debtor's actual 
home energy expenses if the debtor documents such expenses and 
demonstrates that they are reasonable and necessary.
    While the Act replaces the current law's presumption in 
favor of granting relief requested by a chapter 7 debtor with a 
presumption of abuse (if applicable under the income and 
expense analysis previously described), it does provide that 
this presumption may be rebutted under certain circumstances. 
Section 102(a)(2)(C) of the Act amends Bankruptcy Code section 
707(b) to provide that the presumption of abuse may be rebutted 
only if: (1) the debtor demonstrates special circumstances, 
such as a serious medical condition or a call or order to 
active duty in the Armed Forces, to the extent such special 
circumstances justify additional expenses or adjustments of 
current monthly income for which there is no reasonable 
alternative; and (2) the additional expenses or adjustments 
cause the product of the debtor's current monthly income 
(reduced by the specified expenses) when multiplied by 60 to be 
less than the lesser of 25 percent of the debtor's nonpriority 
unsecured claims, or $6,000 (whichever is greater); or $10,000. 
In addition, the debtor must itemize and document each 
additional expense or income adjustment as well as provide a 
detailed explanation of the special circumstances that make 
such expense or adjustment necessary and reasonable. Further, 
the debtor must attest under oath to the accuracy of any 
information provided to demonstrate that such additional 
expense or adjustment to income is required.
    To implement these needs-based reforms, the Act requires 
the debtor to file, as part of the schedules of current income 
and current expenditures, a statement of current monthly 
income. This statement must show: (1) the calculations that 
determine whether a presumption of abuse arises under section 
707(b) (as amended), and (2) how each amount is calculated.
    An exception to the needs-based test applies with respect 
to a debtor who is a disabled veteran whose indebtedness 
occurred primarily during a period when the individual was on 
active duty (as defined in 10 U.S.C. Sec. 101(d)(1)) or 
performing a homeland defense activity (as defined in 32 U.S.C. 
Sec. 901(1)).
    In a case where the presumption of abuse does not apply or 
has been rebutted, section 102(a)(2)(C) of the Act amends 
Bankruptcy Code section 707(b) to require a court to consider 
whether: (1) the debtor filed the chapter 7 case in bad faith; 
or (2) the totality of the circumstances of the debtor's 
financial situation demonstrates abuse, including whether the 
debtor wants to reject a personal services contract and the 
debtor's financial need for such rejection.
    Under section 102(a)(2)(C) of the Act, a court may on its 
own initiative or on motion of a party in interest in 
accordance with rule 9011 of the Federal Rules of Bankruptcy 
Procedure, order a debtor's attorney to reimburse the trustee 
for all reasonable costs incurred in prosecuting a section 
707(b) motion if: (1) a trustee files such motion; (2) the 
motion is granted; and (3) the court finds that the action of 
the debtor's attorney in filing the case under chapter 7 
violated rule 9011. If the court determines that the debtor's 
attorney violated rule 9011, it may on its own initiative or on 
motion of a party in interest in accordance with such rule, 
order the assessment of an appropriate civil penalty against 
debtor's counsel and the payment of such penalty to the 
trustee, United States trustee, or bankruptcy administrator. 
This provision clarifies that a motion for costs or the 
imposition of a civil penalty must be made by a party in 
interest or by the court itself in accordance with rule 9011.
    Section 102(a)(2)(C) of the Act provides that the signature 
of an attorney on a petition, pleading or written motion shall 
constitute a certification that the attorney has: (1) performed 
a reasonable investigation into the circumstances that gave 
rise to such document; and (2) determined that such document is 
well-grounded in fact and 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). In addition, such attorney's signature on the 
petition constitutes a certification that the attorney has no 
knowledge after an inquiry that the information in the 
schedules filed with the petition is incorrect.
    Section 102(a)(2)(C) of the Act amends section 707(b) of 
the Bankruptcy Code to permit a court on its own initiative or 
motion by a party in interest in accordance with rule 9011 of 
the Federal Rules of Bankruptcy Procedure to award a debtor 
reasonable costs (including reasonable attorneys' fees) in 
contesting a section 707(b) motion filed by a party in interest 
(other than a trustee, United States trustee or bankruptcy 
administrator) if the court: (1) does not grant the section 
707(b) motion; and (2) finds that either the movant violated 
rule 9011, or the attorney (if any) who filed the motion did 
not comply with section 707(b)(4)(C) and such was made solely 
for the purpose of coercing a debtor into waiving a right 
guaranteed under the Bankruptcy Code to such debtor. An 
exception applies with respect to a movant that is a ``small 
business'' with a claim in an aggregate amount of less than 
$1,000. A small business, for purposes of this provision, is 
defined as an unincorporated business, partnership, 
corporation, association or organization that engages in 
commercial or business activities and employs less than 25 
full-time employees. The number of employees of a wholly owned 
subsidiary includes the employees of the parent and any other 
subsidiary corporation of the parent. Section 102(a)(2)(C) of 
the Act clarifies that the motion for costs must be made by a 
party in interest or by the court. The use of the phraseology 
in this provision, ``in accordance with rule 9011 of the 
Federal Rules of Bankruptcy Procedure,'' is intended to 
indicate that the procedures for the motion of a party in 
interest or a court acting on its own initiative are the 
procedures outlined in rule 9011(c).
    The Act includes two ``safe harbors'' with respect to its 
needs-based reforms. One safe harbor allows only a judge, 
United States trustee, or bankruptcy administrator to file a 
section 707(b) motion (based on the debtor's ability to repay, 
bad faith, or the totality of the circumstances) if the chapter 
7 debtor's current monthly income (or in a joint case, the 
income of the debtor and the debtor's spouse) falls below 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 Act's second safe harbor only pertains to a motion 
under section 707(b)(2), that is, a motion to dismiss based on 
a debtor's ability to repay. It does not allow a judge, United 
States trustee, bankruptcy administrator or party in interest 
to file such motion if the income of the debtor (including a 
veteran, as that term is defined in 38 U.S.C. Sec. 101) and the 
debtor's spouse is less than certain monetary thresholds. This 
provision does not consider the nonfiling spouse's income if 
the debtor and the debtor's spouse are separated under 
applicable nonbankruptcy law, or the debtor and the debtor's 
spouse are living separate and apart, other than for the 
purpose of evading section 707(b)(2). The debtor must file a 
statement under penalty of perjury specifying that he or she 
meets one of these criteria. In addition, the statement must 
disclose the aggregate (or best estimate) of the amount of any 
cash or money payments received from the debtor's spouse 
attributed to the debtor's current monthly income.
    Section 102(b) of the Act amends section 101 of the 
Bankruptcy Code to define ``current monthly income'' as the 
average monthly income that the debtor receives (or in a joint 
case, the debtor and debtor's spouse receive) from all sources, 
without regard to whether it is taxable income, in a specified 
six-month period preceding the filing of the bankruptcy case. 
The Act specifies that the six-month period is determined as 
ending on the last day of the calendar month immediately 
preceding the filing of the bankruptcy case, if the debtor 
files the statement of current income required by Bankruptcy 
Code section 521. If the debtor does not file such schedule, 
the court determines the date on which current income is 
calculated.
    ``Current monthly income'' includes any amount paid by any 
entity other than the debtor (or, in a joint case, the debtor 
and the debtor's spouse if not otherwise a dependent) on a 
regular basis for the household expenses of the debtor or the 
debtor's dependents (and, the debtor's spouse in a joint case, 
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. In addition, the Act provides that current monthly 
income does not include payments to victims of international or 
domestic terrorism as defined in section 2331 of title 18 of 
the United States Code on account of their status as victims of 
such terrorism.
    Section 102(c) of the Act amends section 704 of the 
Bankruptcy Code to require the United States trustee or 
bankruptcy administrator in a chapter 7 case where the debtor 
is an individual to: (1) review all materials filed by the 
debtor; and (2) file a statement with the court (within ten 
days following the meeting of creditors held pursuant to 
section 341 of the Bankruptcy Code) as to whether or not the 
debtor's case should be presumed to be an abuse under section 
707(b). The court must provide a copy of such statement to all 
creditors within five days after its filing. Within 30 days of 
the filing of such statement, the United States trustee or 
bankruptcy administrator must file either: (1) a motion under 
section 707(b); or (2) a statement setting forth the reasons 
why such motion is not appropriate in any case where the 
debtor's filing should be presumed to be an abuse and the 
debtor's current monthly income exceeds certain monetary 
thresholds.
    In a chapter 7 case where the presumption of abuse applies 
under section 707(b), section 102(d) of the Act amends 
Bankruptcy Code section 342 to require the clerk to provide 
written notice to all creditors within ten days after 
commencement of the case stating that the presumption of abuse 
applies in such case.
    Section 102(e) of the Act provides that nothing in the 
Bankruptcy Code limits the ability of a creditor to give 
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) of the Act adds a provision to Bankruptcy 
Code section 707 to permit the court to dismiss a chapter 7 
case filed by a debtor who is an individual on motion by a 
victim of a crime of violence (as defined in section 16 of 
title 18 of the United States Code) or a drug trafficking crime 
(as defined in section 924(c)(2) of title 18 of the United 
States Code). The case may be dismissed if the debtor was 
convicted of such crime and dismissal is in the best interest 
of the victim, unless the debtor establishes by a preponderance 
of the evidence that the filing of the case is necessary to 
satisfy a claim for a domestic support obligation.
    Section 102(g) of the Act amends section 1325(a) of the 
Bankruptcy Code to require the court, as a condition of 
confirming a chapter 13 plan, to find that the debtor's action 
in filing the case was in good faith.
    Section 102(h) of the Act amends section 1325(b)(1) of the 
Bankruptcy Code to specify that the court must find, in 
confirming a chapter 13 plan to which there has been an 
objection, that the debtor's disposable income will be paid to 
unsecured creditors. It also amends section 1325(b)(2)'s 
definition of disposable income. As defined under this 
provision, the term means income received by the debtor (other 
than child support payments, foster care payments, or certain 
disability payments for a dependent child) less amounts 
reasonably necessary to be expended for: (1) the maintenance or 
support of the debtor or the debtor's dependent; (2) a domestic 
support obligation that first becomes due after the case is 
filed; (3) charitable contributions (as defined in Bankruptcy 
Code section 548(d)(3)) to a qualified religious or charitable 
entity or organization (as defined in Bankruptcy Code section 
548(d)(4)) in an amount that does not exceed 15 percent of the 
debtor's gross income for the year in which the contributions 
are made; and (4) if the debtor is engaged in business, the 
payment of expenditures necessary for the continuation, 
preservation, and operation of the business. Section 1325(b)(3) 
provides that the amounts reasonably necessary to be expended 
under section 1325(b)(2) are determined in accordance with 
section 707(b)(2)(A) and (B) if the debtor's income exceeds 
certain monetary thresholds.
    Section 102(i) of the Act amends Bankruptcy Code section 
1329(a) to require the amounts paid under a confirmed chapter 
13 plan to be reduced by the actual amount expended by the 
debtor to purchase health insurance for the debtor and the 
debtor's dependents (if those dependents do not otherwise have 
such insurance) if the debtor documents the cost of such 
insurance and demonstrates such expense is reasonable and 
necessary, and the amount is not otherwise allowed for purposes 
of determining disposable income under section 1325(b). If the 
debtor previously paid for health insurance, the debtor must 
demonstrate that the amount is not materially greater than the 
amount the debtor previously paid. If the debtor did not 
previously have such insurance, the amount may not be not 
materially larger than the reasonable cost that would be 
incurred by a debtor with similar characteristics. Upon request 
of any party in interest, the debtor must file proof that a 
health insurance policy was purchased.
    Section 102(j) of the Act amends section 104 of the 
Bankruptcy Code to provide for the periodic adjustment of 
monetary amounts specified in sections 707(b) and 1325(b)(3) of 
the Bankruptcy Code, as amended by this Act.
    Section 102(k) adds to section 101 of the Bankruptcy Code a 
definition of ``median family income.''

Sec. 103. Sense of Congress and Study. Section 103(a) of the 
Act expresses the sense of Congress that the Secretary of the 
Treasury has the authority to alter the Internal Revenue 
Service expense standards to set guidelines for repayment plans 
as needed to accommodate their use under section 707(b) of the 
Bankruptcy Code, as amended. Section 103(b) requires the 
Executive Office for United States Trustees to submit a report 
within two years from the date of the Act's enactment regarding 
the utilization of the Internal Revenue Service expense 
standards for determining the current monthly expenses of a 
debtor under section 707(b) and the impact that the application 
of these standards has had on debtors and the bankruptcy 
courts. The report may include recommendations for amendments 
to the Bankruptcy Code that are consistent with the report's 
findings.

Sec. 104. Notice of Alternatives. Section 104 of the Act amends 
section 342(b) of the Bankruptcy Code to require the clerk, 
before the commencement of a bankruptcy case by an individual 
whose debts are primarily consumer debts, to supply such 
individual with a written notice containing: (1) a brief 
description of chapters 7, 11, 12, and 13 and the general 
purpose, benefits, and costs of proceeding under each of these 
chapters; (2) the types of services available from credit 
counseling agencies; (3) a statement advising that 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 (4) a statement warning that all information supplied 
by a debtor in connection with the case is subject to 
examination by the Attorney General.

Sec. 105. Debtor Financial Management Training Test Program. 
Section 105 of the Act requires the Director of the Executive 
Office for United States Trustees to: (1) consult with a wide 
range of debtor education experts who operate financial 
management education programs; and (2) develop a financial 
management training curriculum and materials that can be used 
to teach individual debtors how to manage their finances 
better. The Director must select six judicial districts to test 
the effectiveness of the financial management training 
curriculum and materials for an 18-month period beginning not 
later than 270 days after the Act's enactment date. For these 
six districts, the curricula and materials must be used as the 
instructional personal financial management course required 
under Bankruptcy Code section 111. Over the period of the 
study, the Director must evaluate the effectiveness of the 
curriculum and materials as well as consider 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 three months after 
concluding such evaluation, the Director must submit to 
Congress a report with findings regarding the effectiveness and 
cost of the curricula, materials, and programs.

Sec. 106. Credit Counseling. Section 106(a) of the Act amends 
section 109 of the Bankruptcy Code to require an individual--as 
a condition of eligibility for bankruptcy relief--to 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 be conducted telephonically or via 
the Internet) that outlined opportunities for available credit 
counseling and assisted the individual in performing a budget 
analysis. This requirement does not apply to a debtor who 
resides in a district where the United States trustee or 
bankruptcy administrator has determined that approved nonprofit 
budget and credit counseling agencies in that district are not 
reasonably able to provide adequate services to such 
individuals. Although such determination must be reviewed 
annually, the United States trustee or bankruptcy administrator 
may disapprove a nonprofit budget and credit counseling agency 
at any time.
    A debtor may be temporarily exempted from this requirement 
if he or she submits to the court 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 five-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 up to an additional 15 days.
    In addition, the mandatory credit counseling requirement 
does not apply to a debtor whom the court determines, after 
notice and a hearing, is unable to complete this requirement 
because of incapacity, disability, or active military duty in a 
military combat zone. Incapacity, under this provision, means 
the debtor is impaired by reason of mental illness or mental 
deficiency so that the debtor is incapable of realizing and 
making rational decisions with respect to his or her financial 
responsibilities. Disability, under this provision, means the 
debtor is so physically impaired as to be unable, after 
reasonable effort, to receive credit counseling whether by 
participating in person, or via telephone or Internet briefing.
    Section 106(b) of the Act amends section 727(a) of the 
Bankruptcy Code to deny a discharge to a chapter 7 debtor who 
fails to complete a personal financial management instructional 
course. 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. In addition, it does not 
apply to a debtor whom the court determines, after notice and a 
hearing, is unable to complete this requirement because of 
incapacity, disability, or active military duty in a military 
combat zone.
    Section 106(c) of the Act amends section 1328 of the 
Bankruptcy Code to deny a discharge to a chapter 13 debtor who 
fails to complete a personal financial management instructional 
course. This requirement 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. In addition, it does not apply to a 
debtor whom the court determines, after notice and a hearing, 
is unable to complete this requirement because of incapacity, 
disability, or active military duty in a military combat zone.
    Section 106(d) of the Act amends section 521 of the 
Bankruptcy Code to require a debtor who is an individual to 
file with the court: (1) a certificate from an approved 
nonprofit budget and credit counseling agency describing the 
services it provided the debtor pursuant to section 109(h); and 
(2) a copy of the repayment plan, if any, that was developed by 
the agency pursuant to section 109(h).
    Section 106(e) of the Act adds section 111 to the 
Bankruptcy Code requiring the clerk to maintain a publicly 
available list of approved: (1) credit counseling agencies that 
provide the services described in section 109(h) of the 
Bankruptcy Code; and (2) personal financial management 
instructional courses. Section 106(e) further provides that the 
United States trustee or bankruptcy administrator may only 
approve an agency or course provider under this provision 
pursuant to certain specified criteria. These include, for 
example, if a fee is charged for such services by the agency or 
course provider, the fee must be reasonable and such services 
must be provided without regard to ability to pay the fee. If 
such agency or provider course is approved, the approval may 
only be for a probationary period of up to six 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 one-year 
period and, thereafter for successive one-year periods, which 
has demonstrated during such period that it met the standards 
set forth in this provision and can satisfy such standards in 
the future.
    Within 30 days after any final decision occurring after the 
expiration of the initial probationary period or after any 
subsequent period, an interested person may seek judicial 
review of such decision in the appropriate United States 
district court. In addition, the district court, at any time, 
may investigate the qualifications of a credit counseling 
agency and request the production of documents to ensure the 
agency's integrity and effectiveness. The district court may 
remove a credit counseling agency that does not meet the 
specified qualifications from the approved list. The United 
States trustee or bankruptcy administrator must notify the 
clerk that a credit counseling agency or instructional course 
is no longer approved and the clerk must remove such entity 
from the approved list.
    Section 106(e) prohibits a credit counseling agency from 
providing information to a credit reporting agency as to 
whether an individual debtor has received or sought personal 
financial management instruction. 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 in an action to recover such damages.
    Section 106(f) of the Act amends section 362 of the 
Bankruptcy Code to provide that if a chapter 7, 11, or 13 case 
is dismissed due to the creation of a debt repayment plan, the 
presumption that a case was not filed in good faith under 
section 362(c)(3) shall not apply to any subsequent bankruptcy 
case commenced by the debtor. It also provides 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.

Sec. 107. Schedules of Reasonable and Necessary Expenses. For 
purposes of section 707(b) of the Bankruptcy Code, section 107 
of the Act 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 not later than 180 days after 
the date of enactment of the Act.

                 TITLE II. ENHANCED CONSUMER PROTECTION

Subtitle A. Penalties for Abusive Creditor Practices
Sec. 201. Promotion of Alternative Dispute Resolution. 
Subsection (a) of section 201 of the Act amends section 502 of 
the Bankruptcy Code to permit the court, after a hearing on 
motion of the debtor, to reduce a claim based in whole on an 
unsecured consumer debt by up to 20 percent if: (1) 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; (2) 
the debtor's offer was made at least 60 days before the filing 
of the case; (3) the offer provided for payment of at least 60 
percent of the debt over a period not exceeding the loan's 
repayment period or a reasonable extension thereof; and (4) no 
part of the debt is nondischargeable. The debtor has the burden 
of proving by clear and convincing evidence that: (1) the 
creditor unreasonably refused to consider the debtor's 
proposal; and (2) the proposed alternative repayment schedule 
was made prior to the expiration of the 60-day period. 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.

Sec. 202. Effect of Discharge. Section 202 of the Act amends 
section 524 of the Bankruptcy Code in two respects. First, it 
provides that the willful failure of a creditor to credit 
payments received under a confirmed chapter 11, 12, or 13 plan 
constitutes a violation of the discharge injunction if the 
creditor's action to collect and failure to credit payments in 
the manner required by the plan caused material injury to the 
debtor. This provision does not apply if the order confirming 
the plan is revoked, the plan is in default, or the creditor 
has not received payments required to be made under the plan in 
the manner prescribed by the plan. Second, section 202 amends 
section 524 of the Bankruptcy Code to provide that the 
discharge injunction does not apply to a creditor having a 
claim secured by an interest in real property that is the 
debtor's principal residence if the creditor communicates with 
the debtor in the ordinary course of business between the 
creditor and the debtor and such communication is limited to 
seeking or obtaining periodic payments associated with a valid 
security interest in lieu of the pursuit of in rem relief to 
enforce the lien.

Sec. 203. Discouraging Abuse of Reaffirmation Agreement 
Practices. Section 203 of the Act effectuates a comprehensive 
overhaul of the law applicable to reaffirmation agreements. 
Subsection (a) amends section 524 of the Bankruptcy Code to 
mandate that certain specified disclosures be provided to a 
debtor at or before the time he or she signs a reaffirmation 
agreement. These specified disclosures, which are the only 
disclosures required in connection with a reaffirmation 
agreement, must be in writing and be made clearly and 
conspicuously. In addition, the disclosure 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 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 fully advised the debtor of the legal effect and 
consequences of such agreement as well as of any default 
thereunder. In those instances where the presumption of undue 
hardship applies, the attorney must also certify 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 actual 
current monthly 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 must be used.
    Notwithstanding any other provision of the Bankruptcy Code, 
section 203(a) permits a creditor to accept payments from a 
debtor: (1) before and after the filing of a reaffirmation 
agreement with the court; or (2) pursuant to a reaffirmation 
agreement that the creditor believes in good faith to be 
effective. It further provides that the requirements specified 
in subsections (c)(2) and (k) of section 524 are satisfied if 
the disclosures required by these provisions are given in good 
faith.
    Where the amount of the scheduled payments due on the 
reaffirmed debt (as disclosed in the debtor's statement) 
exceeds 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. The court must review such presumption, which can be 
rebutted by the debtor by a written statement explaining the 
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 if the creditor is a credit union.
    Section 203(b) amends title 18 of the United States Code to 
require the Attorney General to designate a United States 
Attorney for each judicial district and to appoint a Federal 
Bureau of Investigation agent for each field office to have 
primary law enforcement responsibilities for violations of 
sections 152 and 157 of title 18 with respect to abusive 
reaffirmation agreements and materially fraudulent statements 
in bankruptcy schedules that are intentionally false or 
misleading. In addition, section 203(b) provides that the 
designated United States Attorney has primary responsibility 
with respect to bankruptcy investigations under section 3057 of 
title 18. Section 203(b) further provides that the bankruptcy 
courts must establish procedures for referring any case in 
which a materially fraudulent bankruptcy schedule has been 
filed.

Sec. 204. Preservation of Claims and Defenses Upon Sale of 
Predatory Loans. Section 204 of the Act adds a provision to 
section 363 of the Bankruptcy Code with respect to sales of any 
interest in a consumer transaction that is subject to the Truth 
in Lending Act or any interest in a consumer credit contract 
(as defined in section 433.1 of title 16 of the Code of Federal 
Regulations). It provides that the purchaser of such interest 
remains subject to all claims and defenses that are related to 
such assets to the same extent as that person would be subject 
to if the sale was not conducted under section 363.

Sec. 205. GAO Study and Report on Reaffirmation Agreement 
Process. Section 205 of the Act directs the Comptroller General 
of the United States to report to Congress on how consumers are 
treated in connection with the reaffirmation agreement process. 
This report must include: (1) the policies and activities of 
creditors with respect to reaffirmation agreements; and (2) 
whether such consumers are fully, fairly, and consistently 
informed of their rights under the Bankruptcy Code. The report, 
which must be completed not later than 18 months after the date 
of enactment of this Act, may include recommendations for 
legislation to address any abusive or coercive tactics found in 
connection with the reaffirmation process.
Subtitle B. Priority Child Support
Sec. 211. Definition of Domestic Support Obligation. Section 
211 of the Act amends section 101 of the Bankruptcy Code to 
define a domestic support obligation as a debt that accrues 
before, on, or after the date of the order for relief and that 
it includes interest that accrues pursuant to applicable 
nonbankruptcy law. As defined in the Act, the term includes a 
debt owed to or recoverable by: (1) a spouse, former spouse, or 
child of the debtor, or such child's parent, legal guardian, or 
responsible relative; or (2) a governmental unit. To qualify as 
a domestic support obligation, the debt must be in the nature 
of alimony, maintenance, or support (including assistance 
provided by a governmental unit), without regard to whether 
such debt is expressly so designated. It must be established or 
subject to establishment before, on, or after the date of the 
order of relief pursuant to: (1) a separation agreement, 
divorce decree, or property settlement agreement; (2) an order 
of a court of record; or (3) 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.

Sec. 212. Priorities for Claims for Domestic Support 
Obligations. Section 212 of the Act amends section 507(a) of 
the Bankruptcy Code to accord first priority in payment to 
allowed unsecured claims for domestic support obligations that, 
as of the petition date, 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 such claim is filed by the claimant or by a 
governmental unit on behalf of such claimant, on the condition 
that funds received by such unit under this provision be 
applied and distributed in accordance with nonbankruptcy law. 
Subject to these claims, section 212 accords the same payment 
priority to allowed unsecured claims for domestic support 
obligations that, as of the petition date, were 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 the claimant assigned the claim 
voluntarily for the purpose of collecting the debt), or are 
owed directly to or recoverable by a governmental unit under 
applicable nonbankruptcy law, on the condition that funds 
received by such unit under this provision be applied and 
distributed in accordance with nonbankruptcy law. Where a 
trustee administers assets that may be available for payment of 
domestic support obligations under section 507(a)(1) (as 
amended), administrative expenses of the trustee allowed under 
section 503(b)(1)(A), (2) and (6) of the Bankruptcy Code must 
be paid before such claims to the extent the trustee 
administers assets that are otherwise available for the payment 
of these claims.

Sec. 213. Requirements To Obtain Confirmation and Discharge in 
Cases Involving Domestic Support Obligations. With respect to 
chapter 11 cases, section 213(1) adds a condition for 
confirmation of a plan. It amends section 1129(a) of the 
Bankruptcy Code to provide that if a chapter 11 debtor is 
required by judicial or administrative order or statute to pay 
a domestic support obligation, then the debtor must pay all 
amounts payable under such order or statute that became payable 
postpetition as a prerequisite for confirmation.
    With respect to chapter 12 cases, section 213(2) of the Act 
amends section 1208(c) of the Bankruptcy Code to provide that 
the failure of a debtor to pay any domestic support obligation 
that first becomes payable postpetition is cause for conversion 
or dismissal of the case. Section 213(3) amends Bankruptcy Code 
section 1222(a) to permit a chapter 12 debtor to propose a plan 
paying less than full payment of all amounts owed for a claim 
entitled to priority under Bankruptcy Code section 507(a)(1)(B) 
if all of the debtor's projected disposable income for a five-
year period is applied to make payments under the plan. Section 
213(4) of the Act amends Bankruptcy Code section 1222(b) to 
permit a chapter 12 debtor to propose a plan that pays 
postpetition interest on claims that are nondischargeable under 
Section 1228(a), but only to the extent that the debtor has 
disposable income available to pay such interest after payment 
of all allowed claims in full. Section 213(5) amends Bankruptcy 
Code section 1225(a) to provide that if a chapter 12 debtor is 
required by judicial or administrative order or statute to pay 
a domestic support obligation, then the debtor must pay such 
obligations pursuant to such order or statute that became 
payable postpetition as a condition of confirmation. Section 
213(6) amends Bankruptcy Code section 1228(a) to condition the 
granting of a chapter 12 discharge upon the debtor's payment of 
certain postpetition domestic support obligations.
    With respect to chapter 13 cases, section 213(7) of the Act 
amends Bankruptcy Code section 1307(c) to provide that the 
failure of a debtor to pay any domestic support obligation that 
first becomes payable postpetition is cause for conversion or 
dismissal of the debtor's case. Section 213(8) amends 
Bankruptcy Code section 1322(a) to permit a chapter 13 debtor 
to propose a plan paying less than the full amount of a claim 
entitled to priority under Bankruptcy Code section 507(a)(1)(B) 
if the plan provides that all of the debtor's projected 
disposable income over a five-year period will be applied to 
make payments under the plan. Section 213(9) amends Bankruptcy 
Code section 1322(b) to permit a chapter 13 debtor to propose a 
plan that pays postpetition interest on nondischargeable debts 
under section 1328(a), but only to the extent that the debtor 
has disposable income available to pay such interest after 
payment in full of all allowed claims. Section 213(10) amends 
Bankruptcy Code section 1325(a) to provide that if a chapter 13 
debtor is required by judicial or administrative order or 
statute to pay a domestic support obligation, then the debtor 
must pay all such obligations pursuant to such order or statute 
that became payable postpetition as a condition of 
confirmation. Section 213(11) amends Bankruptcy Code section 
1328(a) to condition the granting of a chapter 13 discharge on 
the debtor's payment of certain postpetition domestic support 
obligations.

Sec. 214. Exceptions To Automatic Stay in Domestic Support 
Proceedings. Under current law, section 362(b)(2) of the 
Bankruptcy Code excepts from the automatic stay the 
commencement or continuation of an action or proceeding: (1) 
for the establishment of paternity; or (2) the establishment or 
modification of an order for alimony, maintenance or support. 
It also permits the collection of such obligations from 
property that is not property of the estate. Section 214 makes 
several revisions to Bankruptcy Code section 362(b)(2). First, 
it replaces the reference to ``alimony, maintenance or 
support'' with ``domestic support obligations.'' Second, it 
adds to section 362(b)(2) actions or proceedings concerning: 
(1) child custody or visitation; (2) the dissolution of a 
marriage (except to the extent such proceeding seeks division 
of property that is property of the estate); and (3) domestic 
violence. Third, it permits 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 as well as 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. Fourth, it 
authorizes 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. Fifth, it permits the interception of 
tax refunds as authorized by sections 464 and 466(a)(3) of the 
Social Security Act or analogous state law. Sixth, it allows 
medical obligations, as specified under title IV of the Social 
Security Act, to be enforced notwithstanding the automatic 
stay.

Sec. 215. Nondischargeability of Certain Debts for Alimony, 
Maintenance, and Support. Section 215 of the Act amends 
Bankruptcy Code section 523(a)(5) to provide that a ``domestic 
support obligation'' (as defined in section 211 of the Act) is 
nondischargeable and eliminates Bankruptcy Code section 
523(a)(18). Section 215(2) amends Bankruptcy Code section 
523(c) to delete the reference to section 523(a)(15) in that 
provision. Section 215(3) amends section 523(a)(15) to provide 
that obligations to a spouse, former spouse, or a child of the 
debtor (not otherwise described in section 523(a)(5)) incurred 
in connection with a divorce or separation or related action 
are nondischargeable irrespective of the debtor's inability to 
pay such debts.

Sec. 216. Continued Liability of Property. Section 216(1) of 
the Act 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. Section 216(2) and (3) make 
conforming amendments to sections 522(f)(1)(A) and 522(g)(2) of 
the Bankruptcy Code.

Sec. 217. Protection of Domestic Support Claims Against 
Preferential Transfer Motions. Section 217 of the Act makes a 
conforming amendment to Bankruptcy Code section 547(c)(7) to 
provide that a bona fide payment of a debt for a domestic 
support obligation may not be avoided as a preferential 
transfer.

Sec. 218. Disposable Income Defined. Section 218 of the Act 
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.

Sec. 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 notices to child support claimants and governmental 
enforcement agencies. In addition, the Act conforms internal 
statutory cross references to Bankruptcy Code section 
523(a)(14A) and deletes the reference to Bankruptcy Code 
section 523(a)(14) with respect to chapter 13, as this 
provision is inapplicable to that chapter.
    Section 219(a) requires a chapter 7 trustee to provide 
written notice to a domestic support claimant 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 for assistance in 
collecting child support during and after the bankruptcy case. 
The notice must include the agency's address and telephone 
number as well as explain the claimant's right to payment under 
the applicable chapter of the Bankruptcy Code. In addition, the 
trustee must provide written notice to the claimant and the 
agency of such claim and include the name, address, and 
telephone number of the child support claimant. At the time the 
debtor is granted a discharge, the trustee must notify both the 
child support claimant and the 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 was reaffirmed pursuant to Bankruptcy Code 
section 524. A claimant or agency may request the debtor's last 
known address 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. A 
creditor who discloses such information, however, is not liable 
to the debtor or any other person by reason of such disclosure. 
Subsections (b), (c), and (d) of section 219 of the Act impose 
comparable requirements for chapter 11, 12, and 13 trustees.

Sec. 220. Nondischargeability of Certain Educational Benefits 
and Loans. Section 220 of the Act 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
Sec. 221. Amendments To Discourage Abusive Bankruptcy Filings. 
Section 221 of the Act makes a series of amendments to section 
110 of the Bankruptcy Code. First, section 221 clarifies that 
the definition of a bankruptcy petition preparer does not 
include an attorney for a debtor or an employee of an attorney 
under the direct supervision of such attorney. Second, it 
amends subsections (b) and (c) 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 (as 
prescribed by the Judicial Conference of the United States) 
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. Such 
notice must be signed by the preparer under penalty of perjury 
and the debtor and be filed with any document for filing. 
Fourth, the petition preparer is prohibited from giving legal 
advice, including with respect to certain specified items. 
Fifth, it permits the Supreme Court to promulgate rules or the 
Judicial Conference of the United States to issue guidelines 
for setting the maximum fees that a bankruptcy petition 
preparer may charge for services. Sixth, section 221 requires 
the preparer to notify the debtor of such maximum fees. 
Seventh, it specifies that the bankruptcy petition preparer 
must certify that it complied with this notification 
requirement. Eighth, it requires the court to order the 
turnover of any fees in excess of the value of the services 
rendered by the preparer within the 12-month period preceding 
the bankruptcy filing. Ninth, section 221 provides that all 
fees charged by a preparer may be forfeited if the preparer 
fails to comply with certain requirements specified in 
Bankruptcy Code section 110, as amended by this provision. 
Tenth, it allows a debtor to exempt fees recovered under this 
provision pursuant to Bankruptcy Code section 522(b). Eleventh, 
it specifically authorizes the court to enjoin a bankruptcy 
petition preparer who has violated a court order issued under 
section 110. Twelfth, it generally revises section 110's 
penalty provisions and requires such penalties to be paid into 
a special fund of the United States trustee for the purpose of 
funding the enforcement of section 110 on a national basis. 
With respect to Bankruptcy Administrator districts, the funds 
are to be deposited as offsetting receipts pursuant to section 
1931 of title 28 of the United States Code.

Sec. 222. Sense of Congress. Section 222 of the Act expresses 
the sense of Congress that the states should develop personal 
finance curricula for use in elementary and secondary schools.

Sec. 223. Additional Amendments to Title 11, United States 
Code. Section 223 of the Act amends section 507(a) of the 
Bankruptcy Code to accord a tenth-level priority to claims for 
death or personal injuries resulting from the debtor's 
operation of a motor vehicle or vessel while intoxicated.

Sec. 224. Protection of Retirement Savings in Bankruptcy. The 
intent of section 224 is to expand the protection for tax-
favored retirement plans or arrangements that may not be 
already protected under Bankruptcy Code section 541(c)(2) 
pursuant to Patterson v. Shumate,\84\ or other state or Federal 
law. Subsection (a) of section 224 of the Act amends section 
522 of the Bankruptcy Code to permit a debtor to exempt certain 
retirement funds to the extent 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 that is in effect as of the 
date of the commencement of the case. 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 requirements of the Internal Revenue Code, the 
debtor may claim the retirement funds as exempt if he or she 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.
---------------------------------------------------------------------------
    \84\ 504 U.S. 753 (1992).
---------------------------------------------------------------------------
    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(c) 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 
subject to Internal Revenue Code section 72(p) or with respect 
to a loan from certain thrift savings plans. Section 224(b) 
further provides that this exception may not be used to cause 
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 to be construed to be a claim or debt within the 
meaning of the Bankruptcy Code.
    Section 224(c) amends Bankruptcy Code section 523(a) 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) or with respect 
to a loan from certain thrift savings plans. Section 224(c) 
further provides that this exception to discharge may not be 
used to cause 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 to be construed to be a claim or debt 
within the meaning of the Bankruptcy Code.
    Section 224(d) amends Bankruptcy Code section 1322 to 
provide that a chapter 13 plan may not materially alter the 
terms of a loan described in section 362(b)(19) and 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 interests of justice.

Sec. 225. Protection of Education Savings in Bankruptcy. 
Subsection (a) of section 225 of the Act amends section 541 of 
the Bankruptcy Code to provide that funds placed not later than 
365 days before the filing of the bankruptcy case in an 
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). Funds deposited between 720 days and 365 days 
before the filing date are protected to the extent they do not 
exceed $5,000. 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) 
amends Bankruptcy Code section 521 to require 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.

Sec. 226. Definitions. Subsection (a) of section 226 of the Act 
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 to an assisted person 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 case or 
proceeding on behalf of a person; or providing legal 
representation in 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 specifically excludes certain entities. First, it 
does not apply to a person who is an officer, director, 
employee, or agent of a person who provides bankruptcy 
assistance or of a bankruptcy petition preparer. Second, it is 
not applicable to a nonprofit organization exemption from 
taxation under section 501(c)(3) of the Internal Revenue Code. 
Third, it is inapplicable to a creditor who assisted such 
person to the extent the assistance pertained to the 
restructuring of any debt owed by the person to the creditor. 
Fourth, the definition does not apply to a depository 
institution (as defined in section 3 of the Federal Deposit 
Insurance Act), or any Federal or state credit union (as 
defined in section 101 of the Federal Credit Union Act), as 
well as any affiliate or subsidiary of such depository 
institution or credit union. Fifth, 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 is not within the ambit of this definition.
    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.

Sec. 227. Restrictions on Debt Relief Agencies. Section 227 of 
the Act creates a new provision in the Bankruptcy Code intended 
to proscribe certain activities of a debt relief agency. It 
prohibits such agency from: (1) failing to perform any service 
that it informed an assisted person it would provide; (2) 
advising an assisted person to make an untrue and misleading 
statement (or that upon the exercise of reasonable care, should 
have been known to be untrue or misleading) in a document filed 
in a bankruptcy case; (3) misrepresenting the services it 
provides and the benefits and risks of bankruptcy; and (4) 
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. 
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. The chief law enforcement officer of a state who has 
reason to believe that a person has violated or is violating 
section 526 may seek to have such violation enjoined and 
recover actual damages. 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.

Sec. 228. Disclosures. Section 228 of the Act requires a debt 
relief agency to provide certain specified 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) the 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.

Sec. 229. Requirements for Debt Relief Agencies. Section 229 
adds a provision to the Bankruptcy Code requiring 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 bankruptcy 
petition being filed)--to execute a written contract with the 
assisted person. The contract must specify 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. 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.

Sec. 230. GAO Study. Section 230 of the Act directs the 
Comptroller General of the United States to study and prepare a 
report on the feasibility, efficacy and cost of requiring 
trustees 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.

Sec. 231. Protection of Personally Identifiable Information. 
Section 231 of the Act clarifies that it applies to personally 
identifiable information and does not preempt applicable 
nonbankruptcy law. In addition, the provision specifies that 
court approval must be preceded by the appointment of a privacy 
ombudsman to effectuate the intent of this provision.
    Subsection (a) amends Bankruptcy Code section 363(b)(1) to 
provide that if a debtor, in connection with offering a product 
or service, discloses to an individual a policy prohibiting the 
transfer of personally identifiable information to persons 
unaffiliated with the debtor, and the policy is in effect at 
the time of the bankruptcy filing, then the trustee may not 
sell or lease such information unless either of the following 
conditions is satisfied: (1) the sale is consistent with such 
policy; or (2) the court, after appointment of a consumer 
privacy ombudsman (pursuant to section 332 of the Bankruptcy 
Code, as amended) and notice and hearing, the court approves 
the sale or lease upon due consideration of the facts, 
circumstances, and conditions of the sale or lease.
    Section 231(b) amends Bankruptcy Code section 101 to add a 
definition of ``personally identifiable information.'' The term 
applies to information provided by an individual to the debtor 
in connection with obtaining a product or service from the 
debtor primarily for personal, family, or household purposes. 
It includes the individual's: (1) first name or initial and 
last name (whether given at birth or adoption or legally 
changed); (2) physical home address; (3) electronic address, 
including an e-mail address; (4) home telephone number; (5) 
Social Security account number; or (vi) credit card account 
number. The term also includes information if it is identified 
in connection with the above items: (1) an individual's birth 
date, birth or adoption certificate number, or place of birth; 
or (2) any other information concerning an identified 
individual that, if disclosed, will result in the physical or 
electronic contacting or identification of that person.

Sec. 232. Consumer Privacy Ombudsman. Section 232 implements 
the preceding provision of the Act with respect to the 
appointment and responsibilities of a consumer privacy 
ombudsman. It provides that if a hearing is required under 
section 363(b)(1)(B) (as amended), the court must order the 
United States trustee to appoint a disinterested person to 
serve as the consumer privacy ombudsman and to provide timely 
notice of the hearing to such person. It permits the ombudsman 
to appear and be heard at such hearing. The ombudsman must 
provide the court with information to assist its consideration 
of the facts, circumstances and conditions of the proposed sale 
or lease of personally identifiable information. The 
information may include a presentation of the debtor's privacy 
policy, potential losses or gains of privacy to consumers if 
the sale or lease is approved, potential costs or benefits to 
consumers if the sale or lease is approved, and possible 
alternatives that would mitigate potential privacy losses or 
costs to consumers. Section 232 prohibits the ombudsman from 
disclosing any personally identifiable information obtained in 
the case by such individual. In addition, the provision amends 
Bankruptcy Code section 330(a)(1) to permit an ombudsman to be 
compensated.

Sec. 233. Prohibition on Disclosure of Name of Minor Children. 
Section 233 of the Act adds a new provision to the Bankruptcy 
Code (section 112) specifying that a debtor may be required to 
provide information regarding his or her minor child in 
connection with the bankruptcy case, but such debtor may not be 
required to disclose the child's name in the public records. It 
provides, however, that the debtor may be required to disclose 
this information in a nonpublic record maintained by the court, 
which may be available for inspection by the United States 
trustee, trustee or an auditor, if any. Section 233 prohibits 
the court, United States trustee, trustee, or auditor from 
disclosing such minor child's name.

Sec. 234. Protection of Personal Information. Bankruptcy Code 
section 107, with certain exceptions, provides that all papers 
filed in a bankruptcy case are public records. Exceptions 
include trade secrets, confidential research, and scandalous or 
defamatory matter. Section 234(a) adds a new provision to 
section 107 that permits a bankruptcy court to prohibit the 
disclosure of certain types of information concerning an 
individual to the extent the court finds that disclosure of 
such information would create undue risk of identity theft or 
other unlawful injury to the individual or the individual's 
property. The protected information includes any means of 
identification as defined in 18 U.S.C. Sec. 1028(d) that is 
contained in a document filed in a bankruptcy case. The 
bankruptcy court must provide access to information protected 
under this new provision to an entity acting pursuant to the 
police or regulatory power of a domestic governmental unit upon 
ex parte application demonstrating cause. The provision also 
provides that the United States trustee, bankruptcy 
administrator, trustee, and any auditor serving pursuant to 
section 586(f) of title 28 of the United States Code shall have 
access to all information contained in a bankruptcy case and 
that such persons shall not disclose information specifically 
protected by the court. Section 234(b) amends Bankruptcy Code 
section 342(c), which requires a debtor to disclose in any 
notice required by the debtor to be given to a creditor to 
include the debtor's taxpayer identification number. Section 
234(b) requires the debtor only to supply the last four digits 
of the taxpayer identification number. If, however, the notice 
concerns an amendment that adds a creditor to the schedules of 
assets or liabilities, the debtor must include the full 
taxpayer identification number in the notice sent to such 
creditor. The notice filed with the court must only include the 
last four digits of such notice.

                TITLE III. DISCOURAGING BANKRUPTCY ABUSE

Sec. 301. Technical Amendments. Section 301 of the Act 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 \85\ to except from discharge the filing fees and 
related costs and expenses assessed by a court in a civil case 
or appeal. As the result 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 this ambiguity and makes 
other conforming changes to narrow its application in 
accordance with its original intent.
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    \85\ Pub. L. No. 104-134, Sec. 804(b) (1996).

Sec. 302. Discouraging Bad Faith Repeat Filings. Section 302 of 
the Act 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 one-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 automatic 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 (but such presumption 
may be rebutted by clear and convincing evidence) if: (1) more 
than one bankruptcy case under chapter 7, 11 or 13 was 
previously filed by the debtor within the preceding one-year 
period; (2) the prior chapter 7, 11, or 13 case 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 court order, (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, section 302 provides that a case is presumptively 
deemed not to be filed 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 one-year preceding the filing of the 
pending case.

Sec. 303. Curbing Abusive Filings. Section 303 of the Act is 
intended to reduce abusive filings. Subsection (a) amends 
Bankruptcy Code section 362(d) to add a new ground for relief 
from the automatic stay. Under this provision, cause for relief 
from the automatic stay may be established for a creditor whose 
claim is secured by an interest in real property, 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: (1) a transfer of all or part of an ownership interest 
in real property without such creditor's consent or without 
court approval; or (2) 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 two 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 Bankruptcy Code section 362(b) to 
except from the automatic stay an act to enforce any lien 
against or security interest in real property within two 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: (1) is ineligible to be a debtor in a 
bankruptcy case pursuant to section 109(g) of the Bankruptcy 
Code; or (2) 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.

Sec. 304. Debtor Retention of Personal Property Security. 
Section 304(1) of the Act 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: (1) 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; (2) orders adequate protection 
of the creditor's interest; and (3) 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 full at the time of 
redemption.

Sec. 305. Relief from the Automatic Stay When the Debtor Does 
Not Complete Intended Surrender of Consumer Debt Collateral. 
Paragraph (1) of section 305 of the Act amends Bankruptcy Code 
section 362 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 (where the debtor is an individual) 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; or (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. Likewise, the automatic stay is 
terminated if the debtor fails to take the action specified in 
the statement of intention in a timely manner, 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 to be 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.

Sec. 306. Giving Secured Creditors Fair Treatment in Chapter 
13. Subsection (a) of section 306 of the Act amends Bankruptcy 
Code section 1325(a)(5)(B)(i) 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) adds a new paragraph to section 1325(a) of 
the Bankruptcy Code specifying that Bankruptcy Code section 506 
does not apply to a debt incurred within the two and one-half 
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 
within 910 days preceding the filing of the petition. 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 one-year 
period preceding the filing of the bankruptcy case.
    Section 306(c)(1) amends section 101 of the Bankruptcy Code 
to define the term ``debtor's principal residence'' as a 
residential structure (including incidental property) without 
regard to whether or not such structure is attached to real 
property. The term includes an individual condominium or 
cooperative unit as well as a mobile or manufactured home, or a 
trailer.
    Section 306(c)(2) amends section 101 of the Bankruptcy Code 
to define the term ``incidental property'' as property commonly 
conveyed with a principal residence in the area where the real 
property 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 encompasses all 
replacements and additions.

Sec. 307. Domiciliary Requirements for Exemptions. Section 307 
of the Act amends section 522(b)(2)(A) of the Bankruptcy Code 
to extend the time that a debtor must be domiciled in a state 
from 180 days to 730 days before he or she may claim that 
state's exemptions. If the debtor's domicile has not been 
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. If the effect of this provision is to 
render the debtor ineligible for any exemption, the debtor may 
elect to exempt property of the kind described in the Federal 
exemption notwithstanding the state has opted out of the 
Federal exemption allowances.

Sec. 308. Reduction of Homestead Exemption for Fraud. 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: (i) real or 
personal property that the debtor or a dependent of the debtor 
uses as a residence, (ii) a cooperative that owns property that 
the debtor or a dependent of the debtor uses as a residence, 
(iii) a burial plot, or (iv) real or personal property that the 
debtor or dependent of the debtor claims as a homestead. Where 
nonexempt property is converted to the above-specified exempt 
property within the ten-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.

Sec. 309. Protecting Secured Creditors in Chapter 13 Cases. 
Section 309(a) of the Act amends Bankruptcy Code section 
348(f)(1)(B) to provide 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 
assumed by the trustee in a timely manner, such property is no 
longer property of the estate and the automatic stay under 
Bankruptcy Code section 362 with respect to such property is 
terminated. With regard to a chapter 7 case in which the debtor 
is an individual, 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 
gives written notice to the lessor 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 amended). In a 
chapter 11 or 13 case where the debtor is an individual lessee 
with respect to a personal property lease 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 Bankruptcy Code section 
1325(a)(5)(B) to require that periodic payments pursuant to a 
chapter 13 plan with respect to a secured claim be made in 
equal monthly installments. Where the claim is secured by 
personal property, 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.

Sec. 310. Limitation on Luxury Goods. Section 310 amends 
section 523(a)(2)(C) of the Bankruptcy Code. Under current law, 
consumer debts owed to a single creditor that, in the 
aggregate, exceed $1,075 for luxury goods or services incurred 
within 60 days before the commencement of the case are presumed 
to be nondischargeable. As amended, the presumption applies if 
the aggregate amount of consumer debts for luxury goods or 
services is more than $500 for luxury goods or services 
incurred by an individual debtor within 90 days before the 
order for relief. With respect to cash advances, current law 
provides that cash advances aggregating more than $1,075 that 
are extensions of consumer credit under an open-end credit plan 
obtained by an individual debtor within 60 days before the case 
is filed are presumed to be nondischargeable. As amended, 
section 523(a)(2)(C) presumes that cash advances aggregating 
more than $750 and that are incurred within 70 days 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 this term has 
under the Consumer Credit Protection Act.

Sec. 311. Automatic Stay. Section 311 of the Act amends section 
362(b) of the Bankruptcy Code to except from the automatic stay 
a judgment of eviction with respect to a residential leasehold 
under certain circumstances. It is the intent of this provision 
to create an exception to the automatic stay of section 
362(a)(3) to permit the recovery of possession by rental 
housing providers of their property in certain circumstances 
where a judgment for possession has been obtained against a 
debtor/resident before the filing of the petition for 
bankruptcy. Section 311 is intended to apply to manufactured 
housing communities, where tenants own their own homes and pay 
monthly rent to community owners for the land upon which their 
home sits. Tenants who fail to pay rent for the land beneath 
their homes located in manufactured housing communities would 
no longer be able to avoid their rental obligations under the 
protection of the automatic stay. It is also the intent of this 
section to permit eviction actions based on illegal use of 
controlled substances or endangering property in certain 
circumstances.
    Section 311 gives tenants a reasonable amount of time after 
filing the petition to cure the default giving rise to the 
judgment for possession as long as there are circumstances in 
which applicable nonbankruptcy law allows a default to be cured 
after a judgment has been obtained. Where nonbankruptcy law 
applicable in the jurisdiction does not permit a tenant to cure 
a monetary default after the judgment for possession has been 
obtained, the automatic stay of section 362(a)(3) does not 
operate to limit action by a rental housing provider to proceed 
with, or a marshal, sheriff, or similar local officer to 
execute, the judgment for possession. Where the debtor claims 
that applicable law permits a tenant to cure after the judgment 
for possession has been obtained, the automatic stay operates 
only where the debtor files a certification with the bankruptcy 
petition asserting that applicable law permits such action and 
that the debtor or an adult dependent of the debtor has paid to 
the court all rent that will come due during the 30 days 
following the filing of the petition. If, within thirty days 
following the filing of the petition, the debtor or an adult 
dependent of the debtor certifies that the entire monetary 
default that gave rise to the judgment for possession has been 
cured, the automatic stay remains in effect. If a lessor has 
filed or wishes to file an eviction action based on the use of 
illegal controlled substances or property endangerment, the 
section allows the lessor in certain cases to file a 
certification of such circumstance with the court and obtain an 
exception to the stay.
    For both the judgment based on monetary default and the 
controlled substance or endangerment exceptions, the section 
provides an opportunity for challenge by either the lessor or 
the tenant to certifications filed by the other party and a 
timely hearing for the court to resolve any disputed facts and 
rule on the factual or legal sufficiency of the certifications. 
Where the court finds for the lessor, the clerk shall 
immediately serve upon the parties a copy of the court's order 
confirming that an exception to the automatic stay is 
applicable. Where the court finds for the tenant, the stay 
shall remain in effect. It is the intent of this section that 
the clerk's certified copy of the docket or order shall be 
sufficient evidence that the exception under paragraph 22 or 
paragraph 23 is applicable for a marshal, sheriff, or similar 
local officer to proceed immediately to execute the judgment 
for possession if applicable law otherwise permits such action, 
or for an eviction action for use of illegal controlled 
substances or property endangerment to proceed. This section 
does not provide any new right to either landlords or tenants 
relating to evictions or defenses to eviction under otherwise 
applicable law.
    Section 311 also excepts from the automatic stay a transfer 
that is not avoidable under Bankruptcy Code section 544 and 
that is not avoidable under Bankruptcy Code section 549. This 
amendment responds to a 1997 Ninth Circuit case 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.\86\
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    \86\ 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 Bankruptcy 
Code section 549(a). 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 Bankruptcy Code section 549(c) 
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).

Sec. 312. Extension of Period Between Bankruptcy Discharges. 
Section 312 of the Act 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 
eight years. It also 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 chapter 7, 11, or 12 
case within four years preceding the filing of the subsequent 
chapter 13 case. In addition, it prohibits the issuance of a 
discharge in a subsequent chapter 13 case if the debtor 
received a discharge in a chapter 13 case filed during the two-
year period preceding the date of the filing of the subsequent 
---------------------------------------------------------------------------
chapter 13 case.

Sec. 313. Definition of Household Goods and Antiques. 
Subsection (a) of section 313 of the Act 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. It also specifies various items 
that are expressly not household goods. Section 313 specifies a 
monetary threshold for the exclusions pertaining to electronic 
entertainment equipment, antiques, and jewelry. In addition, it 
provides that works of art are not household goods, unless by 
or of the debtor or by any relative of the debtor. 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. The report may include 
recommendations for amendments to the definition of ``household 
goods'' as codified in section 522(f)(4).

Sec. 314. Debt Incurred To Pay Nondischargeable Debts. 
Subsection (a) of section 314 of the Act 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. 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 $500 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); 
(3) pursuant to section 523(a)(3) of the Bankruptcy Code, debts 
that require a 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; 
and (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.

Sec. 315. Giving Creditors Fair Notice in Chapters 7 and 13 
Cases. Section 315 of the Act amends several provisions of the 
Bankruptcy Code. Subsection (a) amends Bankruptcy Code section 
342(c) to delete 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. It adds a provision requiring a debtor to send any 
notice he or she must provide under the Bankruptcy Code to the 
address stated by the creditor and to include in such notice 
the current account number, if within 90 days prior to the date 
that the debtor filed for bankruptcy relief the creditor in at 
least two communications sent to the debtor set forth such 
address and account number. 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. Section 315(a) also permits a creditor in a chapter 7 
or 13 case (where the debtor is an individual) 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 and the debtor, respectively, must use the 
address so specified to provide notice to such creditor.
    In addition, section 315(a) specifies that an entity may 
file a notice with the court stating an address to be used 
generally by all bankruptcy courts for chapter 7 and 13 cases, 
or by particular bankruptcy courts, as specified by such 
entity. This address must be used by the court to supply notice 
in such cases within 30 days following the filing of such 
notice where the entity is a creditor. Notice given other than 
as provided in section 342 is not effective until it has been 
brought to the creditor's attention. If the creditor has 
designated a person or organizational subdivision to be 
responsible for receiving notices concerning bankruptcy cases 
and has established reasonable procedures so that these notices 
will be delivered to such person or subdivision, a notice will 
not be considered to have been brought to the attention of such 
creditor until it has been received by such person or 
subdivision. This provision also prohibits the imposition of 
any monetary penalty for violation of the automatic stay or for 
the failure to comply with the Bankruptcy Code sections 542 and 
543 unless the creditor has received effective notice under 
section 342.
    Section 315(b) amends section 521 to specify additional 
duties of a debtor. This provision requires 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 Bankruptcy 
Code section 342(b). If the debtor is not represented by 
counsel 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, if any, 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) of the Act requires the court to make 
the petition, schedules, and statement of financial affairs of 
an individual who is a chapter 7 or 13 debtor available to such 
creditor.
    In addition, section 315(b) requires such debtor to provide 
the trustee not later than seven days before the date first set 
for the meeting of creditors a copy of his or her Federal 
income tax return or transcript (at the election of the debtor) 
for the latest taxable period ending prior to the filing of the 
bankruptcy case for which a tax return was filed. Should the 
debtor fail to comply with this requirement, the case must be 
dismissed unless the debtor demonstrates that such failure was 
due to circumstances beyond the debtor's control. Upon request, 
the debtor must provide a copy of the tax return or transcript 
to the requesting creditor at the time the debtor supplies the 
return or transcript to the trustee. 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. In addition, the Act clarifies that this provision 
applies to Federal income tax returns.
    During the pendency of a chapter 7, 11 or 13 case, the 
debtor must file with the court, at the request of the judge, 
United States trustee, or any party in interest, at the time 
filed with the taxing authority, copies of any Federal income 
tax returns (or transcripts thereof) that were not filed for 
the three-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 one 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 person responsible with the debtor 
for the support of the debtor's dependents, the identity of any 
person 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 date of enactment of this Act. 
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 540 days from the Act's 
enactment date, prepare and submit to 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.

Sec. 316. Dismissal for Failure To Timely File Schedules or 
Provide Required Information. Section 316 of the Act 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 316 
provides that a court may decline to dismiss the case if: (1) 
the trustee files a motion before the stated time periods; (2) 
the court finds, after notice and a hearing, that the debtor in 
good faith attempted to file all the information required under 
section 521(a)(1)(B)(iv); and (3) the court finds that the best 
interests of creditors would be served by continued 
administration of the case.

Sec. 317. Adequate Time To Prepare for Hearing on Confirmation 
of the Plan. Section 317 of the Act 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, unless the court determines that it would be in 
the best interests of creditors and the estate to hold such 
hearing at an earlier date and there is no objection to such 
earlier date.

Sec. 318. Chapter 13 Plans To Have a 5-Year Duration in Certain 
Cases. Paragraph (1) of section 318 of the Act amends 
Bankruptcy Code sections 1322(d) and 1325(b) to specify that a 
chapter 13 plan may not provide for payments over a period that 
is not less than five years if the current monthly income of 
the debtor and the debtor's spouse combined exceeds certain 
monetary thresholds. If the current monthly income of the 
debtor and the debtor's spouse fall below these thresholds, 
then the duration of the plan may not be longer than three 
years, unless the court, for cause, approves a longer period up 
to five years. The applicable commitment period may be less if 
the plan provides for payment in full of all allowed unsecured 
claims over a shorter period. Section 318(2), (3), and (4) make 
conforming amendments to sections 1325(b) and 1329(c) of the 
Bankruptcy Code.

Sec. 319. Sense of Congress Regarding Expansion of Rule 9011 of 
the Federal Rules of Bankruptcy Procedure. Section 319 of the 
Act expresses a sense of the Congress that Federal Rule of 
Bankruptcy Procedure 9011 be modified to require that all 
documents (including schedules), whether signed or unsigned, 
supplied to the court or the trustee by a debtor may 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.

Sec. 320. Prompt Relief from Stay in Individual Cases. Section 
320 of the Act 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.

Sec. 321. Chapter 11 Cases Filed by Individuals. Section 321(a) 
of the Act 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 Bankruptcy Code 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 Bankruptcy Code 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 on 
account of such claim, as of the plan's effective date, must 
not be less than the amount of such claim; or be not less than 
the debtor's projected disposable income (as defined in section 
1325(b)(2)) to be received during the five-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 added by 
the Act), subject to section 1129(a)(14).
    Section 321(d)(1) amends Bankruptcy Code section 1141(d) to 
provide that a discharge under chapter 11 does not discharge a 
debtor who is an individual from any debt excepted from 
discharge under Bankruptcy Code section 523. Section 321(d)(2) 
of the Act provides that in a chapter 11 individual 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) of the Act amends section 1127 to permit a 
plan in a chapter 11case 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. 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: (1) there has been disclosure pursuant to section 1125 
(as the court directs); (2) notice and a hearing; and (3) such 
modification is approved.

Sec. 322. Limitations on Homestead Exemption. Section 322(a) 
amends section 522 of the Bankruptcy Code to impose an 
aggregate monetary limitation of $125,000, subject to 
Bankruptcy Code 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 1,215-day period preceding the filing of the 
petition and the property consists of any of the following: (1) 
real or personal property of the debtor or that a dependent of 
the debtor uses as a residence; (2) an interest in a 
cooperative that owns property, which the debtor or the 
debtor's dependent uses as a residence; (3) a burial plot for 
the debtor or the debtor's dependent; or (4) real or personal 
property that the debtor or dependent of the debtor claims as a 
homestead. 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 specified time period) to the debtor's current 
principal residence, if both the previous and current 
residences are located in the same State.
    Section 322(a) further amends section 522 to add a 
provision that does not allow a debtor to exempt any amount of 
an interest in property described in the preceding paragraph in 
excess of $125,000 if any of the following applies:

        1. The court determines, after notice and a hearing, 
        that the debtor has been convicted of a felony (as 
        defined in section 3156 of title 18), which under the 
        circumstance demonstrates that the filing of the case 
        was an abuse of the provisions of the Bankruptcy Code; 
        or

        2. debtor owes a debt arising from:

           a. any violation of the Federal securities laws 
        defined in section 3(a)(47) of the Securities and 
        Exchange Act of 1934, any state securities laws, or any 
        regulation or order issued under Federal securities 
        laws or state securities laws;

           b. fraud, deceit, or manipulation in a fiduciary 
        capacity or in connection with the purchase or sale of 
        any security registered under section 12 or 15(d) of 
        the Securities Exchange Act of 1934, or under section 6 
        of the Securities Act of 1933;

           c. any civil remedy under section 1964 of title 18 
        of the United States Code; or

           d. any criminal act, intentional tort, or willful 
        or reckless misconduct that caused serious physical 
        injury or death to another individual in the preceding 
        five years.

    An exception to the monetary limit applies to the extent 
the value of the homestead property is reasonably necessary for 
the support of the debtor and any dependent of the debtor. The 
monetary limitation set forth in section 322(a) is subject to 
automatic adjustment pursuant to section 104 of the Bankruptcy 
Code.

Sec. 323. Excluding Employee Benefit Plan Participant 
Contributions and Other Property from the Estate. Section 323 
of the Act 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 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.

Sec. 324. Exclusive Jurisdiction in Matters Involving 
Bankruptcy Professionals. Section 324 of the Act 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 or rules relating to disclosure requirements under such 
provision.

Sec. 325. United States Trustee Program Filing Fee Increase. 
Section 325(a) of the Act amends section 1930(a) of title 28 of 
the United States Code to increase the chapter 7 filing fee 
from $155 to $200 and decrease the chapter 13 filing fee from 
$155 to $150. It also increases the chapter 11 filing fee from 
$800 to $1,000. Subsection 325(b) amends section 589a of title 
28 of the United States Code to reallocate the percentage of 
certain filing fees collected for the United States Trustee 
Fund. Subsection 325(c) amends section 406(b) of the Judiciary 
Appropriations Act of 1990 to reallocate the percentage of 
certain filing fees collected under section 1930 of title 28 of 
the United States Code to fund the operation and maintenance of 
the Federal court system. Section 325(d) provides that the 
amendments made by subsections (b) and (c) are effective for 
the two-year period beginning on the Act's date of enactment. 
Section 325(e)(1) mandates that the amount of fees collected 
under 28 U.S.C. Sec. 1930(a)(1) (chapter 7 filing fees) and 28 
U.S.C. Sec. 1930(a)(3) (chapter 11 filing fees) that is greater 
than the amount that would have been collected if these 
provisions were not amended by section 325 be allocated to the 
extent necessary to pay for the salaries and benefits of judges 
appointed pursuant to section 1223 of this Act. Section 
325(e)(2) provides that any amount of fees in excess of that 
used to pay the salaries and benefits of judges appointed 
pursuant to section 1223 be deposited in the Treasury to the 
extent necessary to offset the decrease in governmental 
receipts resulting from the amendments made by section 325(b) 
(United States Trustee Fund) and section 325(c) (federal court 
system fund).

Sec. 326. Sharing of Compensation. Section 326 amends 
Bankruptcy Code section 504 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 rules of 
professional responsibility applicable to attorney acceptance 
of referrals.

Sec. 327. Fair Valuation of Collateral. Section 327 of the Act 
amends section 506(a) of the Bankruptcy Code 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 13 case is 
determined based on the replacement value of such property as 
of the filing date of the bankruptcy case without deduction for 
selling or marketing costs. 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.

Sec. 328. Defaults Based on Nonmonetary Obligations. Subsection 
(a)(1) of section 328 of the Act 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.\87\
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    \87\ Pub. L. No. 102-365, 106 Stat. 972 (1992).
---------------------------------------------------------------------------
    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.

Sec. 329. Clarification of Postpetition Wages and Benefits. 
Section 329 amends Bankruptcy Code section 503(b)(1)(A) to 
accord administrative expense status to certain back pay 
awards. This provision applies to a back pay award attributable 
to any period of time occurring postpetition as a result of a 
violation of Federal or state law by the debtor pursuant to an 
action brought in a court or before the National Labor 
Relations Board, providing the bankruptcy court determines that 
the award will not substantially increase the probability of 
layoff or termination of current employees or of nonpayment of 
domestic support obligations.

Sec. 330. Delay of Discharge During Pendency of Certain 
Proceedings. Section 330(a) of the Act amends section 727(a) of 
the Bankruptcy Code to require the court to withhold the entry 
of a debtor's discharge order if the court, after notice and a 
hearing, finds that there is reasonable cause to believe that 
there is a pending proceeding in which the debtor may be found 
guilty of a felony of the kind described in Bankruptcy Code 
section 522(q)(1) or liable for a debt of the kind described in 
Bankruptcy Code section 522(q)(2). Subsections (b), (c), and 
(d) make comparable revisions to the discharge provisions under 
chapter 11, 12, and 13, respectively.

Sec. 331. Limitation on Retention Bonuses, Severance Pay, and 
Certain Other Payments. Section 331 amends Bankruptcy Code 
section 503 to prohibit the allowance or payment of certain 
transfers or obligations, unless otherwise authorized by the 
court. It applies to transfers made to or obligations incurred 
for the benefit of an insider of the debtor for the purpose of 
inducing such person to remain with the debtor's business, 
unless the court makes certain specified findings. In addition, 
it prohibits a severance payment to an insider of a debtor, 
unless it satisfies certain criteria. Further, it prohibits the 
payment of other transfers or obligations that are outside the 
ordinary course of business and not justified by the facts and 
circumstances of the case, including transfers made to, or 
obligations incurred for the benefit of, officers, mangers, or 
consultants hired after the date of the filing of the petition.

Sec. 332. Fraudulent Involuntary Bankruptcy. Bankruptcy Code 
section 303 permits a creditor to force an individual or 
business into bankruptcy by filing an involuntary bankruptcy 
petition against such entity. Before an order for relief is 
entered in the case, the court must make certain findings that 
support granting such relief (e.g., the debtor is generally not 
paying debts as they become due; or a custodian was appointed 
within the 120-day period preceding the filing of the 
petition). If such findings are not made, the court may dismiss 
the case. As with most documents filed in connection with a 
bankruptcy case, the filing of an involuntary bankruptcy 
petition is a matter of public record and is open for 
examination by any entity.\88\ In addition, the Fair Credit 
Reporting Act \89\ permits credit reporting agencies to note 
the involuntary bankruptcy filing on a person's credit report 
for up to ten years.\90\ Although the Fair Credit Reporting Act 
permits a consumer to have his or her credit report revised to 
reflect the fact, for instance, that the involuntary bankruptcy 
case was dismissed prior to the entry of an order for relief, 
the report may, nevertheless, still refer to the filing of the 
case.\91\
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    \88\ 11 U.S.C. Sec. 107(a).
    \89\ 15 U.S.C. Sec. 1681.
    \90\ 15 U.S.C. Sec. 1681c(a)(1).
    \91\ See, e.g., 15 U.S.C. Sec. 1681i (2000); Letter from Ronald G. 
Isaac, Attorney, Federal Trade Commission--Division of Financial 
Practices/Bureau of Consumer Protection, to Anonymous (Nov. 5, 1999), 
available at http://www.ftc.gov/os/statutes/frca/anon.htm.
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    Unfortunately, tax protesters and other extremists, in 
addition to other forms of obstreperous litigation (such as 
filing false liens), are now resorting to filing fraudulent 
involuntary bankruptcy petitions against public officials and 
other innocent parties. In 2002, for example, one tax protester 
filed fraudulent involuntary bankruptcy petitions against 36 
local public officials in Wisconsin,\92\ some of whom did not 
find out about the petitions until ``they attempted to use a 
credit card or execute some other financial transaction.'' \93\ 
These fraudulent involuntary petition filings were subsequently 
dismissed by the bankruptcy court, which found that they were 
filed in bad faith without legal basis and were commenced ``for 
the sole purpose of harassment of the named public officials.'' 
\94\ Nevertheless, ``[d]espite the fact that the [fraudulent 
involuntary bankruptcy] petitions are often dismissed,'' as one 
State assistant attorney general observed, ``the filings 
continue to cause financial problems for the victims.'' \95\ 
The devastating effect of a fraudulent involuntary bankruptcy 
filing on an innocent person's credit rating is illustrated by 
what occurred in Wisconsin and its aftermath. Although the 
bankruptcy court in dismissing these cases also directed all 
credit reporting agencies to expunge any record of these 
filings from the officials' credit reports,\96\ the bankruptcy 
petition filings nevertheless ``caused some officials' credit 
cards to be canceled, almost caused the sale of one 
supervisor's house to be stopped, and caused continuing credit 
problems for other officials.'' \97\
---------------------------------------------------------------------------
    \92\ See In re Kenealy, No. 02-26100-MDM (Bankr. E.D. Wis. May 21, 
2002). Involuntary petitions ``were filed against all but one of the 
County Board supervisors,'' the county corporation counsel, county 
sheriff, clerk of courts, and county circuit judge. Jeff Cole, 
Paperwork Used for Revenge; Protester's Bogus Bankruptcy Petitions 
Temporarily Disrupt Officials' Credit, Milwaukee J. Sentinel, June 6, 
2002, at 1B. The protester also filed numerous liens in the amount of 
$15 million against these individuals as well. Jeff Cole, Man Charged 
with Filing False Documents; Town of Fredonia Protester's Case is 5th 
Brought by State, Milwaukee J. Sentinel, May 21, 2002, at 1B.
    \93\ Jeff Cole, Paperwork Used for Revenge; Protester's Bogus 
Bankruptcy Petitions Temporarily Disrupt Officials' Credit, Milwaukee 
J. Sentinel, June 6, 2002, at 1B.
    \94\ In re Kenealy, No. 02-26100-MDM (Bankr. E.D. Wis. May 21, 
2002).
    \95\ Roy Korte, Terrorism: A Law Enforcement Perspective, Anti-
Defamation League (2002), available at http://www.adl.org/learn/
columns/roy5%5korte.asp.
    \96\ In re Kenealy, No. 02-26100-MDM (Bankr. E.D. Wis. May 21, 
2002).
    \97\ Jeff Cole, ``Paper Terrorist'' Gets Five Years in Prison, 
Milwaukee J. Sentinel, Jan. 18, 2003, at 1B.
---------------------------------------------------------------------------
    Section 332 responds to these concerns by permitting the 
court to seal and subsequently expunge all records pertaining 
to a fraudulent involuntary petition. Section 332(a) sets forth 
the short title of the section as the ``Involuntary Bankruptcy 
Improvement Act of 2005.'' Section 332(b) amends Bankruptcy 
Code section 303 to permit the court, upon motion of the 
debtor, to seal all court records pertaining to an involuntary 
bankruptcy petition if: (1) the petition is false or contains 
any materially false, fictitious, or fraudulent statement; (2) 
the debtor is an individual; and (3) the court dismisses the 
petition. The provision further permits the court, if the 
debtor is an individual, to prohibit any consumer reporting 
agency from making any consumer report that contains any 
information relating to such petition or to the case commenced 
by the filing of such petition. It further provides that upon 
the expiration of the statute of limitations described in 18 
U.S.C. Sec. 3282 for a violation of 18 U.S.C. Sec. 152 
(concerning crimes for concealment of assets, false oaths and 
claims, and bribery) and 18 U.S.C. Sec. 157 (bankruptcy fraud), 
the court may, upon motion of the debtor and for good cause, 
expunge any records pertaining to such petition. Section 332(c) 
amends section 157 of title 18 to make it a criminal offense to 
file a fraudulent involuntary bankruptcy petition. Section 332 
is similar to legislation considered by the House in the 108th 
Congress.\98\
---------------------------------------------------------------------------
    \98\ H.R. 1529, 108th Cong. (2003). The bill was ordered favorably 
reported without amendment by the House Judiciary Committee, H.R. Rep. 
No. 108-110 (2003), and passed by voice vote by the House. 149 Cong. 
Rec. H5104 (daily ed. June 10, 2003). The principal difference between 
this legislation and section 332 of the Act is that the bill would have 
permitted the court to expunge the case upon dismissal of the 
fraudulent involuntary petition.
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       TITLE IV. GENERAL AND SMALL BUSINESS BANKRUPTCY PROVISIONS

Subtitle A. General Business Bankruptcy Provisions
Sec. 401. Adequate Protection for Investors. Subsection (a) of 
section 401 of the Act 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.

Sec. 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 not to convene a 
meeting of creditors or equity security holders if a debtor has 
filed a plan for which the debtor solicited acceptances prior 
to the commencement of the case.

Sec. 403. Protection of Refinance of Security Interest. Section 
403 amends section 547(e)(2) of the Bankruptcy Code to increase 
the perfection period from ten to 30 days for the purpose of 
determining whether a transfer is an avoidable preference.

Sec. 404. Executory Contracts and Unexpired Leases. Subsection 
(a) of section 404 of the Act amends section 365(d)(4) of the 
Bankruptcy Code to establish a firm, bright line deadline by 
which an unexpired lease of nonresidential real property must 
be assumed or rejected. If such lease is not assumed or 
rejected by such deadline, then such lease shall be deemed 
rejected, and the trustee shall immediately surrender such 
property to the lessor. Section 404(a) permits a bankruptcy 
trustee to assume or reject a lease on a date which is the 
earlier of the date of confirmation of a plan or the date which 
is 120 days after the date of the order for relief. An 
extension of time may be granted, within the 120 day period, 
for an additional 90 days, for cause, upon motion of the 
trustee or lessor. Any subsequent extension can only be granted 
by the judge upon the prior written consent of the lessor 
either by the lessor's motion for an extension or on motion of 
the trustee, provided that the trustee has the prior written 
approval of the lessor. This provision is designed to remove 
the bankruptcy judge's discretion to grant extensions of the 
time for the retail debtor to decide whether to assume or 
reject a lease after a maximum possible period of 210 days from 
the time of entry of the order of relief. Beyond that maximum 
period, the judge has no authority to grant further time unless 
the lessor has agreed in writing to the extension.
    Section 404(b) amends section 365(f)(1) to assure that 
section 365(f) does not override any part of section 365(b). 
Thus, section 404(b) makes a trustee's authority to assign an 
executory contract or unexpired lease subject not only to 
section 365(c), but also to section 365(b), which is given full 
effect. Therefore, for example, assumption or assignment of a 
lease of real property in a shopping center must be subject to 
the provisions of the lease, such as use clauses.

Sec. 405. Creditors and Equity Security Holders Committees. 
Subsection (a) of section 405 of the Act amends section 
1102(a)(2) of the Bankruptcy Code to permit, after notice and a 
hearing, a court, on request of a party in interest, to order a 
change in a committee's membership if necessary to ensure 
adequate representation of creditors or equity security holders 
in a chapter 11 case. 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 give 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.

Sec. 406. Amendment to Section 546 of Title 11, United States 
Code. Section 406 of the Act corrects an erroneous subsection 
designation in section 546 of the Bankruptcy Code. It 
redesignates the second subsection (g) as subsection (i). In 
addition, section 406 amends section 546(i) (as redesignated) 
to subject that provision to the prior rights of security 
interest holders. Further, section 406 adds a new provision to 
section 546 that prohibits a trustee from avoiding a warehouse 
lien for storage, transportation, or other costs incidental to 
the storage and handling of goods. 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.

Sec. 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.

Sec. 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.

Sec. 409. Preferences. Section 409 amends section 547(c)(2) of 
the Bankruptcy Code to provide that a trustee may not avoid a 
transfer to the extent such 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 made either: (1) in the ordinary course of the 
debtor's and the transferee's business or financial affairs; 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 in which the debts 
are not 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.

Sec. 410. Venue of Certain Proceedings. Section 1409(b) of 
title 28 of the United States Code provides that a proceeding 
to recover a money judgment of, or property worth less than, 
certain specified amounts must be commenced in the district 
where the defendant resides. Section 410 amends section 1409(b) 
to provide that a proceeding to recover a debt (excluding a 
consumer debt) against a noninsider of the debtor that is less 
than $10,000 must be commenced in the district where the 
defendant resides. In addition, section 410 increases the 
$5,000 threshold for a consumer debt \99\ to $15,000.
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    \99\ A consumer debt is defined as a ``debt incurred by an 
individual primarily for a personal, family, or household purpose.'' 11 
U.S.C. Sec. 101(8).

Sec. 411. Period for Filing Plan under Chapter 11. Section 411 
amends section 1121(d) of the Bankruptcy Code to mandate that a 
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 
the chapter 11 case. 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.

Sec. 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, 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.

Sec. 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, notwithstanding any local 
court rule, provision of a state constitution, or any otherwise 
applicable nonbankruptcy law, or any other requirement that 
such creditor must be represented by counsel, to appear at and 
participate in a section 341 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.

Sec. 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.

Sec. 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 to a 
professional person, whether such person is board certified or 
otherwise has demonstrated skill and experience in the practice 
of bankruptcy law.

Sec. 416. Appointment of Elected Trustee. Section 416 of the 
Act amends section 1104(b) of the Bankruptcy Code to clarify 
the procedure for the election of a trustee in a chapter 11 
case. Section 1104(b) permits creditors to elect an eligible, 
disinterested person to serve as the trustee in the case, 
provided certain conditions are met. Section 416 amends this 
provision to require 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.

Sec. 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 alter, refuse or 
discontinue service if it does not receive adequate assurance 
of payment that is satisfactory to the utility within 30 days 
of the filing of the petition. 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, a court may not consider: (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.

Sec. 418. Bankruptcy Fees. Section 418 of the Act 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.

Sec. 419. More Complete Information Regarding Assets of the 
Estate. Section 419 of the Act directs the Judicial Conference 
of the United States, 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. Section 419 is intended to ensure that 
the debtor's interest in any of these entities is used for the 
payment of allowed claims against debtor.
Subtitle B. Small Business Bankruptcy Provisions
Sec. 431. Flexible Rules for Disclosure Statement and Plan. 
Section 431 of the Act amends section 1125 of the Bankruptcy 
Code 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 permit the court to dispense 
with a disclosure statement if the plan itself supplies 
adequate information. 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.

Sec. 432. Definitions. Section 432 of the Act 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. Section 432, in turn, defines a ``small business 
debtor'' as a person engaged in commercial or business 
activities (including an affiliate of such person that is also 
a debtor, but excluding a person whose primary activity is the 
business of owning or operating real property or activities 
incidental thereto) having aggregate noncontingent, liquidated 
secured and unsecured debts of not more than $2 million 
(excluding debts owed to affiliates or insiders of the debtor) 
as of the date of the petition or the order for relief. This 
monetary 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 creditors' committee is 
not sufficiently active and representative to provide effective 
oversight of the debtor. It does not apply to any member of a 
group of affiliated debtors that has aggregate noncontingent, 
liquidated secured and unsecured debts in excess of $2 million 
(excluding debts owed to one or more affiliates or insiders). 
This provision also requires this monetary figure to be 
periodically adjusted for inflation pursuant to section 104 of 
the Bankruptcy Code.

Sec. 433. Standard Form Disclosure Statement and Plan. Section 
433 of the Act directs the Judicial Conference of the United 
States to propose for adoption standard form disclosure 
statements and reorganization plans for small business debtors. 
The provision requires the forms 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 debtor's need for economy and simplicity.

Sec. 434. Uniform National Reporting Requirements. Subsection 
(a) of section 434 of the Act adds a provision to the 
Bankruptcy Code mandating 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: (1) profitability; (2) reasonable approximations of 
projected cash receipts and disbursements; (3) comparisons of 
actual cash receipts and disbursements with projections in 
prior reports; (4) whether the debtor is complying with 
postpetition requirements pursuant to the Bankruptcy Code and 
Federal Rules of Bankruptcy Procedure; (5) whether the debtor 
is timely filing tax returns and other government filings; and 
(6) whether the debtor is paying taxes and other administrative 
expenses when due. 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 or other required governmental 
filings, paying taxes and other administrative expenses when 
due, the debtor must report: (1) what the failures are, (2) how 
they will be cured; (3) the cost of their cure; and (4) 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.

Sec. 435. Uniform Reporting Rules and Forms for Small Business 
Cases. Subsection (a) of section 435 of the Act directs the 
Judicial Conference of the United States to 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 better understand its financial condition 
and plan its future.

Sec. 436. Duties in Small Business Cases. Section 436 of the 
Act is intended to implement greater administrative oversight 
and controls over small business chapter 11. The provision 
requires a chapter 11 trustee or debtor to:

        1. file with a voluntary petition (or in an 
        involuntary case, within seven 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 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.

Sec. 437. Plan Filing and Confirmation Deadlines. Section 437 
of the Act 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. This 
provision 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 and the time fixed in section 
1129(e) may be extended only if: (1) 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; (2) a new deadline is imposed at the time the 
extension is granted; and (3) the order granting such extension 
is signed before the expiration of the existing deadline.

Sec. 438. Plan Confirmation Deadline. Section 438 of the Act 
amends Bankruptcy Code section 1129 to require the court to 
confirm a plan not later than 45 days after it is filed if the 
plan complies with the applicable provisions of the Bankruptcy 
Code, unless this period is extended pursuant to section 
1121(e)(3).
    Sec. 439. Duties of the United States Trustee. Section 439 
of the Act 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.

Sec. 440. Scheduling Conferences. Section 440 amends section 
105(d) of the Bankruptcy Code to mandate that a bankruptcy 
court hold status conferences as are necessary to further the 
expeditious and economical resolution of a bankruptcy case.

Sec. 441. Serial Filer Provisions. Paragraph (1) of section 441 
of the Act 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 amended) 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 subsequent case 
is filed; (2) was a debtor in a small business case dismissed 
for any reason pursuant to an order that became final in the 
two-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 two-year period 
ending on the date of the order for relief entered in the 
pending case; or (4) is an entity that has acquired 
substantially all of the assets or business of a small business 
debtor described in the preceding paragraphs, unless such 
entity establishes by a preponderance of the evidence that it 
acquired the assets or business in good faith and not for the 
purpose of evading this provision.
    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: (1) 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 (2) 
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.

Sec. 442. Expanded Grounds for Dismissal or Conversion and 
Appointment of Trustee. Subsection (a) of section 442 of the 
Act amends section 1112(b) of the Bankruptcy Code to mandate 
that the court convert or dismiss a chapter 11 case, whichever 
is in the best interests of creditors and the estate, if the 
movant establishes cause, absent unusual circumstances. In this 
regard, the court must specify the circumstances that support 
the court's finding that conversion or dismissal is not in the 
best interests of creditors and the estate.
    In addition, the provision specifies an exception to the 
provision's mandatory requirement applies if: (1) the debtor or 
a party in interest objects and establishes that there is a 
reasonable likelihood that a plan will be confirmed within the 
time periods set forth in sections 1121(e) and 1129(e), or if 
these provisions are inapplicable, within a reasonable period 
of time; (2) the grounds for granting such relief include an 
act or omission of the debtor for which there exists a 
reasonable justification for such act or omission; and (3) such 
act or omission 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. Section 442 provides that 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 and the absence of a reasonable likelihood 
        of rehabilitation;

         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. unexcused 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, without good 
        cause shown by the debtor;

         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 taxes owed after the order 
        for relief or to 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(b) creates an additional ground for the 
appointment of a chapter 11 trustee or examiner 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 it is in the best interests of 
creditors and the bankruptcy estate.
    Section 442(b) is designed to benefit creditors when a 
chapter 11 case would otherwise be dismissed or converted to a 
chapter 7 case pursuant to section 1112 of the Bankruptcy Code. 
Section 442(b) allows the court to appoint a chapter 11 trustee 
or examiner, as an alternative to dismissing or converting the 
case to chapter 7, if in the best interest of creditors and the 
bankruptcy estate. Section 442(b) is not intended to ease the 
standards for appointing chapter 11 trustees. Practice under 
Chapter X of the Bankruptcy Act of 1898 demonstrated that 
routine appointment of trustees deters the use of 
reorganization statutes and increases the likelihood that by 
the time a company resorts to bankruptcy relief, it must 
liquidate. It is therefore important for section 442(b) to be 
used only for cases that would otherwise be dismissed or 
converted to chapter 7, and not as an alternative method for 
attaining the appointment of a chapter 11 trustee.

Sec. 443. Study of Operation of Title 11, United States Code, 
with Respect to Small Businesses. Section 443 of the Act 
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.

Sec. 444. Payment of Interest. Paragraph (1) of section 444 of 
the Act 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, 
notwithstanding section 363(c)(2).

Sec. 445. Priority for Administrative Expenses. Section 445 of 
the Act 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 two-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 are 
treated as a claim under section 502(b)(6) of the Bankruptcy 
Code.

Sec. 446. Duties with Respect to a Debtor Who Is a Plan 
Administrator of an Employee Benefit Plan. Subsection (a) of 
section 446 of the Act amends Bankruptcy Code section 521(a) to 
require a debtor, unless a trustee is serving in the case, to 
serve as the administrator (as defined in the Employee 
Retirement Income Security Act of 1974) of an employee benefit 
plan if the debtor served in such capacity at the time the case 
was filed. Section 446(b) amends Bankruptcy Code section 704 to 
require the chapter 7 trustee to perform the obligations of 
such administrator in a case where the debtor or an entity 
designated by the debtor was required to perform such 
obligations. Section 446(c) amends Bankruptcy Code section 
1106(a) to require a chapter 11 trustee to perform these 
obligations.

Sec. 447. Appointment of Committee of Retired Employees. This 
provision amends section 1114(d) of the Bankruptcy Code to 
clarify that it is the responsibility of the United States 
trustee to appoint members to a committee of retired employees.

                TITLE V. MUNICIPAL BANKRUPTCY PROVISIONS

Sec. 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.

Sec. 502. Applicability of Other Sections to Chapter 9. Section 
502 of the of the Act 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

Sec. 601. Improved Bankruptcy Statistics. This provision amends 
chapter 6 of title 28 of the United States Code to require the 
clerk for each district (or the bankruptcy court clerk if one 
has been certified pursuant to section 156(b) of title 28 of 
the United States Code) to collect certain statistics for 
chapter 7, 11, and 13 cases in a standardized format prescribed 
by the Director of the Administrative Office of the United 
States Courts and to make this information available to the 
public. Not later than July 1, 2008, the Director must submit a 
report to Congress concerning the statistical information 
collected and then must report annually thereafter. 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 of debtors 
        who are individuals with primarily consumer debts under 
        chapters 7, 11 and 13 by category;

        2. such 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) final 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 six 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.

Sec. 602. Uniform Rules for the Collection of Bankruptcy Data. 
Section 602 of the Act amends chapter 39 of title 28 of the 
United States Code to require 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. This provision 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 bankruptcy system. In issuing rules, the 
Attorney General must consider: (1) the reasonable needs of the 
public for information about the Federal bankruptcy system; (2) 
the economy, simplicity, and lack of undue burden on persons 
obligated to file the reports; and (3) 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 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.

Sec. 603. Audit Procedures. Subsection (a)(1) of section 603 of 
the Act 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 two 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 date of enactment.
    Sec. 604. Sense of Congress Regarding Availability of 
Bankruptcy Data. Section 604 expresses a sense of the 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

Sec. 701. Treatment of Certain Tax Liens. Subsection (a) of 
section 701 of the Act makes several amendments to section 724 
of the Bankruptcy Code to provide greater protection for 
holders of tax liens on real or personal property of the 
estate, particularly holders of ad valorem tax liens. 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. 
Pursuant to section 701(a), subordination of ad valorem tax 
liens is still possible under section 724(b), but limited to 
the payment of: (1) claims for wages, salaries, and commissions 
entitled to priority under section 507(a)(4); and (2) claims 
for contributions to employee benefit plans entitled to 
priority under section 507(a)(5). Section 701(a) will also 
protect the holders of these tax liens as well as Federal tax 
liens from erosion of their claims' status by expenses incurred 
under chapter 11 of the Bankruptcy Code. 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.

Sec. 702. Treatment of Fuel Tax Claims. Section 702 of the Act 
amends section 501 of the Bankruptcy Code to simplify the 
process for filing of claims by states for certain fuel taxes. 
Rather than requiring each state 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.

Sec. 703. Notice of Request for a Determination of Taxes. Under 
current law, a trustee or debtor in possession may request a 
governmental unit to 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 of the Act amends section 505(b) of the 
Bankruptcy Code to require the clerk of each district to 
maintain a list of addresses designated by governmental units 
for service of section 505 requests. In addition, the list may 
also include information concerning filing requirements 
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 for the 
filing of a tax return or protest of the appropriate taxing 
authority of that governmental unit.

Sec. 704. Rate of Interest on Tax Claims. Under current law, 
there is no uniform rate of interest applicable to tax claims. 
As a result, varying standards have been used to determine the 
applicable rate. Section 704 of the Act 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.

Sec. 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 three 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, the 
Supreme Court in Young v. United States, 535 U.S. 93 (2002) 
held that the three-year period is 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 three-year or 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.

Sec. 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.''

Sec. 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. 
In a chapter 7 case, taxes that are not dischargeable include 
taxes from a return due within three years of the petition 
date, taxes assessed within 240 days, or taxes related to an 
unfiled return or false return. Chapter 13, on the other hand, 
allows these obligations to be discharged. Section 707 of the 
Act amends Bankruptcy Code 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).

Sec. 708. No Discharge of Fraudulent Taxes in Chapter 11. Under 
current law, the confirmation of a chapter 11 plan discharges a 
corporate 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 specified in subsections 
523(a)(2)(A) or (B) of the Bankruptcy Code owed to a domestic 
governmental unit. In addition, it excepts from discharge a 
debt owed to a person as the result of an action filed under 
subchapter III of chapter 37 of title 31 of the United States 
Code or any similar state statute. Section 708 excepts from 
discharge a debt for 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.

Sec. 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 United States 
Tax Court. This rule was arguably extended in Halpern v. 
Commissioner,\100\ which held that the tax court did not have 
jurisdiction to hear a case involving a postpetition year. To 
address this issue, section 709 of the Act 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 provides that the stay applies to both prepetition and 
postpetition tax liabilities of a corporation so long as it is 
a liability that the bankruptcy court may determine.
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    \100\ 96 T.C. 895 (1991).

Sec. 710. Periodic Payment of Taxes in Chapter 11 Cases. 
Section 710 of the Act 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 five 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 claim provided for by the plan (other than cash 
payments made to a class of creditors under section 1122(b)). 
In addition, it requires the same payment treatment to be 
accorded to a secured claim that would otherwise meet the 
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description of an unsecured claim under section 507(a)(8).

Sec. 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 of the Act amends section 545(2) 
of the Bankruptcy Code to prevent that provision's special 
protections from being used 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.

Sec. 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) of the Act 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 claim may be deferred until final 
distribution pursuant to section 726 if the tax was not 
incurred by a chapter 7 trustee or if 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.

Sec. 713. Tardily Filed Priority Tax Claims. Section 713 of the 
Act amends section 726(a)(1) of the Bankruptcy Code to require 
a claim under section 507 that is not timely filed pursuant to 
section 501 to be entitled to a distribution if such claim is 
filed the earlier of the date that is ten days following the 
mailing to creditors of the summary of the trustee's final 
report or before the trustee commences final distribution.

Sec. 714. Income Tax Returns Prepared by Tax Authorities. 
Section 714 of the Act amends section 523(a) of the Bankruptcy 
Code to provide that a return prepared pursuant to section 
6020(a) of the Internal Revenue Code, or similar State or local 
law, constitutes filing a return (and the debt can be 
discharged), but that a return filed on behalf of a taxpayer 
pursuant to section 6020(b) of the Internal Revenue Code, or 
similar State or local law, does not constitute filing a return 
(and the debt cannot be discharged).

Sec. 715. Discharge of the Estate's Liability for Unpaid Taxes. 
Under the Bankruptcy Code, a trustee or debtor in possession 
may request a prompt audit to determine postpetition tax 
liabilities incurred by the bankruptcy estate. If the 
government does not make a determination or request an 
extension of time to audit, then the trustee or debtor in 
possession is discharged from any such tax liability. Several 
court cases have held that while this protects the debtor and 
the trustee, it does not necessarily protect the estate. 
Section 715 of the Act amends section 505(b) of the Bankruptcy 
Code to clarify that the estate is also protected if the 
government does not make a determination or request an 
extension of time to audit the debtor's tax returns. Therefore, 
if the government does not make a determination of postpetition 
tax liabilities or request extension of time to audit, then the 
estate's liability for unpaid taxes is discharged.

Sec. 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. 
Section 716 of the Act responds to this problem. Subsection (a) 
amends section 1325(a) of the Bankruptcy Code to require a 
chapter 13 debtor to file all applicable Federal, state, and 
local tax returns as a condition of confirmation as required by 
section 1308 (as added by section 716(b)). Section 716(b) adds 
section 1308 to chapter 13 to require a chapter 13 debtor to be 
current on the filing of tax returns for the four-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 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 to section 1308.

Sec. 717. Standards for Tax Disclosure. Before creditors and 
stockholders may be solicited to vote on a chapter 11 plan, 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, any successor to the debtor, and to a hypothetical 
investor that is representative of the claimants and interest 
holders in the case.

Sec. 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 of the Act 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.

Sec. 719. Special Provisions Related to the Treatment of State 
and Local Taxes. Section 719 of the Act 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.

Sec. 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 of the Act 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 the Act adds a new chapter to the Bankruptcy 
Code for transnational bankruptcy cases. It 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.

Sec. 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.\101\ 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.\102\ 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.
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    \101\ 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.
    \102\ See section 1529 and commentary.

Sec. 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)).\103\ It largely tracks 
the language of the Model Law 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 
such exclusion would be necessary in countries like the United 
States where there are special provisions for consumer debtors 
in the insolvency laws.\104\
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    \103\ Guide at 16-19.
    \104\ See id. at 18, para.60; 19 para.66.
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    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.\105\ 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.
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    \105\ 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.

Sec. 1502. Definitions. ``Debtor'' is given a special 
definition for this chapter. This 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.\106\
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    \106\ See section 1505.
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    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.\107\ 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.\108\ In order to be recognized as a foreign non-main 
proceeding, the debtor must at least have an establishment in 
that foreign country.\109\
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    \107\ Guide at 19-21, para.para.67-68.
    \108\ 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).
    \109\ See id. at 21, para.75.

Sec. 1503. International obligations of the United States. This 
section is taken exactly from the Model Law with only minor 
adaptations of terminology.\110\ 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.
---------------------------------------------------------------------------
    \110\ See id. at 22, Art. 3.

Sec. 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.\111\ 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 if referred 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.\112\
---------------------------------------------------------------------------
    \111\ See id. at 23, Art. 4.
    \112\ 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) Gin which the debtor has its principal place of business or 
principal assets in the United States;

    (2) Gif 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) Gin 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 the title of 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.

Sec. 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.\113\
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    \113\ See Guide at 24.
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    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.\114\ 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.
---------------------------------------------------------------------------
    \114\ See id. at 24, Art. 5.
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    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.\115\
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    \115\ See id. at 23-24, para.82.

Sec. 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.\116\
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    \116\ See id. at 25.

Sec. 1507. Additional assistance. Subsection (1) follows the 
language of Model Law article 7.\117\ 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.\118\
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    \117\ Id. at 26.
    \118\ Id.

Sec. 1508. Interpretation. This provision follows conceptually 
Model Law article 8 and is a standard one in recent UNCITRAL 
treaties and model laws. Changes to the language were made to 
express the concepts more clearly in United States 
vernacular.\119\ 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 advance 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.
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    \119\ Id. at 26, para.91.

Sec. 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 shall 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.\120\
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    \120\ 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 proceeding 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.\121\
---------------------------------------------------------------------------
    \121\ 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.\122\ 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.
---------------------------------------------------------------------------
    \122\ Id. at 27, para.93.

Sec. 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.

Sec. 1511. Commencement of Case Under Section 301 or 303. This 
section reflects 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.\123\ Article 11 does 
not distinguish between voluntary and involuntary proceedings, 
but seems to have implicitly assumed an involuntary 
proceeding.\124\ 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.
---------------------------------------------------------------------------
    \123\ See id. at 28, Art. 11.
    \124\ Id. at 38, para.para.97-99.

Sec. 1512. Participation of a foreign representative in a case 
under this title. This section tracks article 12 of the Model 
Law with a slight alteration to tie into United States 
procedural terminology.\125\ 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.\126\ 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.
---------------------------------------------------------------------------
    \125\ Id. at 29, Art. 12.
    \126\ Id. at 29, para.para.10-102.

Sec. 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.\127\ 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.\128\ The Model Law allows 
for an exception to the policy of nondiscrimination as to 
foreign revenue and other public law claims.\129\ Such claims 
(such as tax and Social Security claims) have been 
traditionally denied enforcement in the United States, 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 this question 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.
---------------------------------------------------------------------------
    \127\ Id. at 30, para.103.
    \128\ See id. at 30, para.104.
    \129\ See id. at 31, para.105.

Sec. 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.\130\ As 
``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 additional time for such creditors to file proofs 
of claim where appropriate and require 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.\131\ 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).\132\ 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.
---------------------------------------------------------------------------
    \130\ See Model Law, Art. 14; Guide at 31-32, para.para.106-109.
    \131\ Guide at 33, para.111.
    \132\ Id. at 31, Art. 14(3)(a).

Sec. 1515. Application for recognition of a foreign proceeding. 
This section follows article 15 of the Model Law with minor 
changes.\133\ 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.\134\
---------------------------------------------------------------------------
    \133\ Id. at 33.
    \134\ See id. at 36, para.121.

Sec. 1516. Presumptions concerning recognition. This section 
follows article 16 of the Model Law with minor changes.\135\ 
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.\136\ ``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.\137\ 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.
---------------------------------------------------------------------------
    \135\ Id. at 36
    \136\ Id. at 36, Art. 16(3).
    \137\ Id.

Sec. 1517. Order granting recognition. This section closely 
tracks article 17 of the Model Law, with a few exceptions.\138\ 
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.\139\ In this regard, 
the Model Law conforms to section 304, which has no such 
requirement.
---------------------------------------------------------------------------
    \138\ Id. at 37.
    \139\ Report of the Working Group on Insolvency Law on the Work of 
Its Twentieth Session (Vienna, 7-18 Oct. 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). A petition under section 
1515 must show that proceeding is a main or a qualifying non-
main proceeding in order to obtain 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.\140\ 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.\141\
---------------------------------------------------------------------------
    \140\ Guide at 37, Art. 17(1)(d).
    \141\ Id.

Sec. 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.\142\ 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.
---------------------------------------------------------------------------
    \142\ Id. at 39-40, para.para.133, 134.

Sec. 1519. Relief may be granted upon petition for recognition 
of a foreign proceeding. This section generally follows article 
19 of the Model Law.\143\ 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 for 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.
---------------------------------------------------------------------------
    \143\ Id. at 40.

Sec. 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 has 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 as well as additional restrictions.\144\
---------------------------------------------------------------------------
    \144\ 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.\145\ 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.
---------------------------------------------------------------------------
    \145\ 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.\146\ 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 a result, the court has the power to terminate the stay 
pursuant to section 362(d), for cause, including a failure of 
adequate protection.\147\
---------------------------------------------------------------------------
    \146\ Id. at 42, Art. 20(2); 44, para.para. 148, 150.
    \147\ 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 for claims that 
might be extinguished under United States law.\148\
---------------------------------------------------------------------------
    \148\ Id.

Sec. 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 conform to United States 
law.\149\ 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.'' \150\ 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.\151\ 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.
---------------------------------------------------------------------------
    \149\ Id. at 45-46, Art. 21.
    \150\ Id. at 46, Art. 21(2); 47, Art. 22(1).
    \151\ See id. at 46-47, para.para. 158, 160.

Sec. 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.\152\ It gives the bankruptcy court 
broad latitude to mold relief to meet specific circumstances, 
including appropriate responses if it is shown that the foreign 
proceeding is seriously and unjustifiably injuring United 
States creditors. For a 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 Bankruptcy Code section 1104(d) shall apply to 
the appointment of an examiner appointed in a case under 
chapter 15 and such examiner shall be subject to certain duties 
and bonding requirements based on those imposed on trustees and 
examiners under other chapters of this title.
---------------------------------------------------------------------------
    \152\ Id. at 47.

Sec. 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.\153\ 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.\154\ The courts will determine the nature and 
extent of any such action and what national law may be 
applicable to such action.
---------------------------------------------------------------------------
    \153\ Id. at 48-49.
    \154\ See id. at 49, para.166.

Sec. 1524. Intervention by a foreign representative. The 
wording is the same as the Model Law, except for a few 
clarifying words.\155\ 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.
---------------------------------------------------------------------------
    \155\ Id. at 49.

Sec. 1525. Cooperation and direct communication between the 
court and foreign courts or foreign representatives. The 
wording of this provision is nearly identical to that of the 
Model Law.\156\ 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.
---------------------------------------------------------------------------
    \156\ Id. at 50.

Sec. 1526 Cooperation and direct communication between the 
trustee and foreign courts or foreign representatives. This 
section closely tracks the Model Law.\157\ The language in 
Model Law article 26 concerning the trustee's function was 
eliminated as unnecessary because it is always implied under 
United States law. The section authorizes the trustee, 
including a debtor in possession, to cooperate with other 
proceedings.
---------------------------------------------------------------------------
    \157\ Id. at 51.

Sec. 1527. Forms of cooperation. This section is identical to 
the Model Law.\158\ United States bankruptcy courts already 
engage in most of the forms of cooperation described here, but 
they now have explicit statutory authorization for acts like 
the approval of protocols of the sort used in cases.\159\
---------------------------------------------------------------------------
    \158\ Guide at 51, 53.
    \159\ See e.g., In re Maxwell Communication Corp., 93 F.2d 1036 (2d 
Cir. 1996).

Sec. 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 of the section 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.\160\ 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.
---------------------------------------------------------------------------
    \160\ 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.

Sec. 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.\161\ This provision is consistent with United 
States policy to act ancillary to a foreign main proceeding 
whenever possible.
---------------------------------------------------------------------------
    \161\ Id. at 55-56.

Sec. 1530. Coordination of more than one foreign proceeding. 
This section follows article 30 of the Model Law exactly.\162\ 
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.
---------------------------------------------------------------------------
    \162\ Id. at 57.

Sec. 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.\163\ 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'' in this provision here means 
``presumption.'' The presumption does not arise for any purpose 
outside this section.
---------------------------------------------------------------------------
    \163\ Id. at 58.

Sec. 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).\164\
---------------------------------------------------------------------------
    \164\ Id. at 59.

Sec. 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).\165\
---------------------------------------------------------------------------
    \165\ 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. 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 
specified in 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

Sec. 901. Treatment of Certain Agreements by Conservators of 
Receivers of Insured Depository Institutions. Subsections (a) 
through (f) of section 901 of the Act amend the definitions of 
``qualified financial contract,'' ``securities contract,'' 
``commodity contract,'' ``forward contract,'' ``repurchase 
agreement'' and ``swap agreement'' contained in the Federal 
Deposit Insurance Act (FDIA) and the Federal Credit Union Act 
(FCUA) to make them consistent with the definitions in the 
Bankruptcy Code and to reflect the enactment of the Commodity 
Futures Modernization Act of 2000 (CFMA). It is intended that 
the legislative history and case law surrounding those terms, 
to the date of this amendment, be incorporated into the 
legislative history of the FDIA and the FCUA.
    Subsection (b) amends the definition of ``securities 
contract'' expressly to encompass margin loans, to clarify the 
coverage of securities options and to clarify the coverage of 
repurchase and reverse repurchase transactions. The inclusion 
of ``margin loans'' in the definition is intended to encompass 
only those loans commonly known in the securities industry as 
``margin loans,'' such as credit permitted in a margin account 
under the Federal Reserve Board's Regulation T (whether or not 
effected in that account) or arrangements where a financial 
intermediary--a stockbroker, financial institution, financial 
participant, or securities agency--extends credit in connection 
with the purchase, sale, carrying, or trading of securities. 
``Margin loans'' do not include, however, other loans that 
happen to be secured by securities collateral. The reference in 
subsection (b) to a ``guarantee by or to any securities 
clearing agency'' is intended to cover other arrangements, such 
as novation, that have an effect similar to a guarantee. The 
reference to a ``loan'' of a security in the definition is 
intended to apply to loans of securities, whether or not for a 
``permitted purpose'' under margin regulations. The reference 
to ``repurchase and reverse repurchase transactions'' is 
intended to eliminate any inquiry under the qualified financial 
contract provisions of the FDIA or FCUA as to whether a 
repurchase or reverse repurchase transaction is a purchase and 
sale transaction or a secured financing. Repurchase and reverse 
repurchase transactions meeting certain criteria are already 
covered under the definition of ``repurchase agreement'' in the 
FDIA (and a regulation of the Federal Deposit Insurance 
Corporation (FDIC)). Repurchase and reverse repurchase 
transactions on all securities (including, for example, equity 
securities, asset-backed securities, corporate bonds and 
commercial paper) are included under the definition of 
``securities contract.'' 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, sale or 
repurchase of 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.''
    A number of terms used in the qualified financial contract 
provisions, but not defined therein, are intended to have the 
meanings set forth in the analogous provisions of the 
Bankruptcy Code or Federal Deposit Insurance Corporation 
Improvement Act (``FDICIA''), such as, for example, 
``securities clearing agency.'' The term ``person,'' however, 
is not intended to be so interpreted. Instead, ``person'' is 
intended to have the meaning set forth in section 1 of title 1 
of the United States Code.
    Section 901(c) amends with respect the definition of 
``commodity contract'' in section 11(e)(8)(D)(iii) of the FDIA 
and in section 207(c)(8)(D)(iii) of the FCUA. Section 901(d) 
amends section 11(e)(8)(D)(iv) of the FDIA and section 
207(c)(8)(D)(iv) of the FCUA with respect to the definition of 
a ``forward contract.''
    Subsection (e) amends the definition of ``repurchase 
agreement'' in the FDIA and the FCUA to codify the substance of 
the FDIC's 1995 regulation defining repurchase agreement to 
include those on qualified foreign government securities.\166\ 
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), 
as determined by rule, of the appropriate Federal banking 
agency. Subsection (e) reflects developments in the repurchase 
agreement markets, which increasingly use foreign government 
securities as the underlying asset. The securities are limited 
to those issued by or guaranteed by full members of the OECD, 
as well as countries that have concluded special lending 
arrangements with the International Monetary Fund associated 
with the Fund's General Arrangements to Borrow.
---------------------------------------------------------------------------
    \166\ See 12 C.F.R. Sec. 360.5.
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    Subsection (e) also amends the definition of ``repurchase 
agreement'' to include those on mortgage-related securities, 
mortgage loans and interests therein, and expressly to include 
principal and interest-only U.S. government and agency 
securities as securities that can be the subject of a 
``repurchase agreement.'' The reference in the definition to 
United States government- and agency-issued or fully guaranteed 
securities is intended to include obligations issued or 
guaranteed by Fannie Mae and the Federal Home Loan Mortgage 
Corporation (Freddie Mac) as well as all obligations eligible 
for purchase by Federal Reserve banks under the similar 
language of section 14(b) of the Federal Reserve Act. This 
amendment is not intended to affect the status of repos 
involving securities or commodities as securities contracts, 
commodity contracts, or forward contracts, and their consequent 
eligibility for similar treatment under the qualified financial 
contract provisions. In particular, an agreement for the sale 
and repurchase of a security would continue to be a securities 
contract as defined in the FDIA or FCUA, even if not a 
``repurchase agreement'' as defined in the FDIA or FCUA. 
Similarly, an agreement for the sale and repurchase of a 
commodity, even though not a ``repurchase agreement'' as 
defined in the FDIA or FCUA, would continue to be a forward 
contract for purposes of the FDIA or FCUA.
    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.'' 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 one year or less after such 
transfer, however, would constitute a ``repurchase agreement'' 
as well as a ``securities contract.''
    Section 901(f) of the Act 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, 
future, or forward agreement; a debt index or debt swap, 
option, future, or forward agreement; a total return, credit 
spread or credit swap, option, future, or forward agreement; a 
commodity index or commodity swap, option, future, or forward 
agreement; or a weather swap, weather derivative, or weather 
option.'' As amended, the definition of ``swap agreement'' will 
update the statutory definition and achieve contractual netting 
across economically similar transactions that are the subject 
of recurring dealings in the swap agreements.
    The definition of ``swap agreement'' originally was 
intended to provide sufficient flexibility to avoid the need to 
amend the definition as the nature and uses of swap 
transactions matured. To that end, the phrase ``or any other 
similar agreement'' was included in the definition. (The phrase 
``or any similar agreement'' has been added to the definitions 
of ``forward contract,'' ``commodity contract,'' ``repurchase 
agreement'' and ``securities contract'' for the same reason.) 
To clarify this, subsection (f) expands the definition of 
``swap agreement'' to include ``any agreement or transaction 
that is similar to any other agreement or transaction referred 
to in [section 11(e)(8)(D)(vi) of the FDIA] and is of a type 
that has been, is presently, or in the future becomes, the 
subject of recurrent dealings in the swap markets . . . and 
that is a forward, swap, future, or option on one or more 
rates, currencies, commodities, equity securities or other 
equity instruments, debt securities or other debt instruments, 
quantitative measures associated with an occurrence, extent of 
an occurrence, or contingency associated with a financial, 
commercial, or economic consequence, or economic or financial 
indices or measures of economic or financial risk or value.''
    The definition of ``swap agreement,'' however, should not 
be interpreted to permit parties to document non-swaps as swap 
transactions. Traditional commercial arrangements, such as 
supply agreements, or other non-financial market transactions, 
such as commercial, residential or consumer loans, cannot be 
treated as ``swaps'' under the FDIA, the FCUA, or the 
Bankruptcy Code simply because the parties purport to document 
or label the transactions as ``swap agreements.'' In addition, 
these definitions apply only for purposes of the FDIA, the 
FCUA, and the Bankruptcy Code. These definitions, and the 
characterization of a certain transaction as a ``swap 
agreement,'' are not intended to affect 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). 
Similarly, Section 17 and a new paragraph of Section 11(e) of 
the FDIA provide that the definitions of ``securities 
contract,'' ``repurchase agreement,'' ``forward contract,'' and 
``commodity contract,'' and the characterization of certain 
transactions as such a contract or agreement, are not intended 
to affect 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).
    The definition also includes any security agreement or 
arrangement, or other credit enhancement, related to a swap 
agreement, including any guarantee or reimbursement obligation 
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 FDIA, FCUA, and the Bankruptcy Code. 
Similar changes are made in the definitions of ``forward 
contract,'' ``commodity contract,'' ``repurchase agreement'' 
and ``securities contract.''
    The use of the term ``forward'' in the definition of ``swap 
agreement'' is not intended to refer only to transactions that 
fall within the definition of ``forward contract.'' Instead, a 
``forward'' transaction could be a ``swap agreement'' even if 
not a ``forward contract.''
    Section 901(g) amends the definition of ``transfer'' in the 
FDIA and FCUA, which is a key term used in both, to ensure that 
it is broadly construed to encompass dispositions of property 
or interests in property. The definition tracks the Bankruptcy 
Code's definition of this term in Bankruptcy Code section 101.
    Section 901(h) makes clarifying technical changes to 
conform the receivership and conservatorship provisions of the 
FDIA and the FCUA. It also clarifies that the FDIA and the FCUA 
expressly protect rights under security agreements, 
arrangements or other credit enhancements related to one or 
more qualified financial contracts (QFCs). An example of a 
security arrangement is a right of setoff, and examples of 
other credit enhancements are letters of credit, guarantees, 
reimbursement obligations and other similar agreements.
    Section 901(i) of the Act 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.

Sec. 902. Authority of the FDIC and NCUAB with Respect to 
Failed and Failing Institutions. Section 902 of the Act 
provides that no provision of law, including FDICIA, shall be 
construed to limit the power of the FDIC or the NCUAB to 
transfer or to repudiate any QFC in accordance with its powers 
under the FDIA or FCUA, respectively. As discussed below, there 
has been some uncertainty regarding whether or not FDICIA 
limits the authority of the FDIC or the NCUAB 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 or the 
NCUAB with respect to QFCs. 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.

Sec. 903. Amendments Relating to Transfers of Qualified 
Financial Contracts. Section 903 of the Act amends the FDIA and 
the FCUA to expand the transfer authority of the FDIC and the 
NCUAB, respectively to permit transfers of QFCs to ``financial 
institutions'' as defined in FDICIA or in regulations. This 
provision will allow the FDIC and NCUAB to transfer QFCs to a 
non-depository financial institution, provided the institution 
is not subject to bankruptcy or insolvency proceedings.
    The new FDIA and FCUA provisions specify that when the FDIC 
and NCUAB transfer QFCs that are cleared on or 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 
and NCUAB flexibility in resolving QFCs cleared on or subject 
to the rules of a clearing organization, while preserving the 
ability of such organizations to enforce appropriate risk 
reducing membership requirements. The amendment does not 
require the clearing organization to accept for clearing any 
QFCs from the transferee, except on the terms and conditions 
applicable to other parties permitted to clear through that 
clearing organization. ``Clearing organization'' is defined to 
mean a ``clearing organization'' within the meaning of FDICIA 
(as amended both by the CFMA and by Section 906 of the Act).
    The new FDIA and FCUA provisions also permit transfers to 
an eligible financial institution that is a non-U.S. person, or 
the branch or agency of a non-U.S. person or a U.S. financial 
institution that is not an FDIC-insured institution if, 
following the transfer, the contractual rights of the parties 
would be enforceable substantially to the same extent as under 
the FDIA and the FCUA. It is expected that neither the FDIC nor 
the NCUAB would transfer QFCs to such a financial institution 
if there were an impending change of law that would impair the 
enforceability of the parties' contractual rights.
    Section 903 amends the notification requirements following 
a transfer of the QFCs of a failed depository institution to 
require the FDIC and NCUAB 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 or NCUAB acting as a conservator. This amendment is 
consistent with the policy statement on QFCs issued by the FDIC 
on December 12, 1989.
    Section 903 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. Section 903 
makes a similar change to the FCUA.
    Section 903 also prohibits the enforcement of rights of 
termination or liquidation that arise solely because of the 
insolvency of the institution or are based 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 rendered ineffective 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 or 
NCUAB 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, or from 
taking actions based upon a receivership or other financial 
condition-triggered default in the absence of a transfer (as 
contemplated in Section 11(e)(10) of the FDIA). The amendment 
allows the FDIC or NCUAB 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 or NCUAB to 
transfer QFCs of a failed depository institution to a bridge 
bank or a depository institution organized by the FDIC or NCUAB 
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 or 
NCUAB 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.

Sec. 904. Amendments Relating to Disaffirmance or Repudiation 
of Qualified Financial Contracts. Section 904 of the Act limits 
the disaffirmance and repudiation authority of the FDIC and 
NCUAB with respect to QFCs so that such authority is consistent 
with their transfer authority under FDIA section 11(e)(9) or 
FCUA section 207(c). This ensures that no disaffirmance, 
repudiation or transfer authority of the FDIC or NCUAB 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.

Sec. 905. Clarifying Amendment Relating to Master Agreements. 
Section 905 of the Act specifies 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 or the FCUA (but only 
with respect to the underlying agreements are themselves QFCs). 
This provision ensures that cross-product netting pursuant to a 
master agreement, or pursuant to an umbrella agreement for 
separate master agreements between the same parties, each of 
which is used to document one or more qualified financial 
contracts, will be enforceable under the FDIA and the FCUA. 
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.

Sec. 906. Federal Deposit Insurance Corporation Improvement Act 
of 1991. Subsection (a)(1) of section 906 of the Act amends the 
definition of ``clearing organization'' in section 402 of the 
FDICIA to include clearinghouses that are subject to exemptions 
pursuant to orders of the Securities and Exchange Commission or 
the Commodity Futures Trading Commission and to include 
multilateral clearing organizations (the definition of which 
was added to FDICIA by the CFMA).
    FDICIA provides that a netting arrangement will be enforced 
pursuant to its terms, notwithstanding the failure of a party 
to the agreement. The current netting provisions of FDICIA, 
however, limit this protection to ``financial institutions,'' 
which include depository institutions. Section 906(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 latter change will 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. It is intended that a non-defaulting 
foreign bank and its branches and agencies be considered to be 
a single financial institution for purposes of the bilateral 
netting provisions of FDICIA (except to the extent that the 
non-defaulting foreign bank and its branches and agencies on 
the one hand, and the defaulting financial institution, on the 
other, have entered into agreements that clearly evidence an 
intention that the non-defaulting foreign bank and its branches 
and agencies be treated as separate financial institutions for 
purposes of the bilateral netting provisions of FDICIA).
    Subsection (a)(3) amends the 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.
    Section 906(a)(4) of the Act 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. Many of 
these agreements, however, 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 not be invalid 
under, or precluded by, Federal law.
    Section 906(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 FCUA, or (ii) the appointment of 
a receiver or liquidating agent for such institution under the 
FDIA or FCUA, if such receiver or liquidating agent transfers 
or repudiates QFCs in accordance with the FDIA or FCUA and 
gives notice of a transfer by 5:00 p.m. on the business day 
following such appointment. This change is made to confirm the 
FDIC's and FCUA's flexibility to transfer or repudiate the QFCs 
of an insolvent depository institution in accordance with the 
terms of the FDIA or FCUA. This modification also provides 
important legal certainty regarding the treatment of QFCs under 
the FDIA and FCUA, because the current relationship between 
these statutes and FDICIA is unclear.
    The second exception provides that FDICIA does not override 
a stay order under SIPA with respect to foreclosure on 
securities (but not cash) collateral of a debtor (section 911 
of the Act makes a conforming change to SIPA). There is also an 
exception relating to insolvent commodity brokers. 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.
    Section 906(d) of the Act adds a new section 407 to FDICIA. 
This new section provides that, notwithstanding any other law, 
QFCs with uninsured national banks, uninsured Federal branches 
or agencies, or Edge Act corporations, or uninsured State 
member banks that operate, or operate as, a multilateral 
clearing organization and 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 these 
institutions 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 such an 
institution to those contained in 12 U.S.C. 
Sec. Sec. 1821(e)(8), (9), (10), and (11), which address QFCs.
    While the amendment would apply the same rules 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.

Sec. 907. Bankruptcy Law Amendments. Section 907 of the Act 
makes a series of amendments to the Bankruptcy Code. Subsection 
(a)(1) amends the Bankruptcy Code definitions of ``repurchase 
agreement'' and ``swap agreement'' to conform with the 
amendments to the FDIA contained in sections 901(e) and (f) of 
the Act.
    In connection with the definition of ``repurchase 
agreement,'' the term ``qualified foreign government 
securities'' is defined to include securities that are direct 
obligations of, or fully guaranteed by, central governments of 
members of the Organization for Economic Cooperation and 
Development (OECD). This language reflects developments in the 
repurchase agreement markets, which increasingly use foreign 
government securities as the underlying asset. The securities 
are limited to those issued by or guaranteed by full members of 
the OECD, as well as countries that have concluded special 
lending arrangements with the International Monetary Fund 
associated with the Fund's General Arrangements to Borrow.
    Subsection (a)(1) also amends the definition of 
``repurchase agreement'' to include those on mortgage-related 
securities, mortgage loans and interests therein, and to 
include principal and interest-only U.S. government and agency 
securities as securities that can be the subject of a 
``repurchase agreement.'' The reference in the definition to 
United States government- and agency-issued or fully guaranteed 
securities is intended to include obligations issued or 
guaranteed by Fannie Mae and the Federal Home Loan Mortgage 
Corporation (Freddie Mac) as well as all obligations eligible 
for purchase by Federal Reserve banks under the similar 
language of section 14(b) of the Federal Reserve Act.
    This amendment is not intended to affect the status of 
repos involving securities or commodities as securities 
contracts, commodity contracts, or forward contracts, and their 
consequent eligibility for similar treatment under other 
provisions of the Bankruptcy Code. In particular, an agreement 
for the sale and repurchase of a security would continue to be 
a securities contract as defined in the Bankruptcy Code and 
thus also would be subject to the Bankruptcy Code provisions 
pertaining to securities contracts, even if not a ``repurchase 
agreement'' as defined in the Bankruptcy Code. Similarly, an 
agreement for the sale and repurchase of a commodity, even 
though not a ``repurchase agreement'' as defined in the 
Bankruptcy Code, would continue to be a forward contract for 
purposes of the Bankruptcy Code and would be subject to the 
Bankruptcy Code provisions pertaining to forward contracts.
    Subsection (a)(1) specifies that repurchase obligations 
under a participation in a commercial mortgage loan do not make 
the participation agreement a ``repurchase agreement.'' These 
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 one year or less 
after such transfer would constitute a ``repurchase agreement'' 
(as well as a ``securities contract'').
    The definition of ``swap agreement'' is amended to include 
an ``interest rate swap, option, future, or forward agreement, 
including a rate floor, rate cap, rate collar, cross-currency 
rate swap, and basis swap; a spot, same day-tomorrow, tomorrow-
next, forward, or other foreign exchange or precious metals 
agreement; a currency swap, option, future, or forward 
agreement; an equity index or equity swap, option, future, or 
forward agreement; a debt index or debt swap, option, future, 
or forward agreement; a total return, credit spread or credit 
swap, option, future, or forward agreement; a commodity index 
or commodity swap, option, future, or forward agreement; or a 
weather swap, weather derivative, or weather option.'' As 
amended, the definition of ``swap agreement'' will update the 
statutory definition and achieve contractual netting across 
economically similar transactions.
    The definition of ``swap agreement'' originally was 
intended to provide sufficient flexibility to avoid the need to 
amend the definition as the nature and uses of swap 
transactions matured. To that end, the phrase ``or any other 
similar agreement'' was included in the definition. (The phrase 
``or any similar agreement'' has been added to the definitions 
of ``forward contract,'' ``commodity contract,'' ``repurchase 
agreement,'' and ``securities contract'' for the same reason.) 
To clarify this, subsection (a)(1) expands the definition of 
``swap agreement'' to include ``any agreement or transaction 
that is similar to any other agreement or transaction referred 
to in [Section 101(53B) of the Bankruptcy Code] and that is of 
a type that has been, is presently, or in the future becomes, 
the subject of recurrent dealings in the swap markets'' and 
[that] is a forward, swap, future, or option on one or more 
rates, currencies, commodities, equity securities or other 
equity instruments, debt securities or other debt instruments, 
quantitative measures associated with an occurrence, extent of 
an occurrence, or contingency associated with a financial, 
commercial, or economic consequence, or economic or financial 
indices or measures of economic or financial risk or value.''
    The definition of ``swap agreement'' in this subsection 
should not be interpreted to permit parties to document non-
swaps as swap transactions. Traditional commercial 
arrangements, such as supply agreements, or other non-financial 
market transactions, such as commercial, residential or 
consumer loans, cannot be treated as ``swaps'' under the FDIA, 
the FCUA, or the Bankruptcy Code because the parties purport to 
document or label the transactions as ``swap agreements.'' 
These definitions, and the characterization of a certain 
transaction as a ``swap agreement,'' are not intended to affect 
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 (a)(1)(C). Similarly, the 
definitions of ``securities contract,'' ``repurchase 
agreement,'' and ``commodity contract'' and the 
characterization of certain transactions as such a contract or 
agreement, are not intended to affect the characterization, 
definition, or treatment of any instrument under any other 
statute, regulation, or rule including, but not limited to, the 
statutes, regulations or rules enumerated in subsection (f).
    The definition also includes any security agreement or 
arrangement, or other credit enhancement, related to a swap 
agreement, including any guarantee or reimbursement obligation 
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, the FDIA and the FCUA. 
Similar changes are made in the definitions of ``forward 
contract,'' ``commodity contract,'' ``repurchase agreement,'' 
and ``securities contract.'' An example of a security 
arrangement is a right of setoff; examples of other credit 
enhancements are letters of credit and other similar 
agreements. A security agreement or arrangement or guarantee or 
reimbursement obligation related to a ``swap agreement,'' 
``forward contract,'' ``commodity contract,'' ``repurchase 
agreement'' or ``securities contract'' will be such an 
agreement or contract only to the extent of the damages in 
connection with such agreement measured in accordance with 
Section 562 of the Bankruptcy Code (added by the Act). This 
limitation does not affect, however, the other provisions of 
the Bankruptcy Code (including Section 362(b)) relating to 
security arrangements in connection with agreements or 
contracts that otherwise qualify as ``swap agreements,'' 
``forward contracts,'' ``commodity contracts,'' ``repurchase 
agreements'' or ``securities contracts.''
    The use of the term ``forward'' in the definition of ``swap 
agreement'' is not intended to refer only to transactions that 
fall within the definition of ``forward contract.'' Instead, a 
``forward'' transaction could be a ``swap agreement'' even if 
not a ``forward contract.''
    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.
    Subsection (a)(2), like the amendments to the FDIA and the 
FCUA, amends the definition of ``securities contract'' 
expressly to encompass margin loans, to clarify the coverage of 
securities options and to clarify the coverage of repurchase 
and reverse repurchase transactions. The inclusion of ``margin 
loans'' in the definition is intended to encompass only those 
loans commonly known in the securities industry as ``margin 
loans,'' such as credit permitted in a margin account under the 
Federal Reserve Board's Regulation T (whether or not effected 
in that account) or arrangements where a financial 
intermediary--a stockbroker, financial institution, financial 
participant, or securities clearing agency--extends credit in 
connection with the purchase, sale, carrying, or trading of 
securities. ``Margin loans'' do not include, however, other 
loans that happen to be secured by securities collateral. The 
reference in subsection (b) to a ``guarantee'' by or to a 
``securities clearing agency'' is intended to cover other 
arrangements, such as novation, that have an effect similar to 
a guarantee. The reference to a ``loan'' of a security in the 
definition is intended to apply to loans of securities, whether 
or not for a ``permitted purpose'' under margin regulations. 
The reference to ``repurchase and reverse repurchase 
transactions'' is intended to eliminate any inquiry under 
section 555 and related provisions as to whether a repurchase 
or reverse repurchase transaction is a purchase and sale 
transaction or a secured financing. Repurchase and reverse 
repurchase transactions meeting certain criteria are already 
covered under the definition of ``repurchase agreement'' in the 
Bankruptcy Code. Repurchase and reverse repurchase transactions 
on all securities (including, for example, equity securities, 
asset-backed securities, corporate bonds and commercial paper) 
are included under the definition of ``securities contract.'' A 
repurchase or reverse repurchase transaction which is a 
``securities contract'' but not a ``repurchase agreement'' 
would thus be subject to the ``counterparty limitations'' 
contained in section 555 of the Bankruptcy Code (i.e., only 
stockbrokers, financial institutions, securities clearing 
agencies and financial participants can avail themselves of 
section 555 and related provisions).
    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, sale or repurchase of 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.'' Section 907(a) clarifies the reference 
to guarantee or reimbursement obligation.
    Section 907(b) amends the Bankruptcy Code definitions of 
``financial institution'' and ``forward contract merchant.'' 
The definition for ``financial institution'' includes Federal 
Reserve Banks and the receivers or conservators of insolvent 
depository institutions. With respect to securities contracts, 
the definition of ``financial institution'' expressly includes 
investment companies registered under the Investment Company 
Act of 1940.
    Subsection (b) also adds a new definition of ``financial 
participant'' to limit the potential impact of insolvencies 
upon other major market participants. This definition will 
allow such market participants to close-out and net agreements 
with insolvent entities under sections 362(b)(6), 555, and 556 
even if the creditor could not qualify as, for example, a 
commodity broker. Sections 362(b)(6), 555 and 556 preserve the 
limitations of the right to close-out and net such contracts, 
in most cases, to entities who qualify under the Bankruptcy 
Code's counterparty limitations. However, where the 
counterparty has transactions with a total gross dollar value 
of at least $1 billion in notional or actual principal amount 
outstanding on any day during the previous 15-month period, or 
has gross mark-to-market positions of at least $100 million 
(aggregated across counterparties) in one or more agreements or 
transactions on any day during the previous 15-month period, 
sections 362(b)(6), 555 and 556 and corresponding amendments 
would permit it to exercise netting and related rights 
irrespective of its inability otherwise to satisfy those 
counterparty limitations. This change will help prevent 
systemic impact upon the markets from a single failure, and is 
derived from threshold tests contained in Regulation EE 
promulgated by the Federal Reserve Board in implementing the 
netting provisions of the Federal Deposit Insurance Corporation 
Improvement Act. It is intended that the 15-month period be 
measured with reference to the 15 months preceding the filing 
of a petition by or against the debtor.
    ``Financial participant'' is also defined to include 
``clearing organizations'' within the meaning of FDICIA (as 
amended by the CFMA and Section 906 of the Act). This 
amendment, together with the inclusion of ``financial 
participants'' as eligible counterparties in connection with 
``commodity contracts,'' ``forward contracts'' and ``securities 
contracts'' and the amendments made in other Sections of the 
Act to include ``financial participants'' as counterparties 
eligible for the protections in respect of ``swap agreements'' 
and ``repurchase agreements,'' take into account the CFMA and 
will allow clearing organizations to benefit from the 
protections of all of the provisions of the Bankruptcy Code 
relating to these contracts and agreements. This will further 
the goal of promoting the clearing of derivatives and other 
transactions as a way to reduce systemic risk. The definition 
of ``financial participant'' (as with the other provisions of 
the Bankruptcy Code relating to ``securities contracts,'' 
``forward contracts,'' ``commodity contracts,'' ``repurchase 
agreements'' and ``swap agreements'') is not mutually 
exclusive, i.e., an entity that qualifies as a ``financial 
participant'' could also be a ``swap participant,'' ``repo 
participant,'' ``forward contract merchant,'' ``commodity 
broker,'' ``stockbroker,'' ``securities clearing agency'' and/
or ``financial institution.''
    Section 907(c) of the Act adds to the Bankruptcy Code new 
definitions for the terms ``master netting agreement'' and 
``master netting agreement participant.'' The definition of 
``master netting agreement'' is designed to protect the 
termination and close-out netting provisions of cross-product 
master agreements between parties. Such an agreement may be 
used: (i) to document a wide variety of securities contracts, 
commodity contracts, forward contracts, repurchase agreements 
and swap agreements, or (ii) as an umbrella agreement for 
separate master agreements between the same parties, each of 
which is used to document a discrete type of transaction. The 
definition includes security agreements or arrangements or 
other credit enhancements related to one or more such 
agreements and clarifies that a master netting agreement will 
be treated as such even if it documents transactions that are 
not within the enumerated categories of qualifying transactions 
(but the provisions of the Bankruptcy Code relating to master 
netting agreements and the other categories of transactions 
will not apply to such other transactions). A ``master netting 
agreement participant'' is any entity that is a party to an 
outstanding master netting agreement with a debtor before the 
filing of a bankruptcy petition.
    Subsection (d) amends section 362(b) of the Bankruptcy Code 
to protect enforcement, free from the automatic stay, of setoff 
or netting provisions in swap agreements and in master netting 
agreements and security agreements or arrangements related to 
one or more swap agreements or master netting agreements. This 
provision parallels the other provisions of the Bankruptcy Code 
that protect netting provisions of securities contracts, 
commodity contracts, forward contracts, and repurchase 
agreements. Because the relevant definitions include related 
security agreements, the references to ``setoff'' in these 
provisions, as well as in section 362(b)(6) and (7) of the 
Bankruptcy Code, are intended to refer also to rights to 
foreclose on, and to set off against obligations to return, 
collateral securing swap agreements, master netting agreements, 
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 free from the automatic 
stay 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 but that cannot technically be ``held by'' the creditor, 
such as receivables and book-entry securities, and to 
collateral that has been repledged by the creditor and 
securities re-sold pursuant to repurchase agreements.
    Subsections (e) and (f) of section 907 of the Act amend 
sections 546 and 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 
and not taken in good faith. This amendment provides the same 
protections for a transfer made under, or in connection with, a 
master netting agreement as currently is provided for margin 
payments, settlement payments and other transfers received by 
commodity brokers, forward contract merchants, stockbrokers, 
financial institutions, securities clearing agencies, repo 
participants, and swap participants under sections 546 and 
548(d), except to the extent the trustee could otherwise avoid 
such a transfer made under an individual contract covered by 
such master netting agreement.
    Subsections (g), (h), (i), and (j) of section 907 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.
    Section 907(k) of the Act 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. These rights include rights 
arising: (i) from the rules of a derivatives clearing 
organization, multilateral clearing organization, securities 
clearing agency, securities exchange, securities association, 
contract market, derivatives transaction execution facility or 
board of trade; (ii) under common law, law merchant; or (iii) 
by reason of normal business practice. This reflects the 
enactment of the CFMA and the current treatment of rights under 
swap agreements under section 560 of the Bankruptcy Code. 
Similar changes to reflect the enactment of the CFMA have been 
made to the definition of ``contractual right'' for purposes of 
Sections 555, 556, 559, and 560 of the Bankruptcy Code.
    Subsections (b)(2)(A) and (b)(2)(B) of new Section 561 
limit the exercise of contractual rights to net or to offset 
obligations where the debtor is a commodity broker and one leg 
of the obligations sought to be netted relates to commodity 
contracts traded on or subject to the rules of a contract 
market designated under the Commodity Exchange Act or a 
derivatives transaction execution facility registered under the 
Commodity Exchange Act. Under subsection (b)(2)(A) netting or 
offsetting is not permitted in these circumstances if the party 
seeking to net or to offset has no positive net equity in the 
commodity accounts at the debtor. Subsection (b)(2)(B) applies 
only if the debtor is a commodity broker, acting on behalf of 
its own customer, and is in turn a customer of another 
commodity broker. In that case, the latter commodity broker may 
not net or offset obligations under such commodity contracts 
with other claims against its customer, the debtor. Subsections 
(b)(2)(A) and (b)(2)(B) limit the depletion of assets available 
for distribution to customers of commodity brokers. Subsection 
(b)(2)(C) provides an exception to subsections (b)(2)(A) and 
(b)(2)(B) for cross-margining and other similar arrangements 
approved by, or submitted to and not rendered ineffective by, 
the Commodity Futures Trading Commission, as well as certain 
other netting arrangements.
    For the purposes of Bankruptcy Code sections 555, 556, 559, 
560, and 561, it is intended that the normal business practice 
in the event of a default of a party based on bankruptcy or 
insolvency is to terminate, liquidate or accelerate securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements and master netting agreements with 
the bankrupt or insolvent party. The protection of netting and 
offset rights in sections 560 and 561 is in addition to the 
protections afforded in sections 362(b)(6), (b)(7), (b)(17), 
and (b)(28) of the Bankruptcy Code.
    Under the Act, the termination, liquidation or acceleration 
rights of a master netting agreement participant are subject to 
limitations contained in other provisions of the Bankruptcy 
Code relating to securities contracts and repurchase 
agreements. In particular, if a securities contract or 
repurchase agreement is documented under a master netting 
agreement, a party's termination, liquidation and acceleration 
rights would be subject to the provisions of the Bankruptcy 
Code relating to orders authorized under the provisions of SIPA 
or any statute administered by the SEC. In addition, the 
netting rights of a party to a master netting agreement would 
be subject to any contractual terms between the parties 
limiting or waiving netting or set off rights. Similarly, a 
waiver by a bank or a counterparty of netting or set off rights 
in connection with QFCs would be enforceable under the FDIA.
    New section 561 of the Bankruptcy Code clarifies that the 
provisions of the Bankruptcy Code related to securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements and master netting agreements apply 
in a proceeding ancillary to a foreign insolvency proceeding 
under new section 304 of the Bankruptcy Code.
    Subsections (l) and (m) of section 907 of the Act clarify 
that the exercise of termination and netting rights will not 
otherwise affect the priority of the creditor's claim after the 
exercise of netting, foreclosure and related rights.
    Subsection (n) 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 setoff excepted from section 
553(b).
    Section 907(o), as well as other subsections of the Act, 
adds references to ``financial participant'' in all the 
provisions of the Bankruptcy Code relating to securities, 
forward and commodity contracts and repurchase and swap 
agreements.

Sec. 908. Recordkeeping Requirements. Section 908 of the Act 
amends section 11(e)(8) of the Federal Deposit Insurance Act to 
explicitly authorize the FDIC, in consultation with appropriate 
Federal banking agencies, to prescribe regulations on 
recordkeeping by any insured depository institution with 
respect to QFCs only if the insured financial institution is in 
a troubled condition (as such term is defined in the FDIA).

Sec. 909. Exemptions from Contemporaneous Execution 
Requirement. Section 909 of the Act amends FDIA section 
13(e)(2) 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 ``D'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.

Sec. 910. Damage Measure. Section 910 of the Act adds a new 
section 562 to the Bankruptcy Code providing that damages under 
any swap agreement, securities contract, forward contract, 
commodity contract, repurchase agreement or master netting 
agreement will be calculated as of the earlier of: (i) the date 
of rejection of such agreement by a trustee, or (ii) the date 
or dates of liquidation, termination or acceleration of such 
contract or agreement.
    Section 562 provides an exception to the rules in (i) and 
(ii) if there are no commercially reasonable determinants of 
value as of such date or dates, in which case damages are to be 
measured as of the earliest subsequent date or dates on which 
there are commercially reasonable determinants of value. 
Although it is expected that in most circumstances damages 
would be measured as of the date or dates of either rejection 
or liquidation, termination or acceleration, in certain unusual 
circumstances, such as dysfunctional markets or liquidation of 
very large portfolios, there may be no commercially reasonable 
determinants of value for liquidating any such agreements or 
contracts or for liquidating all such agreements and contracts 
in a large portfolio on a single day. It is expected that 
measuring damages as of a date or dates before the date of 
liquidation, termination, or acceleration will occur only in 
very unusual circumstances.
    The party determining damages is given limited discretion 
to determine the dates as of which damages are to be measured. 
Its actions are circumscribed unless there are no 
``commercially reasonable'' determinants of value for it to 
measure damages on the date or dates of either rejection or 
liquidation, termination or acceleration. The references to 
``commercially reasonable'' are intended to reflect existing 
state law standards relating to a creditor's actions in 
determining damages. New section 562 provides that if damages 
are not measured as of either the date of rejection or the date 
or dates of liquidation, termination or acceleration and the 
trustee challenges the timing of the measurement of damages by 
the non-defaulting party determining the damages, then the non-
defaulting party, rather than the trustee, has the burden of 
proving the absence of any commercially reasonable determinants 
of value.
    New section 562 is not intended to have any impact on the 
determination under the Bankruptcy Code of the timing of 
damages for contracts and agreements other than those specified 
in section 562. Also, section 562 does not apply to proceedings 
under the FDIA, and it is not intended that Section 562 have 
any impact on the interpretation of the provisions of the FDIA 
relating to timing of damages in respect of QFCs or other 
contracts.

Sec. 911. SIPC Stay. Section 911 of the Act 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 or dispose of securities 
(but not cash) collateral pledged by the debtor or sold by the 
debtor under a repurchase agreement or lent by the debtor under 
a securities lending agreement. A corresponding amendment to 
FDICIA is made by section 906. A creditor that was stayed in 
exercising rights against such securities would be entitled to 
post-insolvency interest to the extent of the value of such 
securities.

       TITLE X. PROTECTION OF FAMILY FARMERS AND FAMILY FISHERMEN

Sec. 1001. Permanent Reenactment of Chapter 12. Chapter 12 is a 
specialized form of bankruptcy relief available only to a 
``family farmer with regular annual income,'' \167\ a defined 
term.\168\ This form of bankruptcy relief permits eligible 
family farmers, under the supervision of a bankruptcy 
trustee,\169\ to reorganize their debts pursuant to a repayment 
plan.\170\ The special attributes of chapter 12 make it better 
suited to meet the particularized needs of family farmers in 
financial distress than other forms of bankruptcy relief, such 
as chapter 11 \171\ and chapter 13.\172\
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    \167\ 11 U.S.C. Sec. 109(f).
    \168\ 11 U.S.C. Sec. 101(19).
    \169\ 11 U.S.C. Sec. 1202.
    \170\ 11 U.S.C. Sec. 1222.
    \171\ For example, chapter 12 is typically less complex and 
expensive than chapter 11, a form of bankruptcy relief generally 
utilized to effectuate large corporate reorganizations.
    \172\ Chapter 13, a form of bankruptcy relief for individuals 
seeking to reorganize their debts, limits its eligibility to debtors 
with debts in lower amounts than permitted for eligibility purposes 
under chapter 12. Cf. 11 U.S.C. Sec. Sec. 109(e), 101(18).
---------------------------------------------------------------------------
    Chapter 12 was enacted on a temporary 7-year basis as part 
of the Bankruptcy Judges, United States Trustees, and Family 
Farmer Bankruptcy Act of 1986 \173\ in response to the farm 
financial crisis of the early- to mid-1980's.\174\ It was 
subsequently reenacted and extended on several occasions. The 
most recent extension, authorized as part of the Farm Security 
and Rural Investment Act of 2002, provides that chapter remains 
in effect until December 31, 2002.\175\
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    \173\ Pub. L. No. 99-554, Sec. 255, 100 Stat. 3088, 3105 (1986).
    \174\ See U.S. Dept. of Agriculture, Info. Bull. No. 724-09, Issues 
in Agricultural and Rural Finance: Do Farmers Need a Separate Chapter 
in the Bankruptcy Code? (Oct. 1997).

As one of the principal proponents of this legislation explained:
  I doubt there will be anything that we do that will have such an 
immediate impact in the grassroots of our country with respect to the 
situation that exists in most of the heartland, and that is in the 
agricultural sector. . . .

  You know, William Jennings Bryan in his famous speech, the Cross of 
Gold, almost 60 years ago [sic], stated these words: ``Destroy our 
cities and they will spring up again as if by magic; but destroy our 
farms, and the grass will grow in every city in our country.''
  This legislation will hopefully stem the tide that we have seen so 
recently in the massive bankruptcies in the family farm area.

132 Cong. Rec. 28,147 (1986) (statement of Rep. Mike Synar (D-Okla.)).
---------------------------------------------------------------------------
    \175\ Pub. L. No. 107-171, Sec. 10814 (2002).
---------------------------------------------------------------------------
    Section 1001(a) of the Act reenacts chapter 12 of the 
Bankruptcy Code and provides that such reenactment takes effect 
as of July 1, 2005. Section 1001(b) makes a conforming 
amendment to section 302 of the Bankruptcy Judges, United 
States Trustees, and Family Farmer Bankruptcy Act of 1986. As a 
result of this provision, chapter 12 becomes a permanent form 
of relief under the Bankruptcy Code.

Sec. 1002. Debt Limit Increase. Section 1002 of the Act amends 
section 104(b) of the Bankruptcy Code to provide for periodic 
adjustments for inflation of the debt eligibility limit for 
family farmers.

Sec. 1003. Certain Claims Owed to Governmental Units. 
Subsection (a) of section 1003 of the Act amends section 
1222(a) of the Bankruptcy Code to add an exception with respect 
to payments to a governmental unit for a debt entitled to 
priority under section 507 if such debt arises from the sale, 
transfer, exchange, or other disposition of an asset used in 
the debtor's farming operation, but only if the debtor receives 
a discharge. Section 1003(b) amends section 1231(b) of the 
Bankruptcy Code to have it apply to any governmental unit. 
Subsection (c) provides that section 1003 becomes effective on 
the date of enactment of this Act and applies to cases 
commenced after such effective date.

Sec. 1004. Definition of Family Farmer. Section 1004 of the Act 
amends the definition of ``family farmer'' in section 101(18) 
of the Bankruptcy Code to increase the debt eligibility limit 
from $1,500,000 to $3,237,000. It also reduces the percentage 
of the farmer's liabilities that must arise out of the debtor's 
farming operation for eligibility purposes from 80 percent to 
50 percent.

Sec. 1005. Elimination of Requirement that Family Farmer and 
Spouse Receive over 50 Percent of Income from Farming Operation 
in Year Prior to Bankruptcy. Section 1005 of the Act amends the 
Bankruptcy Code's definition of ``family farmer'' with respect 
to the determination of the farmer's income. Current law 
provides that a debtor, in order to be eligible to be a family 
farmer, must derive a specified percentage of his or her income 
from farming activities for the taxable year preceding the 
commencement of the bankruptcy case. Section 1005 adjusts the 
threshold percentage to be met during either: (1) the taxable 
year preceding the filing of the bankruptcy case; or (2) the 
taxable year in the second and third taxable years preceding 
the filing of the bankruptcy case.

Sec. 1006. Prohibition of Retroactive Assessment of Disposable 
Income. Section 1006 of the Act amends the Bankruptcy Code in 
two respects concerning chapter 12 plans. Section 1006(a) 
amends Bankruptcy Code section 1225(b) to permit the court to 
confirm a plan even if the distribution proposed under the plan 
equal or exceed the debtor's projected disposable income for 
that period, providing the plan otherwise satisfies the 
requirements for confirmation. Section 1006(b) amends 
Bankruptcy Code section 1229 to restrict the bases for 
modifying a confirmed chapter 12 plan. Specifically, Section 
1006(b) to provide that a confirmed chapter 12 plan may not be 
modified to increase the amount of payments due prior to the 
date of the order modifying the confirmation of the plan. Where 
the modification is based on an increase in the debtor's 
disposable income, the plan may not be modified to require 
payments to unsecured creditors in any particular month in an 
amount greater than the debtor's disposable income for that 
month, unless the debtor proposes such a modification. Section 
1006(b) further provides that a modification of a plan shall 
not require payments that would leave the debtor with 
insufficient funds to carry on the farming operation after the 
plan is completed, unless the debtor proposes such a 
modification.

Sec. 1007. Family Fishermen. Subsection (a) of section 1007 of 
the Act amends Bankruptcy Code section 101 to add definitions 
of ``commercial fishing operation,'' ``commercial fishing 
vessel,'' ``family fisherman'' and ``family fisherman with 
regular annual income.'' The definition of ``commercial fishing 
operation'' includes the catching or harvesting of fish, 
shrimp, lobsters, urchins, seaweed, shellfish, or other aquatic 
species or products. The term ``commercial fishing vessel'' is 
defined as a vessel used by a fisher to ``carry out a 
commercial fishing operation.'' The term ``family fisherman'' 
is defined as an individual engaged in a commercial fishing 
operation, with an aggregate debt limit of $1.5 million. The 
definition specifies that at least 80 percent of those debts 
must be derived from a commercial fishing operation. The 
percentage of income that must be derived from such operation 
is specified to be more than 50 percent of the individual's 
gross income for the taxable year preceding the taxable year in 
which the case was filed. Similar provisions are included for 
corporations and partnerships. The term ``family fisherman with 
regular annual income'' is defined as a family fisherman whose 
annual income is sufficiently stable and regular to enable such 
person to make payments under a chapter 12 plan. Section 
1007(b) amends Bankruptcy Code section 109 to provide that a 
family fisherman is eligible to be a debtor under chapter 12. 
Section 1007(c) amends the heading of chapter 12 to include a 
reference to family fisherman and makes conforming revisions to 
Sections 1203 and 1206.

              TITLE XI. HEALTH CARE AND EMPLOYEE BENEFITS

Sec. 1101. Definitions. Subsection (a) of section 1101 of the 
Act amends section 101 of the Bankruptcy Code to add a 
definition of ``health care business.'' The definition includes 
any public or private entity (without regard to whether that 
entity is for or not for profit) that is primarily engaged in 
offering to the general public facilities and services for the 
diagnosis or treatment of injury, deformity or disease; and 
surgical, drug treatment, psychiatric or obstetric care. It 
also includes the following entities: (1) a general or 
specialized hospital; (2) an ancillary ambulatory, emergency, 
or surgical treatment facility; (3) a hospice; (d) a home 
health agency; (e) other health care institution that is 
similar to an entity referred to in (a) through (d); and other 
long-term care facility. These include a skilled nursing 
facility, intermediate care facility, assisted living facility, 
home for the aged, domiciliary care facility, or health care 
institution that is related to an aforementioned facility. 
Section 1101(b) amends Bankruptcy Code section 101 to add a 
definition of ``patient.'' The term means an individual who 
obtains or receives services from a health care business. 
Section 1101(c) amends section 101 of the Bankruptcy Code to 
add a definition of ``patient records.'' The term means any 
written document relating to a patient or record recorded in a 
magnetic, optical, or other form of electronic medium. Section 
1101(d) specifies that the amendments effectuated by new 
section 101(27A) do not affect the interpretation of section 
109(b).

Sec. 1102. Disposal of Patient Records. Section 1102 of the Act 
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. The 
requirements chiefly consist of providing notice to the 
affected patients and specifying the method of disposal for 
unclaimed records. They 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. The 
provision specifies the following requirements:

        1. The trustee shall: (a) publish notice in one or 
        more appropriate newspapers stating that if the records 
        are not claimed by the patient or an insurance provider 
        (if permitted under applicable law) within 365 days of 
        the date of such notice, then the trustee will destroy 
        such records; and (b) during the first 180 days of such 
        365-day period, attempt to directly notify by mail each 
        patient and appropriate insurance carrier of the 
        claiming or disposing of such records.

        2. If after providing such notice patient records are 
        not claimed within the specified period, the trustee 
        shall, upon the expiration of such period, send a 
        request by certified mail to each appropriate Federal 
        agency to request permission from such agency to 
        deposit the records with the agency.

        3. If after providing the notice as set forth above, 
        patient records are not claimed, the trustee shall 
        destroy such records as follows: (a) by shredding or 
        burning, if the records are written; or (b) by 
        destroying the records so that their information cannot 
        be retrieved, if the records are magnetic, optical or 
        electronic.

    It is anticipated that if the estate of the debtor lacks 
the funds to pay for the costs and expenses related to the 
above, the trustee may recover such costs and expenses under 
section 506(c) of the Bankruptcy Code.

Sec. 1103. Administrative Expense Claim for Costs of Closing a 
Health Care Business and Other Administrative Expenses. Section 
1103 of the Act 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.

Sec. 1104. Appointment of Ombudsman to Act as Patient Advocate. 
Section 1104 of the Act adds a provision to the Bankruptcy Code 
requiring the court to order the appointment of an ombudsman to 
monitor the quality of patient care within 30 days after 
commencement of a chapter 7, 9, or 11 health care business 
bankruptcy case, unless the court finds that such appointment 
is not necessary for the protection of patients under the 
specific facts of the case. The ombudsman must be a 
disinterested person. If the health care business is a long-
term care facility, a person who is serving as a State Long-
Term Care Ombudsman of the Older Americans Act of 1965 may be 
appointed as the ombudsman in such case. The ombudsman must: 
(1) monitor the quality of patient care to the extent necessary 
under the circumstances, including interviewing patients and 
physicians; (2) report to the court, not less than 60 days from 
the date of appointment and then every 60 days thereafter, at a 
hearing or in writing regarding the quality of patient care at 
the health care business involved; and (3) notify the court by 
motion or written report (with notice to appropriate parties in 
interest) if the ombudsman determines that the quality of 
patient care is declining significantly or is otherwise being 
materially compromised. The provision requires the ombudsman to 
maintain any information obtained that relates to patients 
(including patient records) as confidential. Section 1104(b) 
amends section 330(a)(1) of the Bankruptcy Code to authorize 
the payment of reasonable compensation to an ombudsman.

Sec. 1105. Debtor in Possession; Duty of Trustee to Transfer 
Patients. Section 1105 of the Act amends section 704(a) of the 
Bankruptcy Code to require a trustee or debtor in possession to 
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. 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.

Sec. 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

Sec. 1201. Definitions. Section 1201 of the Act 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 single asset real estate debtors. 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. 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.
    Paragraph (6) of section 1201, together with section 1214, 
respond to a 1997 Ninth Circuit case, 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.\176\ 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,\177\ that is, a transfer 
includes the creation of a lien.
---------------------------------------------------------------------------
    \176\ Thompson v. Margen (In re McConville), 110 F.3d 47 (9th 
Cir.), cert. denied, 522 U.S. 966 (1997).
    \177\ Pub. L. No. 95-598, 92 Stat. 2549 (1978).

Sec. 1202. Adjustment of Dollar Amounts. Bankruptcy Code 
section 104 provides for the periodic automatic adjustment of 
certain dollar amounts specified in the Code to reflect the 
change in the Consumer Price Index. Section 1202 amends 
Bankruptcy Code section 104(b) to add a reference to certain 
other monetary amounts specified in the Bankruptcy Code 
section. These include: (1) section 522(f)(3) (pertaining to 
the avoidance of certain liens on implements and other personal 
property valued at less than $5,000); (2) section 101(19A) 
(definition of family fisherman); (3) section 522(f)(4) 
(definition of household goods); (4) section 541(b) (property 
items, such as certain educational individual retirement 
accounts and tuition credit or certificate programs, that do 
not constitute property of the bankruptcy estate); (5) section 
547(c)(9) (limits the avoidance of a preferential transfer, 
under certain circumstances); (6) section 1322(d) (concerning 
the applicability of the needs-based test to chapter 13 debtors 
with above median incomes); (7) section 1325(b) (determination 
of disposable income for chapter 13 debtors with above median 
incomes); and (8) section 1326(b)(3) (payments to a chapter 7 
trustee in a chapter 13 case). In addition, the provision adds 
a reference to section 1409(b) of title 28 of the United States 
Code, which pertains to the venue of proceedings to recover a 
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money judgment or property.

Sec. 1203. Extension of Time. Section 1203 of the Act 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.

Sec. 1204. Technical Amendments. Section 1204 of the Act makes 
technical amendments to Bankruptcy Code 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'').

Sec. 1205. Penalty for Persons Who Negligently or Fraudulently 
Prepare Bankruptcy Petitions. Section 1205 of the Act amends 
section 110(j)(4) of the Bankruptcy Code to change the 
reference to attorneys from the singular possessive to the 
plural possessive.

Sec. 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 of the Act amends section 328(a) to 
include compensation ``on a fixed or percentage fee basis'' in 
addition to the other specified forms of reimbursement.

Sec. 1207. Effect of Conversion. Section 1207 of the Act 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.

Sec. 1208. Allowance of Administrative Expenses. Section 1208 
of the Act 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.

Sec. 1209. Exceptions to Discharge. Section 1209 of the Act 
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. Section 1209 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 corrects a grammatical error 
in section 523(e).

Sec. 1210. Effect of Discharge. Section 1210 of the Act 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.\178\
---------------------------------------------------------------------------
    \178\ For a description of these errors, see the appropriate 
footnote and amendment notes in the United States Code.

Sec. 1211. Protection Against Discriminatory Treatment. Section 
1211 of the Act 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.

Sec. 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 of the Act 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.

Sec. 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. To address the concern 
that a corporate insider (such as an officer or director 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 one year before filing. Several 
recent cases, including DePrizio,\179\ allowed the trustee to 
``reach-back'' and avoid a transfer to a noninsider creditor 
made within the 90-day to one-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 one-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 one 
year before bankruptcy, if the transfer benefitted an insider 
guarantor of the debtor's debt. Accordingly, section 1213 of 
the Act 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 one 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 one year pre-filing period. This provision is 
intended to apply to any case, including any adversary 
proceeding, that is pending or commenced on or after the date 
of enactment of this Act.
---------------------------------------------------------------------------
    \179\ Levit v. Ingersoll Rand Fin. Corp., 874 F.2d 1186 (7th Cir. 
1989); see also 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).

Sec. 1214. Postpetition Transactions. Section 1214 of the Act 
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.\180\
---------------------------------------------------------------------------
    \180\ See supra notes 86 and 176 and accompanying text.

Sec. 1215. Disposition of Property of the Estate. Section 1215 
of the Act amends section 726(b) of the Bankruptcy Code to 
strike an erroneous reference.\181\
---------------------------------------------------------------------------
    \181\ For a description of the error, see the appropriate footnote 
and amendment notes in the United States Code.

Sec. 1216. General Provisions. Section 1216 of the Act 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.

Sec. 1217. Abandonment of Railroad Line. Section 1217 of the 
Act 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.

Sec. 1218. Contents of Plan. Section 1218 of the Act 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.

Sec. 1219. Bankruptcy Cases and Proceedings. Section 1219 of 
the Act amends section 1334(d) of title 28 of the United States 
Code to make clarifying references.\182\
---------------------------------------------------------------------------
    \182\ For a description of the errors, see the appropriate footnote 
and amendment notes in the United States Code.

Sec. 1220. Knowing Disregard of Bankruptcy Law or Rule. Section 
1220 of the Act amends section 156(a) of title 18 of the United 
States Code to make stylistic changes and correct a reference 
---------------------------------------------------------------------------
to the Bankruptcy Code.

Sec. 1221. Transfers Made by Nonprofit Charitable Corporations. 
Section 1221 of the Act 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 of such property 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 1221 
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 
such 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 1221 
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.

Sec. 1222. Protection of Valid Purchase Money Security 
Interests. Section 1222 of the Act 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.

Sec. 1223. 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 
1223 extends four existing temporary judgeships and authorizes 
28 additional bankruptcy judgeships. In determining the 
official duty stations of bankruptcy judges and places of 
holding court pursuant to section 152(b)(1) of title 28 of the 
United States Code regarding the additional judgeships 
authorized in this section, the Judicial Conference should 
consider the convenience of the parties, the district's 
geography, and factors that would facilitate better 
administration of cases, such as may be presented in the 
Eastern District of California with respect to Bakersfield, for 
example.

Sec. 1224. Compensating Trustees. Section 1224 of the Act 
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 exceed 
the greater of $25 or the amount payable to unsecured 
nonpriority creditors as provided by the plan, multiplied by 
five percent and the result divided by the number of months of 
the plan.
    Sec. 1225. Amendment to Section 362 of Titile11, United 
States Code. Section 1225 of the Act 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.

Sec. 1226. Judicial Education. Section 1226 of the Act 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.

Sec. 1227. Reclamation. Section 1227 of the Act amends section 
546(c) of the Bankruptcy Code to provide that the rights of a 
trustee under sections 544(a), 545, 547, and 549 are subject to 
the rights of a seller of goods to reclaim goods sold in the 
ordinary course of business to the debtor if: (1) the debtor, 
while insolvent, received these goods not later than 45 days 
prior to the commencement of the case, and (2) written demand 
for reclamation of the goods is made not later than 45 days 
after receipt of such goods by the debtor or not later than 20 
days after the commencement of the case, if the 45-day period 
expires after the commencement of the case. If the seller fails 
to provide notice in the manner provided in this provision, the 
seller may still assert the rights set forth in section 
503(b)(7) of the Bankruptcy Code. Section 1227(b) amends 
Bankruptcy Code section 503(b) to provide that the value of any 
goods received by a debtor not later than within 20 days prior 
to 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.

Sec. 1228. Providing Requested Tax Documents to the Court. 
Subsection (a) of section 1228 of the Act 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 1228(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 
1228(c) directs the court to destroy documents submitted in 
support of a bankruptcy claim not sooner than three 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.

Sec. 1229. Encouraging Creditworthiness. Subsection (a) of 
section 1229 of the Act expresses the sense of the Congress 
that certain lenders may sometimes offer credit to consumers 
indiscriminately and that resulting consumer debt may be a 
major contributing factor leading to consumer insolvency. 
Section 1229(b) directs the Board of Governors of the Federal 
Reserve 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 
1229(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.

Sec. 1230. Property No Longer Subject to Redemption. Section 
1230 of the Act 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: (1) the property is in the possession of the pledgee or 
transferee; (2) the debtor has no obligation to repay the 
money, redeem the collateral, or buy back the property at a 
stipulated price; and (3) 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.

Sec. 1231. Trustees. Section 1231 of the Act 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 1231(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 to have 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. The 
provision 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 1231(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.

Sec. 1232. Bankruptcy Forms. Section 1232 of the Act amends 
section 2075 of title 28 of the United States Code to a form to 
be prescribed for the statement specified under section 
707(b)(2)(C) of the Bankruptcy Code and to promulgate general 
rules on the content of such statement.

Sec. 1233. Direct Appeals of Bankruptcy Matters to Courts of 
Appeals. Under current law, 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 well as a bankruptcy appellate 
panel are generally not binding and lack stare decisis value.
    To address these problems, section 1233 of the Act amends 
section 158(d) of title 28 to establish a procedure to 
facilitate appeals of certain decisions, judgments, orders and 
decrees of the bankruptcy courts to the circuit courts of 
appeals by means of a two-step certification process. The first 
step is a certification by the bankruptcy court, district 
court, or bankruptcy appellate panel (acting on its own motion 
or on the request of a party, or the appellants and appellees 
acting jointly). Such certification must be issued by the lower 
court if: (1) the bankruptcy court, district court, or 
bankruptcy appellate panel determines that one or more of 
certain specified standards are met; or (2) a majority in 
number of the appellants and a majority in number of the 
appellees request certification and represent that one or more 
of the standards are met. The second step is authorization by 
the circuit court of appeals. Jurisdiction for the direct 
appeal would exist in the circuit court of appeals only if the 
court of appeals authorizes the direct appeal.
    This procedure is intended to be used to settle unresolved 
questions of law where there is a need to establish clear 
binding precedent at the court of appeals level, where the 
matter is one of public importance, where there is a need to 
resolve conflicting decisions on a question of law, or where an 
immediate appeal may materially advance the progress of the 
case or proceeding. The courts of appeals are encouraged to 
authorize direct appeals in these circumstances. While fact-
intensive issues may occasionally offer grounds for 
certification even when binding precedent already exists on the 
general legal issue in question, it is anticipated that this 
procedure will rarely be used in that circumstance or in an 
attempt to bring to the circuit courts of appeals matters that 
can appropriately be resolved initially by district court 
judges or bankruptcy appellate panels.

Sec. 1234. Involuntary Cases. Section 1234 of the Act amends 
the Bankruptcy Code's criteria for commencing an involuntary 
bankruptcy case. Current law renders a creditor ineligible if 
its claim is contingent as to liability or the subject of a 
bona fide dispute. This provision amends section 303(b)(1) to 
specify that a creditor would be ineligible to file an 
involuntary petition if the creditor's claim was the subject of 
a bona fide dispute as to liability or amount. It further 
provides that the claims needed to meet the monetary threshold 
must be undisputed. The provision makes a conforming revision 
to section 303(h)(1). Section 1234 becomes effective on the 
date of enactment of this Act and applies to cases commenced 
before, on, and after such date.

Sec. 1235. Federal Election Law Fines and Penalties as 
Nondischargeable Debt. Section 1235 of the Act amends section 
523(a) of the Bankruptcy Code to make debts incurred to pay 
fines or penalties imposed under Federal election law 
nondischargeable.

                 TITLE XIII. CONSUMER CREDIT DISCLOSURE

Sec. 1301. Enhanced Disclosures under an Open End Credit Plan. 
Section 1301 of the Act 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 1301(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 1301(a). With respect to the toll-free telephone 
number, section 1301(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 six 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 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 1301(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 Federal Reserve Board to 
promulgate regulations implementing section 1301(a)'s 
amendments to section 127. 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 Federal Reserve 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 study's findings must be submitted to Congress 
and include recommendations for legislative initiatives, based 
on the Board's findings.

Sec. 1302. Enhanced Disclosure for Credit Extensions Secured by 
a Dwelling. Subsection (a)(1) of section 1302 of the Act 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. 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 Federal Reserve Board to 
promulgate regulations implementing the amendments effectuated 
by this provision. Section 1302(c)(2) provides that 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.

Sec. 1303. Disclosures Related to ``Introductory Rates.'' 
Subsection (a) of section 1303 of the Act amends section 127(c) 
of the Truth in Lending Act by adding a provision to specify 
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. 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 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) of the Truth in Lending Act, 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 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) of the Truth in Lending Act 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 publication of such final regulations.

Sec. 1304. Internet-Based Credit Card Solicitations. Subsection 
(a) of section 1304 of the Act 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 Federal Reserve Board to 
promulgate regulations implementing this provision. It also 
provides that the amendments effectuated by section 1304 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.

Sec. 1305. Disclosures Related to Late Payment Deadlines and 
Penalties. Subsection (a) of section 1305 of the Act 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 Federal Reserve 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.

Sec. 1306. Prohibition on Certain Actions for Failure to Incur 
Finance Charges. Subsection (a) of section 1306 of the Act 
amends section 127 of the Truth in Lending Act 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 Federal Reserve 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.

Sec. 1307. Dual Use Debit Card. Subsection (a) of section 1307 
of the act provides that the Federal Reserve 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 Federal Reserve 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.

Sec. 1308. Study of Bankruptcy Impact of Credit Extended to 
Dependent Students. Section 1308 of the Act 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 one year from 
the Act's enactment date.

Sec. 1309. Clarification of Clear and Conspicuous. Subsection 
(a) of section 1309 of the Act 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 six 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 purpose of disclosures required under 
the Truth in Lending Act provisions set forth therein.
    Section 1309(c) requires the Federal Reserve 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.

            TITLE XIV. PREVENTING CORPORATE BANKRUPTCY ABUSE

Sec. 1401. Employee Wage and Benefit Priorities. Section 1401 
of the Act amends Bankruptcy Code section 507(a) to provide 
heightened protections for employees by increasing the monetary 
cap on wage and employee benefit claims entitled to priority 
under the Bankruptcy Code from $4,650 to $10,000 and lengthens 
the reachback period for wage claims from 90 days to 180 days. 
As few employees will continue working without pay for an 
extended period, the principal effect of extending the time 
period to 180 days is that a greater portion of unpaid 
vacation, severance, and sick leave pay will be entitled to 
priority payment.

Sec. 1402. Fraudulent Transfers and Obligations. Section 1402 
of the Act amends section 548 of the Bankruptcy Code to enhance 
the recovery of avoidable transfers and excessive prepetition 
compensation, such as bonuses, paid to insiders of a debtor. It 
effectuates two changes to current law that would make it 
easier for a trustee to avoid pre-petition transfers. First, 
section 1402(1) extends the one-year reachback period for 
fraudulent transfers to two years. Second, section 1402(2) 
amends Bankruptcy Code section 548(a) to clarify that it 
permits the recovery of any transfer to or an obligation 
incurred for the benefit of an insider under an employment 
contract, under certain conditions. In addition, section 1402 
adds a new provision to section 548 authorizing a bankruptcy 
trustee to avoid any transfer of an interest of the debtor in 
property that was made on or within the ten-year period 
preceding the filing of the debtor's bankruptcy case if: (a) 
the transfer was made to a self-settled trust or similar 
device; (b) the transfer was made by the debtor; (c) the debtor 
is a beneficiary of such trust or similar device; and (d) the 
debtor made such transfer with actual intent to hinder, delay, 
or defraud any entity to which the debtor was or became, on or 
after the date of such transfer, indebted. For purposes of this 
provision, a transfer includes a transfer made in anticipation 
of any money judgment, criminal fine, or similar obligation or 
which the debtor believed would be incurred as a result of: (1) 
a violation of Federal or state securities laws, regulations, 
or orders; or (2) fraud, deceit, or manipulation in fiduciary 
capacity or in connection with the purchase or sale of a 
security under specified provisions of the Federal securities 
laws.

Sec. 1403. Payment of Insurance Benefits to Retired Employees. 
Current bankruptcy law prevents a chapter 11 debtor from 
unilaterally modifying certain retiree benefits, such as health 
insurance, during the pendency of the bankruptcy case unless an 
authorized retiree representative is appointed and agrees to 
the modification, or the court authorizes the modification. 
Section 1403 amends Bankruptcy Code section 1114 to prevent 
debtors from evading these requirements by terminating retiree 
benefit plans on the eve of bankruptcy. The amendment would 
require retroactive reinstatement of retiree benefits that were 
modified within 180 days before the debtor filed for bankruptcy 
protection, unless the court finds that the balance of the 
equities clearly favors the modification.

Sec. 1404. Debts Nondischargeable If Incurred in Violation of 
Securities Fraud Laws. Bankruptcy Code section 523(a)(19) makes 
certain debts nondischargeable that result from the violation 
of Federal securities law, state securities law, or any 
regulation or order issued under such Federal or state 
securities law nondischargeable. Section 1404 amends Bankruptcy 
Code section 523(a)(19)(B) to provide that it applies to such 
debts that result before, on, or after the date on which the 
petition was filed from any judgment, order, consent order, 
decree, settlement agreement, or from any court or 
administrative order for damages or for other specified 
payments owed by the debtor. Section 1404 is effective as of 
July 30, 2002.

Sec. 1405. Appointment of Trustee in Cases of Suspected Fraud. 
Section 1405 amends Bankruptcy Code section 1104 to require the 
United States trustee to move for the appointment of a trustee 
if there are reasonable grounds to suspect that current members 
of a chapter 11 debtor's governing body, chief executive 
officer, chief financial officer, or members of the debtor's 
governing body who selected the debtor's chief executive 
officer or chief financial officer participated in actual 
fraud, dishonesty, or criminal conduct in the management of the 
debtor or the debtor's public financial reporting.

Sec. 1406. Effective Date; Application of Amendments. Section 
1406 provides that title XIV, with the exception of one 
provision, takes effect on the date of enactment of this Act 
and the amendments apply only to cases commenced after such 
date. The exception applies to section 1402(1) of the Act, 
which applies only to cases commenced under the Bankruptcy Code 
more than one year after the date of enactment of this Act.

      TITLE XV. GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS

Sec. 1501. Effective Date; Application of Amendments. 
Subsection (a) of section 1501 of the Act provides that the Act 
shall take effect 180 days after the date of enactment, unless 
otherwise specified in this Act. Section 1501(b) provides that 
the amendments made by this Act shall not apply to cases 
commenced under the Bankruptcy Code before the Act's effective 
date, unless otherwise specified in this Act. The provision 
specifies that the amendments made by sections 308, 322 and 330 
shall apply to cases commenced on or after the date of 
enactment of this Act.

Sec. 1502. Technical Corrections. In light of the renumbering 
of a paragraph in Bankruptcy Code section 507 as effectuated by 
section 212 of this Act, section 1502 corrects various cross-
references in the Bankruptcy Code to reflect such renumbering.

         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 italics, existing law in which no change 
is proposed is shown in roman):

                      TITLE 11, UNITED STATES CODE

Chap.                                                               Sec.

      General Provisions.............................................101
     * * * * * * *
      Adjustment of Debts of Family Farmers with Regular Annual Inc1201]
      Adjustments of Debts of a Family Farmer or Family Fisherman with .
        Regular Annual Income.......................................1201
     * * * * * * *
      Ancillary and Other Cross-Border Cases........................1501

                     CHAPTER 1--GENERAL PROVISIONS

Sec.
101.  Definitions.
     * * * * * * *
111.  Nonprofit budget and credit counseling agencies; financial 
          management instructional courses.
112.  Prohibition on disclosure of name of minor children.

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 the 
        value of whose nonexempt property is 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 case or 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[;].
            (7A) The term ``commercial fishing operation'' 
        means--
                    (A) the catching or harvesting of fish, 
                shrimp, lobsters, urchins, seaweed, shellfish, 
                or other aquatic species or products of such 
                species; or
                    (B) for purposes of section 109 and chapter 
                12, aquaculture activities consisting of 
                raising for market any species or product 
                described in subparagraph (A).
            (7B) The term ``commercial fishing vessel'' means a 
        vessel used by a family fisherman to carry out a 
        commercial fishing operation.
            (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 that the debtor receives (or in a 
                joint case the debtor and the debtor's spouse 
                receive) without regard to whether such income 
                is taxable income, derived during the 6-month 
                period ending on--
                            (i) the last day of the calendar 
                        month immediately preceding the date of 
                        the commencement of the case if the 
                        debtor files the schedule of current 
                        income required by section 
                        521(a)(1)(B)(ii); or
                            (ii) the date on which current 
                        income is determined by the court for 
                        purposes of this title if the debtor 
                        does not file the schedule of current 
                        income required by section 
                        521(a)(1)(B)(ii); and
                    (B) includes any amount paid by any entity 
                other than the debtor (or in a joint case the 
                debtor and the debtor's spouse), on a regular 
                basis for the household expenses of the debtor 
                or the debtor's dependents (and in a joint case 
                the debtor's spouse if not otherwise a 
                dependent), but excludes benefits received 
                under the Social Security Act, payments to 
                victims of war crimes or crimes against 
                humanity on account of their status as victims 
                of such crimes, and payments to victims of 
                international terrorism (as defined in section 
                2331 of title 18) or domestic terrorism (as 
                defined in section 2331 of title 18) on account 
                of their status as victims of such terrorism.
            (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 who is an officer, director, 
                employee, or agent of a person who provides 
                such assistance or of the bankruptcy petition 
                preparer;
                    (B) a nonprofit organization that is exempt 
                from taxation under section 501(c)(3) of the 
                Internal Revenue Code of 1986;
                    (C) a creditor of such assisted person, to 
                the extent that the creditor is assisting such 
                assisted person to restructure any debt owed by 
                such assisted person to the creditor;
                    (D) a depository institution (as defined in 
                section 3 of the Federal Deposit Insurance Act) 
                or any Federal credit union or State credit 
                union (as those terms are defined in section 
                101 of the Federal Credit Union Act), or any 
                affiliate or subsidiary of such depository 
                institution or credit union; or
                    (E) an author, publisher, distributor, or 
                seller of works subject to copyright protection 
                under title 17, when acting in such capacity.
            (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, on, or after the date 
        of the order for relief in a case under this title, 
        including interest that accrues on that debt as 
        provided under applicable nonbankruptcy law 
        notwithstanding any other provision of this title, that 
        is--
                    (A) owed to or recoverable by--
                            (i) a spouse, former spouse, or 
                        child of the debtor or such child's 
                        parent, legal guardian, or responsible 
                        relative; or
                            (ii) a governmental unit;
                    (B) in the nature of alimony, maintenance, 
                or support (including assistance provided by a 
                governmental unit) of such spouse, former 
                spouse, or child of the debtor or such child's 
                parent, without regard to whether such debt is 
                expressly so designated;
                    (C) established or subject to establishment 
                before, on, or after the date of the order for 
                relief in a case under this title, by reason of 
                applicable provisions of--
                            (i) a separation agreement, divorce 
                        decree, or property settlement 
                        agreement;
                            (ii) an order of a court of record; 
                        or
                            (iii) a determination made in 
                        accordance with applicable 
                        nonbankruptcy law by a governmental 
                        unit; and
                    (D) not assigned to a nongovernmental 
                entity, unless that obligation is assigned 
                voluntarily by the spouse, former spouse, child 
                of the debtor, or such child's parent, legal 
                guardian, or responsible relative for the 
                purpose of collecting the debt.
            (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) individual or individual and spouse 
                engaged in a farming operation whose aggregate 
                debts do not exceed [$1,500,000] $3,237,000 and 
                not less than [80] 50 percent of whose 
                aggregate noncontingent, liquidated debts 
                (excluding a debt for the principal residence 
                of such individual or such individual and 
                spouse unless such debt arises out of a farming 
                operation), on the date the case is filed, 
                arise out of a farming operation owned or 
                operated by such individual or such individual 
                and spouse, and such individual or such 
                individual and spouse receive from such farming 
                operation more than 50 percent of such 
                individual's or such individual and spouse's 
                gross income [for the taxable year preceding 
                the taxable year] for--
                            (i) the taxable year preceding; or
                            (ii) each of the 2d and 3d taxable 
                        years preceding;
                the taxable year in which the case concerning 
                such individual or such individual and spouse 
                was filed; or
                    (B) corporation or partnership in which 
                more than 50 percent of the outstanding stock 
                or equity is held by one family, or by one 
                family and the relatives of the members of such 
                family, and such family or such relatives 
                conduct the farming operation, and
                            (i) * * *
                            (ii) its aggregate debts do not 
                        exceed [$1,500,000] $3,237,000 and not 
                        less than [80] 50 percent of its 
                        aggregate noncontingent, liquidated 
                        debts (excluding a debt for one 
                        dwelling which is owned by such 
                        corporation or partnership and which a 
                        shareholder or partner maintains as a 
                        principal residence, unless such debt 
                        arises out of a farming operation), on 
                        the date the case is filed, arise out 
                        of the farming operation owned or 
                        operated by such corporation or such 
                        partnership; and
                            (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[;].
            (19A) The term ``family fisherman'' means--
                    (A) an individual or individual and spouse 
                engaged in a commercial fishing operation--
                            (i) whose aggregate debts do not 
                        exceed $1,500,000 and not less than 80 
                        percent of whose aggregate 
                        noncontingent, liquidated debts 
                        (excluding a debt for the principal 
                        residence of such individual or such 
                        individual and spouse, unless such debt 
                        arises out of a commercial fishing 
                        operation), on the date the case is 
                        filed, arise out of a commercial 
                        fishing operation owned or operated by 
                        such individual or such individual and 
                        spouse; and
                            (ii) who receive from such 
                        commercial fishing operation more than 
                        50 percent of such individual's or such 
                        individual's and spouse's gross income 
                        for the taxable year preceding the 
                        taxable year in which the case 
                        concerning such individual or such 
                        individual and spouse was filed; or
                    (B) a corporation or partnership--
                            (i) in which more than 50 percent 
                        of the outstanding stock or equity is 
                        held by--
                                    (I) 1 family that conducts 
                                the commercial fishing 
                                operation; or
                                    (II) 1 family and the 
                                relatives of the members of 
                                such family, and such family or 
                                such relatives conduct the 
                                commercial fishing operation; 
                                and
                            (ii)(I) more than 80 percent of the 
                        value of its assets consists of assets 
                        related to the commercial fishing 
                        operation;
                            (II) its aggregate debts do not 
                        exceed $1,500,000 and not less than 80 
                        percent of its aggregate noncontingent, 
                        liquidated debts (excluding a debt for 
                        1 dwelling which is owned by such 
                        corporation or partnership and which a 
                        shareholder or partner maintains as a 
                        principal residence, unless such debt 
                        arises out of a commercial fishing 
                        operation), on the date the case is 
                        filed, arise out of a commercial 
                        fishing operation owned or operated by 
                        such corporation or such partnership; 
                        and
                            (III) if such corporation issues 
                        stock, such stock is not publicly 
                        traded.
            (19B) The term ``family fisherman with regular 
        annual income'' means a family fisherman whose annual 
        income is sufficiently stable and regular to enable 
        such family fisherman to make payments under a plan 
        under chapter 12 of this title.
            (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 ``financial institution''--
                    [(A) means--
                            [(i) a Federal reserve bank or an 
                        entity (domestic or foreign) that is a 
                        commercial or savings bank, industrial 
                        savings bank, savings and loan 
                        association, trust company, or receiver 
                        or conservator for such entity and, 
                        when any such Federal reserve bank, 
                        receiver, conservator, or entity is 
                        acting as agent or custodian for a 
                        customer in connection with a 
                        securities contract, as defined in 
                        section 741 of this title, the 
                        customer; or
                            [(ii) in connection with a 
                        securities contract, as defined in 
                        section 741 of this title, an 
                        investment company registered under the 
                        Investment Company Act of 1940; and
                    [(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;
            [(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;]
            (22) The term ``financial institution'' means--
                    (A) a Federal reserve bank, or an entity 
                (domestic or foreign) that is a commercial or 
                savings bank, industrial savings bank, savings 
                and loan association, trust company, federally-
                insured credit union, or receiver, liquidating 
                agent, or conservator for such entity and, when 
                any such Federal reserve bank, receiver, 
                liquidating agent, conservator or entity is 
                acting as agent or custodian for a customer in 
                connection with a securities contract (as 
                defined in section 741) such customer; or
                    (B) in connection with a securities 
                contract (as defined in section 741) an 
                investment company registered under the 
                Investment Company Act of 1940.
            (22A) The term ``financial participant'' means--
                    (A) an entity that, at the time it enters 
                into a securities contract, commodity contract, 
                swap agreement, repurchase agreement, or 
                forward contract, or at the time of the date of 
                the filing of the petition, has one or more 
                agreements or transactions described in 
                paragraph (1), (2), (3), (4), (5), or (6) of 
                section 561(a) with the debtor or any other 
                entity (other than an affiliate) of a total 
                gross dollar value of not less than 
                $1,000,000,000 in notional or actual principal 
                amount outstanding on any day during the 
                previous 15-month period, or has gross mark-to-
                market positions of not less than $100,000,000 
                (aggregated across counterparties) in one or 
                more such agreements or transactions with the 
                debtor or any other entity (other than an 
                affiliate) on any day during the previous 15-
                month period; or
                    (B) a clearing organization (as defined in 
                section 402 of the Federal Deposit Insurance 
                Corporation Improvement Act of 1991).
            (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 such 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), including 
                any guarantee or reimbursement obligation by or 
                to a forward contract merchant or financial 
                participant in connection with any agreement or 
                transaction referred to in any such 
                subparagraph, but not to exceed the damages in 
                connection with any such agreement or 
                transaction, measured in accordance with 
                section 562.
            [(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 in a commodity 
        (as defined in section 761) or any similar good, 
        article, service, right, or interest which is presently 
        or in the future becomes the subject of dealing in the 
        forward contract trade.
            (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 
                property is located;
                    (B) all easements, rights, appurtenances, 
                fixtures, rents, royalties, mineral rights, oil 
                or gas rights or profits, water rights, escrow 
                funds, or insurance proceeds; and
                    (C) all replacements or additions.
            (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) * * *
                            (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) * * *
                    (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) * * *

           *       *       *       *       *       *       *

        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 close out, under or in 
                connection with one or more contracts that are 
                described in any one or more of paragraphs (1) 
                through (5) of section 561(a), or any security 
                agreement or arrangement or other credit 
                enhancement related to one or more of the 
                foregoing, including any guarantee or 
                reimbursement obligation related to 1 or more 
                of the foregoing; and
                    (B) if the agreement contains provisions 
                relating to agreements or transactions that are 
                not contracts described in paragraphs (1) 
                through (5) of section 561(a), shall be deemed 
                to be a master netting agreement only with 
                respect to those agreements or transactions 
                that are described in any one or more of 
                paragraphs (1) through (5) of section 561(a).
            (38B) The term ``master netting agreement 
        participant'' means an entity that, at any time before 
        the date of the filing of the petition, is a party to 
        an outstanding master netting agreement with the 
        debtor.
            (39) The term ``mask work'' has the meaning given 
        it in section 901(a)(2) of title 17.
            (39A) The term ``median family income'' means for 
        any year--
                    (A) the median family income both 
                calculated and reported by the Bureau of the 
                Census in the then most recent year; and
                    (B) if not so calculated and reported in 
                the then current year, adjusted annually after 
                such most recent year until the next year in 
                which median family income is both calculated 
                and reported by the Bureau of the Census, to 
                reflect the percentage change in the Consumer 
                Price Index for All Urban Consumers during the 
                period of years occurring after such most 
                recent year and before such current year.
            (40) The term ``municipality'' means political 
        subdivision or public agency or instrumentality of a 
        State[;].
            (40A) The term ``patient'' means any individual 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) * * *

           *       *       *       *       *       *       *

        shall be considered, for purposes of section 1102 of 
        this title, to be a person with respect to such asset 
        or such benefit[;].
            (41A) The term ``personally identifiable 
        information'' means--
                    (A) if provided by an individual to the 
                debtor in connection with obtaining a product 
                or a service from the debtor primarily for 
                personal, family, or household purposes--
                            (i) the first name (or initial) and 
                        last name of such individual, whether 
                        given at birth or time of adoption, or 
                        resulting from a lawful change of name;
                            (ii) the geographical address of a 
                        physical place of residence of such 
                        individual;
                            (iii) an electronic address 
                        (including an e-mail address) of such 
                        individual;
                            (iv) a telephone number dedicated 
                        to contacting such individual at such 
                        physical place of residence;
                            (v) a social security account 
                        number issued to such individual; or
                            (vi) the account number of a credit 
                        card issued to such individual; or
                    (B) if identified in connection with 1 or 
                more of the items of information specified in 
                subparagraph (A)--
                            (i) a birth date, the number of a 
                        certificate of birth or adoption, or a 
                        place of birth; or
                            (ii) any other information 
                        concerning an identified individual 
                        that, if disclosed, will result in 
                        contacting or identifying such 
                        individual physically or 
                        electronically.
            (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) * * *
                    (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, mortgage loans, or 
                        interests, with a simultaneous 
                        agreement by such transferee to 
                        transfer to the transferor thereof 
                        certificates of deposit, eligible 
                        bankers' acceptance, securities, 
                        mortgage loans, or interests of the 
                        kind described in this clause, at a 
                        date certain not later than 1 year 
                        after such transfer or on demand, 
                        against the transfer of funds;
                            (ii) any combination of agreements 
                        or transactions referred to in clauses 
                        (i) and (iii);
                            (iii) an option to enter into an 
                        agreement or transaction referred to in 
                        clause (i) or (ii);
                            (iv) a master agreement that 
                        provides for an agreement or 
                        transaction referred to in clause (i), 
                        (ii), or (iii), together with all 
                        supplements to any such master 
                        agreement, without regard to whether 
                        such master agreement provides for an 
                        agreement or transaction that is not a 
                        repurchase agreement under this 
                        paragraph, except that such master 
                        agreement shall be considered to be a 
                        repurchase agreement under this 
                        paragraph only with respect to each 
                        agreement or transaction under the 
                        master agreement that is referred to in 
                        clause (i), (ii), or (iii); or
                            (v) any security agreement or 
                        arrangement or other credit enhancement 
                        related to any agreement or transaction 
                        referred to in clause (i), (ii), (iii), 
                        or (iv), including any guarantee or 
                        reimbursement obligation by or to a 
                        repo participant or financial 
                        participant in connection with any 
                        agreement or transaction referred to in 
                        any such clause, but not to exceed the 
                        damages in connection with any such 
                        agreement or transaction, measured in 
                        accordance with section 562 of this 
                        title; and
                    (B) does not include a repurchase 
                obligation under a participation in a 
                commercial mortgage loan.
            (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 or a national securities exchange registered with 
        the Securities and Exchange Commission under section 6 
        of the Securities Exchange Act of 1934.
            (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 date of the order for relief in 
                an amount not more than $2,000,000 (excluding 
                debts owed to 1 or more affiliates or insiders) 
                for a case in which the United States trustee 
                has not appointed under section 1102(a)(1) a 
                committee of unsecured creditors or where the 
                court has determined that the committee of 
                unsecured creditors is not sufficiently active 
                and representative to provide effective 
                oversight of the debtor; and
                    (B) does not include any member of a group 
                of affiliated debtors that has aggregate 
                noncontingent liquidated secured and unsecured 
                debts in an amount greater than $2,000,000 
                (excluding debt owed to 1 or more affiliates or 
                insiders).
            (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--
                                    (I) an interest rate swap, 
                                option, future, or forward 
                                agreement, including a rate 
                                floor, rate cap, rate collar, 
                                cross-currency rate swap, and 
                                basis swap;
                                    (II) a spot, same day-
                                tomorrow, tomorrow-next, 
                                forward, or other foreign 
                                exchange or precious metals 
                                agreement;
                                    (III) a currency swap, 
                                option, future, or forward 
                                agreement;
                                    (IV) an equity index or 
                                equity swap, option, future, or 
                                forward agreement;
                                    (V) a debt index or debt 
                                swap, option, future, or 
                                forward agreement;
                                    (VI) a total return, credit 
                                spread or credit swap, option, 
                                future, or forward agreement;
                                    (VII) a commodity index or 
                                a commodity swap, option, 
                                future, or forward agreement; 
                                or
                                    (VIII) a weather swap, 
                                weather derivative, or weather 
                                option;
                            (ii) any agreement or transaction 
                        that is similar to any other agreement 
                        or transaction referred to in this 
                        paragraph and that--
                                    (I) is of a type that has 
                                been, is presently, or in the 
                                future becomes, the subject of 
                                recurrent dealings in the swap 
                                markets (including terms and 
                                conditions incorporated by 
                                reference therein); and
                                    (II) is a forward, swap, 
                                future, or option on one or 
                                more rates, currencies, 
                                commodities, equity securities, 
                                or other equity instruments, 
                                debt securities or other debt 
                                instruments, quantitative 
                                measures associated with an 
                                occurrence, extent of an 
                                occurrence, or contingency 
                                associated with a financial, 
                                commercial, or economic 
                                consequence, or economic or 
                                financial indices or measures 
                                of economic or financial risk 
                                or value;
                            (iii) any combination of agreements 
                        or transactions referred to in this 
                        subparagraph;
                            (iv) any option to enter into an 
                        agreement or transaction referred to in 
                        this subparagraph;
                            (v) a master agreement that 
                        provides for an agreement or 
                        transaction referred to in clause (i), 
                        (ii), (iii), or (iv), together with all 
                        supplements to any such master 
                        agreement, and without regard to 
                        whether the master agreement contains 
                        an agreement or transaction that is not 
                        a swap agreement under this paragraph, 
                        except that the master agreement shall 
                        be considered to be a swap agreement 
                        under this paragraph only with respect 
                        to each agreement or transaction under 
                        the master agreement that is referred 
                        to in clause (i), (ii), (iii), or (iv); 
                        or
                            (vi) any security agreement or 
                        arrangement or other credit enhancement 
                        related to any agreements or 
                        transactions referred to in clause (i) 
                        through (v), including any guarantee or 
                        reimbursement obligation by or to a 
                        swap participant or financial 
                        participant in connection with any 
                        agreement or transaction referred to in 
                        any such clause, but not to exceed the 
                        damages in connection with any such 
                        agreement or transaction, measured in 
                        accordance with section 562; and
                    (B) is applicable for purposes of this 
                title only, and shall not be construed or 
                applied so as to challenge or affect the 
                characterization, definition, or treatment of 
                any swap agreement under any other statute, 
                regulation, or rule, including the Securities 
                Act of 1933, the Securities Exchange Act of 
                1934, the Public Utility Holding Company Act of 
                1935, the Trust Indenture Act of 1939, the 
                Investment Company Act of 1940, the Investment 
                Advisers Act of 1940, the Securities Investor 
                Protection Act of 1970, the Commodity Exchange 
                Act, the Gramm-Leach-Bliley Act, and the Legal 
                Certainty for Bank Products Act of 2000.
            (53C) The term ``swap participant'' means an entity 
        that, at any time before the filing of the petition, 
        has an outstanding swap agreement with the debtor[;].
            (56A) 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(n), 555 through 557, and 559 through 562 
apply in a case under chapter 15.

           *       *       *       *       *       *       *

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

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), 101(18), 101(19A), 101(51D), 109(e), 303(b), 
507(a), 522(d), [and 523(a)(2)(C)] 522(f)(3) and 522(f)(4), 
522(n), 522(p), 522(q), 522(f)(3) and 522(f)(4), 523(a)(2)(C), 
541(b), 547(c)(9), 707(b), 1322(d), 1325(b), and 1326(b)(3) of 
this title and section 1409(b) of title 28 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 101(3), 101(18), 101(19A), 101(51D), 109(e), 303(b), 
507(a), 522(d), [and 523(a)(2)(C) of this title] 522(f)(3) and 
522(f)(4), 522(n), 522(p), 522(q), 522(f)(3) and 522(f)(4), 
523(a)(2)(C), 541(b), 547(c)(9), 707(b), 1322(d), 1325(b), and 
1326(b)(3) of this title and section 1409(b) of title 28.

           *       *       *       *       *       *       *


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. 107. Public access to papers

    (a) Except as provided in subsection (b) of this section 
and subject to section 112, a paper filed in a case under this 
title and the dockets of a bankruptcy court are public records 
and open to examination by an entity at reasonable times 
without charge.

           *       *       *       *       *       *       *

    (c)(1) The bankruptcy court, for cause, may protect an 
individual, with respect to the following types of information 
to the extent the court finds that disclosure of such 
information would create undue risk of identity theft or other 
unlawful injury to the individual or the individual's property:
            (A) Any means of identification (as defined in 
        section 1028(d) of title 18) contained in a paper 
        filed, or to be filed, in a case under this title.
            (B) Other information contained in a paper 
        described in subparagraph (A).
    (2) Upon ex parte application demonstrating cause, the 
court shall provide access to information protected pursuant to 
paragraph (1) to an entity acting pursuant to the police or 
regulatory power of a domestic governmental unit.
    (3) The United States trustee, bankruptcy administrator, 
trustee, and any auditor serving under section 586(f) of title 
28--
            (A) shall have full access to all information 
        contained in any paper filed or submitted in a case 
        under this title; and
            (B) shall not disclose information specifically 
        protected by the court under this title.

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, 1201, 
        or] 922, 1201, or 1301 of this title, as the case may 
        be, with respect to such claim.

Sec. 109. Who may be a debtor

    (a) * * *
    (b) A person may be a debtor under chapter 7 of this title 
only if such person is not--
            (1) a railroad;
            (2) a domestic insurance company, bank, savings 
        bank, cooperative bank, savings and loan association, 
        building and loan association, homestead association, a 
        New Markets Venture Capital company as defined in 
        section 351 of the Small Business Investment Act of 
        1958, 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, 
        except that an uninsured State member bank, or a 
        corporation organized under section 25A of the Federal 
        Reserve Act, which operates, or operates as, a 
        multilateral clearing organization pursuant to section 
        409 of the Federal Deposit Insurance Corporation 
        Improvement Act of 1991 may be a debtor if a petition 
        is filed at the direction of the Board of Governors of 
        the Federal Reserve System; 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 in the United States.

           *       *       *       *       *       *       *

    (f) Only a family farmer or family fisherman with regular 
annual income may be a debtor under chapter 12 of this title.

           *       *       *       *       *       *       *

    (h)(1) Subject to paragraphs (2) and (3), and 
notwithstanding any other provision of this section, an 
individual may not be a debtor under this title unless such 
individual has, during the 180-day period preceding the date of 
filing of the petition by such individual, received from an 
approved nonprofit budget and credit counseling agency 
described in section 111(a) an individual or group briefing 
(including a briefing conducted by telephone or on the 
Internet) that outlined the opportunities for available credit 
counseling and assisted such individual in performing a related 
budget analysis.
    (2)(A) Paragraph (1) shall not apply with respect to a 
debtor who resides in a district for which the United States 
trustee (or the bankruptcy administrator, if any) determines 
that the approved nonprofit budget and credit counseling 
agencies for such district are not reasonably able to provide 
adequate services to the additional individuals who would 
otherwise seek credit counseling from such agencies by reason 
of the requirements of paragraph (1).
    (B) The United States trustee (or the bankruptcy 
administrator, if any) who makes a determination described in 
subparagraph (A) shall review such determination not later than 
1 year after the date of such determination, and not less 
frequently than annually thereafter. Notwithstanding the 
preceding sentence, a nonprofit budget and credit counseling 
agency may be disapproved by the United States trustee (or the 
bankruptcy administrator, if any) at any time.
    (3)(A) Subject to subparagraph (B), the requirements of 
paragraph (1) shall not apply with respect to a debtor who 
submits to the court a certification that--
            (i) describes exigent circumstances that merit a 
        waiver of the requirements of paragraph (1);
            (ii) states that the debtor requested credit 
        counseling services from an approved nonprofit budget 
        and credit counseling agency, but was unable to obtain 
        the services referred to in paragraph (1) during the 5-
        day period beginning on the date on which the debtor 
        made that request; and
            (iii) is satisfactory to the court.
    (B) With respect to a debtor, an exemption under 
subparagraph (A) shall cease to apply to that debtor on the 
date on which the debtor meets the requirements of paragraph 
(1), but in no case may the exemption apply to that debtor 
after the date that is 30 days after the debtor files a 
petition, except that the court, for cause, may order an 
additional 15 days.
    (4) The requirements of paragraph (1) shall not apply with 
respect to a debtor whom the court determines, after notice and 
hearing, is unable to complete those requirements because of 
incapacity, disability, or active military duty in a military 
combat zone. For the purposes of this paragraph, incapacity 
means that the debtor is impaired by reason of mental illness 
or mental deficiency so that he is incapable of realizing and 
making rational decisions with respect to his financial 
responsibilities; and ``disability'' means that the debtor is 
so physically impaired as to be unable, after reasonable 
effort, to participate in an in person, telephone, or Internet 
briefing required under paragraph (1).

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] 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 bankruptcy 
petition preparer shall be required to--
            (A) sign the document for filing; and
            (B) print on the document the name and address of 
        that officer, principal, responsible person, or 
        partner.
    [(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 which 
shall be on an official form prescribed by the Judicial 
Conference of the United States in accordance with rule 9009 of 
the Federal Rules of Bankruptcy Procedure.
    (B) The notice under subparagraph (A)--
            (i) shall inform the debtor in simple language that 
        a bankruptcy petition preparer is not an attorney and 
        may not practice law or give legal advice;
            (ii) may contain a description of examples of legal 
        advice that a bankruptcy petition preparer is not 
        authorized to give, in addition to any advice that the 
        preparer may not give by reason of subsection (e)(2); 
        and
            (iii) shall--
                    (I) be signed by the debtor and, under 
                penalty of perjury, by the bankruptcy petition 
                preparer; and
                    (II) be filed with any document for filing.
    (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 bankruptcy 
petition 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) * * *
    [(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 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) Within 10 days after the date of the filing of a 
petition, a bankruptcy petition preparer shall file a] (2) 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 bankruptcy petition preparer 
        during the 12-month period immediately preceding the 
        date of the filing of the petition; or
            (ii) found to be in violation of any rule or 
        guideline promulgated or prescribed under paragraph 
        (1).
    (B) All fees charged by a bankruptcy petition preparer may 
be forfeited in any case in which the bankruptcy petition 
preparer fails to comply with this subsection or subsection 
(b), (c), (d), (e), (f), or (g).
    (C) An individual may exempt any funds recovered under this 
paragraph under section 522(b).
    [(3)] (4) The debtor, the trustee, a creditor, [or the 
United States trustee] the United States trustee (or the 
bankruptcy administrator, if any) 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 the motion of the debtor, 
trustee, United States trustee (or the bankruptcy 
administrator, if any), and after notice and a hearing, the 
court shall order the bankruptcy petition preparer to pay to 
the debtor--
            (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] 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 on the motion of the court, the 
trustee, or the United States trustee (or the bankruptcy 
administrator, if any).
    [(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 bankruptcy 
        petition preparer.
    (3) A debtor, trustee, creditor, or United States trustee 
(or the bankruptcy administrator, if any) may file a motion for 
an order imposing a fine on the bankruptcy petition preparer 
for any violation of this section.
    (4)(A) Fines imposed under this subsection in judicial 
districts served by United States trustees shall be paid to the 
United States trustee, who shall deposit an amount equal to 
such fines in a special account of the United States Trustee 
System Fund referred to in section 586(e)(2) of title 28. 
Amounts deposited under this subparagraph shall be available to 
fund the enforcement of this section on a national basis.
    (B) Fines imposed under this subsection in judicial 
districts served by bankruptcy administrators shall be 
deposited as offsetting receipts to the fund established under 
section 1931 of title 28, and shall remain available until 
expended to reimburse any appropriation for the amount paid out 
of such appropriation for expenses of the operation and 
maintenance of the courts of the United States.

Sec. 111. Nonprofit budget and credit counseling agencies; financial 
                    management instructional courses

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

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

    The debtor may be required to provide information regarding 
a minor child involved in matters under this title but may not 
be required to disclose in the public records in the case the 
name of such minor child. The debtor may be required to 
disclose the name of such minor child in a nonpublic record 
that is maintained by the court and made available by the court 
for examination by the United States trustee, the trustee, and 
the auditor (if any) serving under section 586(f) of title 28, 
in the case. The court, the United States trustee, the trustee, 
and such auditor shall not disclose the name of such minor 
child maintained in such nonpublic record.

                     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.  Consumer privacy ombudsman.
333   Appointment of ombudsman.

                     SUBCHAPTER III--ADMINISTRATION

341.  Meetings of creditors and equity security holders.
     * * * * * * *
[346.  Special tax provisions.]
346.  Special provisions related to the treatment of State and local 
          taxes.
     * * * * * * *
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) * * *
    (b) An involuntary case against a person is commenced by 
the filing with the bankruptcy court of a petition under 
chapter 7 or 11 of this title--
            (1) by three or more entities, each of which is 
        either a holder of a claim against such person that is 
        not contingent as to liability or the subject of a bona 
        fide dispute as to liability or amount, or an indenture 
        trustee representing such a holder, [if such claims] if 
        such noncontingent, undisputed claims aggregate at 
        least $10,000 more than the value of any lien on 
        property of the debtor securing such claims held by the 
        holders of such claims;

           *       *       *       *       *       *       *

    (h) If the petition is not timely controverted, the court 
shall order relief against the debtor in an involuntary case 
under the chapter under which the petition was filed. 
Otherwise, after trial, the court shall order relief against 
the debtor in an involuntary case under the chapter under which 
the petition was filed, only if--
            (1) the debtor is generally not paying such 
        debtor's debts as such debts become due unless such 
        debts are the subject of a bona fide dispute as to 
        liability or amount; or

           *       *       *       *       *       *       *

    [(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.]
    (l)(1) If--
            (A) the petition under this section is false or 
        contains any materially false, fictitious, or 
        fraudulent statement;
            (B) the debtor is an individual; and
            (C) the court dismisses such petition,
the court, upon the motion of the debtor, shall seal all the 
records of the court relating to such petition, and all 
references to such petition.
    (2) If the debtor is an individual and the court dismisses 
a petition under this section, the court may enter an order 
prohibiting all consumer reporting agencies (as defined in 
section 603(f) of the Fair Credit Reporting Act (15 U.S.C. 
1681a(f))) from making any consumer report (as defined in 
section 603(d) of that Act) that contains any information 
relating to such petition or to the case commenced by the 
filing of such petition.
    (3) Upon the expiration of the statute of limitations 
described in section 3282 of title 18, for a violation of 
section 152 or 157 of such title, the court, upon the motion of 
the debtor and for good cause, may expunge any records relating 
to a petition filed under this section.

[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--
            (1) * * *
            [(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 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.

           *       *       *       *       *       *       *


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 expenses when due;
            (B) if the debtor is not in compliance with the 
        requirements referred to in subparagraph (A)(i) or 
        filing tax returns and other required government 
        filings and making the payments referred to in 
        subparagraph (A)(ii), what the failures are and how, at 
        what cost, and when the debtor intends to remedy such 
        failures; and
            (C) such other matters as are in the best interests 
        of the debtor and creditors, and in the public interest 
        in fair and efficient procedures under chapter 11 of 
        this title.

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, a consumer 
privacy ombudsman appointed under section 332, an examiner, an 
ombudsman appointed under section 333, 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
            (B) reimbursement for actual, necessary expenses.
    (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.

           *       *       *       *       *       *       *


Sec. 332. Consumer privacy ombudsman

    (a) If a hearing is required under section 363(b)(1)(B), 
the court shall order the United States trustee to appoint, not 
later than 5 days before the commencement of the hearing, 1 
disinterested person (other than the United States trustee) to 
serve as the consumer privacy ombudsman in the case and shall 
require that notice of such hearing be timely given to such 
ombudsman.
    (b) The consumer privacy ombudsman may appear and be heard 
at such hearing and shall provide to the court information to 
assist the court in its consideration of the facts, 
circumstances, and conditions of the proposed sale or lease of 
personally identifiable information under section 363(b)(1)(B). 
Such information may include presentation of--
            (1) the debtor's privacy policy;
            (2) the potential losses or gains of privacy to 
        consumers if such sale or such lease is approved by the 
        court;
            (3) the potential costs or benefits to consumers if 
        such sale or such lease is approved by the court; and
            (4) the potential alternatives that would mitigate 
        potential privacy losses or potential costs to 
        consumers.
    (c) A consumer privacy ombudsman shall not disclose any 
personally identifiable information obtained by the ombudsman 
under this title.

Sec. 333. Appointment of patient care ombudsman

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

                     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 otherwise applicable nonbankruptcy law, 
or any other requirement that representation at the meeting of 
creditors under subsection (a) be by an attorney, a creditor 
holding a consumer debt or any representative of the creditor 
(which may include an entity or an employee of an entity and 
may be a representative for more than 1 creditor) shall be 
permitted to appear at and participate in the meeting of 
creditors in a case under chapter 7 or 13, either alone or in 
conjunction with an attorney for the creditor. Nothing in this 
subsection shall be construed to require any creditor to be 
represented by an attorney at any meeting of creditors.

           *       *       *       *       *       *       *

    (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 case under this title shall 
                be subject to fine, imprisonment, or both; and
                    (B) all information supplied by a debtor in 
                connection with a case under this title is 
                subject to examination by the Attorney General.
    (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 last 4 digits of the taxpayer identification 
number of the debtor[, but the failure of such notice to 
contain such information shall not invalidate the legal effect 
of such notice]. If the notice concerns an amendment that adds 
a creditor to the schedules of assets and liabilities, the 
debtor shall include the full taxpayer identification number in 
the notice sent to that creditor, but the debtor shall include 
only the last 4 digits of the taxpayer identification number in 
the copy of the notice filed with the court.
    (2)(A) If, within the 90 days before the commencement of a 
voluntary case, a creditor supplies the debtor in at least 2 
communications sent to the debtor with the current account 
number of the debtor and the address at which such creditor 
requests to receive correspondence, then any notice required by 
this title to be sent by the debtor to such creditor shall be 
sent to such address and shall include such account number.
    (B) If a creditor would be in violation of applicable 
nonbankruptcy law by sending any such communication within such 
90-day period and if such creditor supplies the debtor in the 
last 2 communications with the current account number of the 
debtor and the address at which such creditor requests to 
receive correspondence, then any notice required by this title 
to be sent by the debtor to such creditor shall be sent to such 
address and shall include such account number.
    (d) In a case under chapter 7 of this title in which the 
debtor is an individual and in which the presumption of abuse 
arises under section 707(b), the clerk shall give written 
notice to all creditors not later than 10 days after the date 
of the filing of the petition that the presumption of abuse has 
arisen.
    (e)(1) In a case under chapter 7 or 13 of this title of a 
debtor who is an individual, a creditor at any time may both 
file with the court and serve on the debtor a notice of address 
to be used to provide notice in such case to such creditor.
    (2) Any notice in such case required to be provided to such 
creditor by the debtor or the court later than 5 days after the 
court and the debtor receive such creditor's notice of address, 
shall be provided to such address.
    (f)(1) An entity may file with any bankruptcy court a 
notice of address to be used by all the bankruptcy courts or by 
particular bankruptcy courts, as so specified by such entity at 
the time such notice is filed, to provide notice to such entity 
in all cases under chapters 7 and 13 pending in the courts with 
respect to which such notice is filed, in which such entity is 
a creditor.
    (2) In any case filed under chapter 7 or 13, any notice 
required to be provided by a court with respect to which a 
notice is filed under paragraph (1), to such entity later than 
30 days after the filing of such notice under paragraph (1) 
shall be provided to such address unless with respect to a 
particular case a different address is specified in a notice 
filed and served in accordance with subsection (e).
    (3) A notice filed under paragraph (1) may be withdrawn by 
such entity.
    (g)(1) Notice provided to a creditor by the debtor or the 
court other than in accordance with this section (excluding 
this subsection) shall not be effective notice until such 
notice is brought to the attention of such creditor. If such 
creditor designates a person or an organizational subdivision 
of such creditor to be responsible for receiving notices under 
this title and establishes reasonable procedures so that such 
notices receivable by such creditor are to be delivered to such 
person or such subdivision, then a notice provided to such 
creditor other than in accordance with this section (excluding 
this subsection) shall not be considered to have been brought 
to the attention of such creditor until such notice is received 
by such person or such subdivision.
    (2) A monetary penalty may not be imposed on a creditor for 
a violation of a stay in effect under section 362(a) (including 
a monetary penalty imposed under section 362(k)) or for failure 
to comply with section 542 or 543 unless the conduct that is 
the basis of such violation or of such failure occurs after 
such creditor receives notice effective under this section of 
the order for relief.

           *       *       *       *       *       *       *


[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 such returns only to 
the extent such returns are also required to be made under such 
Code. The estate shall be liable for any tax imposed on such 
corporation or partnership, but not for any tax imposed on 
partners or members.
    (c) With respect to a partnership or any entity treated as 
a partnership under a State or local law imposing a tax on or 
measured by income that is a debtor in a case under this title, 
any gain or loss resulting from a distribution of property from 
such partnership, or any distributive share of any income, 
gain, loss, deduction, or credit of a partner or member that is 
distributed, or considered distributed, from such partnership, 
after the commencement of the case, is gain, loss, income, 
deduction, or credit, as the case may be, of the partner or 
member, and if such partner or member is a debtor in a case 
under this title, shall be subject to tax in accordance with 
subsection (a) or (b).
    (d) For purposes of any State or local law imposing a tax 
on or measured by income, the taxable period of a debtor in a 
case under this title shall terminate only if and to the extent 
that the taxable period of such debtor terminates under the 
Internal Revenue Code of 1986.
    (e) The estate in any case described in subsection (a) 
shall use the same accounting method as the debtor used 
immediately before the commencement of the case, if such method 
of accounting complies with applicable nonbankruptcy tax law.
    (f) For purposes of any State or local law imposing a tax 
on or measured by income, a transfer of property from the 
debtor to the estate or from the estate to the debtor shall not 
be treated as a disposition for purposes of any provision 
assigning tax consequences to a disposition, except to the 
extent that such transfer is treated as a disposition under the 
Internal Revenue Code of 1986.
    (g) Whenever a tax is imposed pursuant to a State or local 
law imposing a tax on or measured by income pursuant to 
subsection (a) or (b), such tax shall be imposed at rates 
generally applicable to the same types of entities under such 
State or local law.
    (h) The trustee shall withhold from any payment of claims 
for wages, salaries, commissions, dividends, interest, or other 
payments, or collect, any amount required to be withheld or 
collected under applicable State or local tax law, and shall 
pay such withheld or collected amount to the appropriate 
governmental unit at the time and in the manner required by 
such tax law, and with the same priority as the claim from 
which such amount was withheld or collected was paid.
    (i)(1) To the extent that any State or local law imposing a 
tax on or measured by income provides for the carryover of any 
tax attribute from one taxable period to a subsequent taxable 
period, the estate shall succeed to such tax attribute in any 
case in which such estate is subject to tax under subsection 
(a).
    (2) After such a case is closed or dismissed, the debtor 
shall succeed to any tax attribute to which the estate 
succeeded under paragraph (1) to the extent consistent with the 
Internal Revenue Code of 1986.
    (3) The estate may carry back any loss or tax attribute to 
a taxable period of the debtor that ended before the date of 
the order for relief under this title to the extent that--
            (A) applicable State or local tax law provides for 
        a carryback in the case of the debtor; and
            (B) the same or a similar tax attribute may be 
        carried back by the estate to such a taxable period of 
        the debtor under the Internal Revenue Code of 1986.
    (j)(1) For purposes of any State or local law imposing a 
tax on or measured by income, income is not realized by the 
estate, the debtor, or a successor to the debtor by reason of 
discharge of indebtedness in a case under this title, except to 
the extent, if any, that such income is subject to tax under 
the Internal Revenue Code of 1986.
    (2) Whenever the Internal Revenue Code of 1986 provides 
that the amount excluded from gross income in respect of the 
discharge of indebtedness in a case under this title shall be 
applied to reduce the tax attributes of the debtor or the 
estate, a similar reduction shall be made under any State or 
local law imposing a tax on or measured by income to the extent 
such State or local law recognizes such attributes. Such State 
or local law may also provide for the reduction of other 
attributes to the extent that the full amount of income from 
the discharge of indebtedness has not been applied.
    (k)(1) Except as provided in this section and section 505, 
the time and manner of filing tax returns and the items of 
income, gain, loss, deduction, and credit of any taxpayer shall 
be determined under applicable nonbankruptcy law.
    (2) For Federal tax purposes, the provisions of this 
section are subject to the Internal Revenue Code of 1986 and 
other applicable Federal nonbankruptcy law.

           *       *       *       *       *       *       *


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 case under chapter 13; 
                and
                    (ii) unless a prebankruptcy default has 
                been fully cured under the plan at the time of 
                conversion, in any proceeding under this title 
                or otherwise, the default shall have the effect 
                given under applicable nonbankruptcy law.
    (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 most recent known address of that patient, 
                or a family member or contact person for that 
                patient, and to the appropriate insurance 
                carrier an appropriate notice regarding the 
                claiming or disposing of patient records.
            (2) If, after providing the notification under 
        paragraph (1), patient records are not claimed during 
        the 365-day period described under that paragraph, the 
        trustee shall mail, by certified mail, at the end of 
        such 365-day period a written request to each 
        appropriate Federal agency to request permission from 
        that agency to deposit the patient records with that 
        agency, except that no Federal agency is required to 
        accept patient records under this paragraph.
            (3) If, following the 365-day period described in 
        paragraph (2) and after providing the notification 
        under paragraph (1), patient records are not claimed by 
        a patient or insurance provider, or request is not 
        granted by a Federal agency to deposit such records 
        with that agency, the trustee shall destroy those 
        records by--
                    (A) if the records are written, shredding 
                or burning the records; or
                    (B) if the records are magnetic, optical, 
                or other electronic records, by otherwise 
                destroying those records so that those records 
                cannot be retrieved.

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 the tax liability of a debtor 
        who is an individual for a taxable period ending before 
        the date of the order for relief under this title.
    (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) of the collection of a domestic support 
                obligation from property that is not property 
                of the estate;
                    (C) with respect to the withholding of 
                income that is property of the estate or 
                property of the debtor for payment of a 
                domestic support obligation under a judicial or 
                administrative order or a statute;
                    (D) of the withholding, suspension, or 
                restriction of a driver's license, a 
                professional or occupational license, or a 
                recreational license, under State law, as 
                specified in section 466(a)(16) of the Social 
                Security Act;
                    (E) of the reporting of overdue support 
                owed by a parent to any consumer reporting 
                agency as specified in section 466(a)(7) of the 
                Social Security Act;
                    (F) of the interception of a tax refund, as 
                specified in sections 464 and 466(a)(3) of the 
                Social Security Act or under an analogous State 
                law; or
                    (G) of the enforcement of a medical 
                obligation, as specified under title IV of the 
                Social Security Act;

           *       *       *       *       *       *       *

            (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, 
        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 or financial 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, under the control of, or due from such repo 
        participant or financial 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 or financial participant of a mutual debt 
        and claim under or in connection with one or more swap 
        agreements that constitutes the setoff of a claim 
        against the debtor for any payment or other transfer of 
        property due from the debtor under or in connection 
        with any swap agreement against any payment due to the 
        debtor from the swap participant or financial 
        participant under or in connection with any swap 
        agreement or against cash, securities, or other 
        property held by, pledged to, under the control of, or 
        due from such swap participant or financial participant 
        to margin, guarantee, secure, or settle any swap 
        agreement;
            (18) under subsection (a) of the creation or 
        perfection of a statutory lien for an ad valorem 
        property tax, or a special tax or special assessment on 
        real property whether or not ad valorem, imposed by a 
        governmental unit, if such tax or assessment comes due 
        after the date of the filing of the petition;
            (19) under subsection (a), of withholding of income 
        from a debtor's wages and collection of amounts 
        withheld, under the debtor's agreement authorizing that 
        withholding and collection for the benefit of a 
        pension, profit-sharing, stock bonus, or other plan 
        established under section 401, 403, 408, 408A, 414, 
        457, or 501(c) of the Internal Revenue Code of 1986, 
        that is sponsored by the employer of the debtor, or an 
        affiliate, successor, or predecessor of such employer--
                    (A) to the extent that the amounts withheld 
                and collected are used solely for payments 
                relating to a loan from a plan under section 
                408(b)(1) of the Employee Retirement Income 
                Security Act of 1974 or is subject to section 
                72(p) of the Internal Revenue Code of 1986; or
                    (B) a loan from a thrift savings plan 
                permitted under subchapter III of chapter 84 of 
                title 5, that satisfies the requirements of 
                section 8433(g) of such title;
        but nothing in this paragraph may be construed to 
        provide that any loan made under a governmental plan 
        under section 414(d), or a contract or account under 
        section 403(b), of the Internal Revenue Code of 1986 
        constitutes a claim or a debt under this title;
            (20) under subsection (a), of any act to enforce 
        any lien against or security interest in real property 
        following entry of the order under subsection (d)(4) as 
        to such real property in any prior case under this 
        title, for a period of 2 years after the date of the 
        entry of such an order, except that the debtor, in a 
        subsequent case under this title, may move for relief 
        from such order based upon changed circumstances or for 
        other good cause shown, after notice and a hearing;
            (21) under subsection (a), of any act to enforce 
        any lien against or security interest in real 
        property--
                    (A) if the debtor is ineligible under 
                section 109(g) to be a debtor in a case under 
                this title; or
                    (B) if the case under this title was filed 
                in violation of a bankruptcy court order in a 
                prior case under this title prohibiting the 
                debtor from being a debtor in another case 
                under this title;
            (22) subject to subsection (l), under subsection 
        (a)(3), of the continuation of any eviction, unlawful 
        detainer action, or similar proceeding by a lessor 
        against a debtor involving residential property in 
        which the debtor resides as a tenant under a lease or 
        rental agreement and with respect to which the lessor 
        has obtained before the date of the filing of the 
        bankruptcy petition, a judgment for possession of such 
        property against the debtor;
            (23) subject to subsection (m), under subsection 
        (a)(3), of an eviction action that seeks possession of 
        the residential property in which the debtor resides as 
        a tenant under a lease or rental agreement based on 
        endangerment of such property or the illegal use of 
        controlled substances on such property, but only if the 
        lessor files with the court, and serves upon the 
        debtor, a certification under penalty of perjury that 
        such an eviction action has been filed, or that the 
        debtor, during the 30-day period preceding the date of 
        the filing of the certification, has endangered 
        property or illegally used or allowed to be used a 
        controlled substance on the property;
            (24) under subsection (a), of any transfer that is 
        not avoidable under section 544 and that is not 
        avoidable under section 549;
            (25) under subsection (a), of--
                    (A) the commencement or continuation of an 
                investigation or action by a securities self 
                regulatory organization to enforce such 
                organization's regulatory power;
                    (B) the enforcement of an order or 
                decision, other than for monetary sanctions, 
                obtained in an action by such securities self 
                regulatory organization to enforce such 
                organization's regulatory power; or
                    (C) any act taken by such securities self 
                regulatory organization to delist, delete, or 
                refuse to permit quotation of any stock that 
                does not meet applicable regulatory 
                requirements;
            (26) under subsection (a), of the setoff under 
        applicable nonbankruptcy law of an income tax refund, 
        by a governmental unit, with respect to a taxable 
        period that ended before the date of the order for 
        relief against an income tax liability for a taxable 
        period that also ended before the date of the order for 
        relief, except that in any case in which the setoff of 
        an income tax refund is not permitted under applicable 
        nonbankruptcy law because of a pending action to 
        determine the amount or legality of a tax liability, 
        the governmental unit may hold the refund pending the 
        resolution of the action, unless the court, on the 
        motion of the trustee and after notice and a hearing, 
        grants the taxing authority adequate protection (within 
        the meaning of section 361) for the secured claim of 
        such authority in the setoff under section 506(a);
            (27) under subsection (a), of the setoff by a 
        master netting agreement participant of a mutual debt 
        and claim under or in connection with one or more 
        master netting agreements or any contract or agreement 
        subject to such agreements that constitutes the setoff 
        of a claim against the debtor for any payment or other 
        transfer of property due from the debtor under or in 
        connection with such agreements or any contract or 
        agreement subject to such agreements against any 
        payment due to the debtor from such master netting 
        agreement participant under or in connection with such 
        agreements or any contract or agreement subject to such 
        agreements or against cash, securities, or other 
        property held by, pledged to, under the control of, or 
        due from such master netting agreement participant to 
        margin, guarantee, secure, or settle such agreements or 
        any contract or agreement subject to such agreements, 
        to the extent that such participant is eligible to 
        exercise such offset rights under paragraph (6), (7), 
        or (17) for each individual contract covered by the 
        master netting agreement in issue; and
            (28) under subsection (a), of the exclusion by the 
        Secretary of Health and Human Services of the debtor 
        from participation in the medicare program or any other 
        Federal health care program (as defined in section 
        1128B(f) of the Social Security Act pursuant to title 
        XI or XVIII of such Act).
The provisions of paragraphs (12) and (13) of this subsection 
shall apply with respect to any such petition filed on or 
before December 31, 1989.
    (c) Except as provided in subsections (d), [(e), and (f)] 
(e), (f), and (h) of this section--
            (1) the stay of an act against property of the 
        estate under subsection (a) of this section continues 
        until such property is no longer property of the 
        estate; [and]
            (2) the stay of any other act under subsection (a) 
        of this section continues until the earliest of--
                    (A) * * *

           *       *       *       *       *       *       *

                    (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 debtor who is an individual in a case under 
        chapter 7, 11, or 13, and if a single or joint case of 
        the debtor was pending within the preceding 1-year 
        period but was dismissed, other than a case refiled 
        under a chapter other than chapter 7 after dismissal 
        under section 707(b)--
                    (A) the stay under subsection (a) with 
                respect to any action taken with respect to a 
                debt or property securing such debt or with 
                respect to any lease shall terminate with 
                respect to the debtor on the 30th day after the 
                filing of the later case;
                    (B) on the motion of a party in interest 
                for continuation of the automatic stay and upon 
                notice and a hearing, the court may extend the 
                stay in particular cases as to any or all 
                creditors (subject to such conditions or 
                limitations as the court may then impose) after 
                notice and a hearing completed before the 
                expiration of the 30-day period only if the 
                party in interest demonstrates that the filing 
                of the later case is in good faith as to the 
                creditors to be stayed; and
                    (C) for purposes of subparagraph (B), a 
                case is presumptively filed not in good faith 
                (but such presumption may be rebutted by clear 
                and convincing evidence to the contrary)--
                            (i) as to all creditors, if--
                                    (I) more than 1 previous 
                                case under any of chapters 7, 
                                11, and 13 in which the 
                                individual was a debtor was 
                                pending within the preceding 1-
                                year period;
                                    (II) a previous case under 
                                any of chapters 7, 11, and 13 
                                in which the individual was a 
                                debtor was dismissed within 
                                such 1-year period, after the 
                                debtor failed to--
                                            (aa) file or amend 
                                        the petition or other 
                                        documents as required 
                                        by this title or the 
                                        court without 
                                        substantial excuse (but 
                                        mere inadvertence or 
                                        negligence shall not be 
                                        a substantial excuse 
                                        unless the dismissal 
                                        was caused by the 
                                        negligence of the 
                                        debtor's attorney);
                                            (bb) provide 
                                        adequate protection as 
                                        ordered by the court; 
                                        or
                                            (cc) perform the 
                                        terms of a plan 
                                        confirmed by the court; 
                                        or
                                    (III) there has not been a 
                                substantial change in the 
                                financial or personal affairs 
                                of the debtor since the 
                                dismissal of the next most 
                                previous case under chapter 7, 
                                11, or 13 or any other reason 
                                to conclude that the later case 
                                will be concluded--
                                            (aa) if a case 
                                        under chapter 7, with a 
                                        discharge; or
                                            (bb) if a case 
                                        under chapter 11 or 13, 
                                        with a confirmed plan 
                                        that will be fully 
                                        performed; and
                            (ii) as to any creditor that 
                        commenced an action under subsection 
                        (d) in a previous case in which the 
                        individual was a debtor if, as of the 
                        date of dismissal of such case, that 
                        action was still pending or had been 
                        resolved by terminating, conditioning, 
                        or limiting the stay as to actions of 
                        such creditor; and
            (4)(A)(i) if a single or joint case is filed by or 
        against a debtor who is an individual under this title, 
        and if 2 or more single or joint cases of the debtor 
        were pending within the previous year but were 
        dismissed, other than a case refiled under section 
        707(b), the stay under subsection (a) shall not go into 
        effect upon the filing of the later case; and
            (ii) on request of a party in interest, the court 
        shall promptly enter an order confirming that no stay 
        is in effect;
            (B) if, within 30 days after the filing of the 
        later case, a party in interest requests the court may 
        order the stay to take effect in the case as to any or 
        all creditors (subject to such conditions or 
        limitations as the court may impose), after notice and 
        a hearing, only if the party in interest demonstrates 
        that the filing of the later case is in good faith as 
        to the creditors to be stayed;
            (C) a stay imposed under subparagraph (B) shall be 
        effective on the date of the entry of the order 
        allowing the stay to go into effect; and
            (D) for purposes of subparagraph (B), a case is 
        presumptively filed not in good faith (but such 
        presumption may be rebutted by clear and convincing 
        evidence to the contrary)--
                    (i) as to all creditors if--
                            (I) 2 or more previous cases under 
                        this title in which the individual was 
                        a debtor were pending within the 1-year 
                        period;
                            (II) a previous case under this 
                        title in which the individual was a 
                        debtor was dismissed within the time 
                        period stated in this paragraph after 
                        the debtor failed to file or amend the 
                        petition or other documents as required 
                        by this title or the court without 
                        substantial excuse (but mere 
                        inadvertence or negligence shall not be 
                        substantial excuse unless the dismissal 
                        was caused by the negligence of the 
                        debtor's attorney), failed to provide 
                        adequate protection as ordered by the 
                        court, or failed to perform the terms 
                        of a plan confirmed by the court; or
                            (III) there has not been a 
                        substantial change in the financial or 
                        personal affairs of the debtor since 
                        the dismissal of the next most previous 
                        case under this title, or any other 
                        reason to conclude that the later case 
                        will not be concluded, if a case under 
                        chapter 7, with a discharge, and if a 
                        case under chapter 11 or 13, with a 
                        confirmed plan that will be fully 
                        performed; or
                    (ii) as to any creditor that commenced an 
                action under subsection (d) in a previous case 
                in which the individual was a debtor if, as of 
                the date of dismissal of such case, such action 
                was still pending or had been resolved by 
                terminating, conditioning, or limiting the stay 
                as to such action of such creditor.
    (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) * * *
                    (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) * * *
                    [(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, on, or after 
                        the date of the commencement of the 
                        case by or from the property to each 
                        creditor whose claim is secured by such 
                        real estate (other than a claim secured 
                        by a judgment lien or by an unmatured 
                        statutory lien); and
                            (ii) are in an amount equal to 
                        interest at the then applicable 
                        nondefault contract rate of interest on 
                        the value of the creditor's interest in 
                        the real estate; or
            (4) with respect to a stay of an act against real 
        property under subsection (a), by a creditor whose 
        claim is secured by an interest in such real property, 
        if the court finds that the filing of the petition was 
        part of a scheme to delay, hinder, and defraud 
        creditors that involved either--
                    (A) transfer of all or part ownership of, 
                or other interest in, such real property 
                without the consent of the secured creditor or 
                court approval; or
                    (B) multiple bankruptcy filings affecting 
                such real property.
If recorded in compliance with applicable State laws governing 
notices of interests or liens in real property, an order 
entered under paragraph (4) shall be binding in any other case 
under this title purporting to affect such real property filed 
not later than 2 years after the date of the entry of such 
order by the court, except that a debtor in a subsequent case 
under this title may move for relief from such order based upon 
changed circumstances or for good cause shown, after notice and 
a hearing. Any Federal, State, or local governmental unit that 
accepts notices of interests or liens in real property shall 
accept any certified copy of an order described in this 
subsection for indexing and recording.
    (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 a case under chapter 
7, 11, or 13 in which the debtor is an individual, the stay 
under subsection (a) shall terminate on the date that is 60 
days after a request is made by a party in interest under 
subsection (d), unless--
            (A) a final decision is rendered by the court 
        during the 60-day period beginning on the date of the 
        request; or
            (B) such 60-day period is extended--
                    (i) by agreement of all parties in 
                interest; or
                    (ii) by the court for such specific period 
                of time as the court finds is required for good 
                cause, as described in findings made by the 
                court.

           *       *       *       *       *       *       *

    (h)(1) In a case in which the debtor is an individual, the 
stay provided by subsection (a) is terminated with respect to 
personal property of the estate or of the debtor securing in 
whole or in part a claim, or subject to an unexpired lease, and 
such personal property shall no longer be property of the 
estate if the debtor fails within the applicable time set by 
section 521(a)(2)--
            (A) to file timely any statement of intention 
        required under section 521(a)(2) with respect to such 
        personal property or to indicate in such statement that 
        the debtor will either surrender such personal property 
        or retain it and, if retaining such personal property, 
        either redeem such personal property pursuant to 
        section 722, enter into an agreement of the kind 
        specified in section 524(c) applicable to the debt 
        secured by such personal property, or assume such 
        unexpired lease pursuant to section 365(p) if the 
        trustee does not do so, as applicable; and
            (B) to take timely the action specified in such 
        statement, as it may be amended before expiration of 
        the period for taking action, unless such statement 
        specifies the debtor's intention to reaffirm such debt 
        on the original contract terms and the creditor refuses 
        to agree to the reaffirmation on such terms.
    (2) Paragraph (1) does not apply if the court determines, 
on the motion of the trustee filed before the expiration of the 
applicable time set by section 521(a)(2), after notice and a 
hearing, that such personal property is of consequential value 
or benefit to the estate, and orders appropriate adequate 
protection of the creditor's interest, and orders the debtor to 
deliver any collateral in the debtor's possession to the 
trustee. If the court does not so determine, the stay provided 
by subsection (a) shall terminate upon the conclusion of the 
hearing on the motion.
    (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 otherwise provided in this subsection, 
subsection (b)(22) shall apply on the date that is 30 days 
after the date on which the bankruptcy petition is filed, if 
the debtor files with the petition and serves upon the lessor a 
certification under penalty of perjury that--
            (A) under nonbankruptcy law applicable in the 
        jurisdiction, there are circumstances under which the 
        debtor would be permitted to cure the entire monetary 
        default that gave rise to the judgment for possession, 
        after that judgment for possession was entered; and
            (B) the debtor (or an adult dependent of the 
        debtor) has deposited with the clerk of the court, any 
        rent that would become due during the 30-day period 
        after the filing of the bankruptcy petition.
    (2) If, within the 30-day period after the filing of the 
bankruptcy petition, the debtor (or an adult dependent of the 
debtor) complies with paragraph (1) and files with the court 
and serves upon the lessor a further certification under 
penalty of perjury that the debtor (or an adult dependent of 
the debtor) has cured, under nonbankrupcty law applicable in 
the jurisdiction, the entire monetary default that gave rise to 
the judgment under which possession is sought by the lessor, 
subsection (b)(22) shall not apply, unless ordered to apply by 
the court under paragraph (3).
    (3)(A) If the lessor files an objection to any 
certification filed by the debtor under paragraph (1) or (2), 
and serves such objection upon the debtor, the court shall hold 
a hearing within 10 days after the filing and service of such 
objection to determine if the certification filed by the debtor 
under paragraph (1) or (2) is true.
    (B) If the court upholds the objection of the lessor filed 
under subparagraph (A)--
            (i) subsection (b)(22) shall apply immediately and 
        relief from the stay provided under subsection (a)(3) 
        shall not be required to enable the lessor to complete 
        the process to recover full possession of the property; 
        and
            (ii) the clerk of the court shall immediately serve 
        upon the lessor and the debtor a certified copy of the 
        court's order upholding the lessor's objection.
    (4) If a debtor, in accordance with paragraph (5), 
indicates on the petition that there was a judgment for 
possession of the residential rental property in which the 
debtor resides and does not file a certification under 
paragraph (1) or (2)--
            (A) subsection (b)(22) shall apply immediately upon 
        failure to file such certification, and relief from the 
        stay provided under subsection (a)(3) shall not be 
        required to enable the lessor to complete the process 
        to recover full possession of the property; and
            (B) the clerk of the court shall immediately serve 
        upon the lessor and the debtor a certified copy of the 
        docket indicating the absence of a filed certification 
        and the applicability of the exception to the stay 
        under subsection (b)(22).
    (5)(A) Where a judgment for possession of residential 
property in which the debtor resides as a tenant under a lease 
or rental agreement has been obtained by the lessor, the debtor 
shall so indicate on the bankruptcy petition and shall provide 
the name and address of the lessor that obtained that pre-
petition judgment on the petition and on any certification 
filed under this subsection.
    (B) The form of certification filed with the petition, as 
specified in this subsection, shall provide for the debtor to 
certify, and the debtor shall certify--
            (i) whether a judgment for possession of 
        residential rental housing in which the debtor resides 
        has been obtained against the debtor before the date of 
        the filing of the petition; and
            (ii) whether the debtor is claiming under paragraph 
        (1) that under nonbankruptcy law applicable in the 
        jurisdiction, there are circumstances under which the 
        debtor would be permitted to cure the entire monetary 
        default that gave rise to the judgment for possession, 
        after that judgment of possession was entered, and has 
        made the appropriate deposit with the court.
    (C) The standard forms (electronic and otherwise) used in a 
bankruptcy proceeding shall be amended to reflect the 
requirements of this subsection.
    (D) The clerk of the court shall arrange for the prompt 
transmittal of the rent deposited in accordance with paragraph 
(1)(B) to the lessor.
    (m)(1) Except as otherwise provided in this subsection, 
subsection (b)(23) shall apply on the date that is 15 days 
after the date on which the lessor files and serves a 
certification described in subsection (b)(23).
    (2)(A) If the debtor files with the court an objection to 
the truth or legal sufficiency of the certification described 
in subsection (b)(23) and serves such objection upon the 
lessor, subsection (b)(23) shall not apply, unless ordered to 
apply by the court under this subsection.
    (B) If the debtor files and serves the objection under 
subparagraph (A), the court shall hold a hearing within 10 days 
after the filing and service of such objection to determine if 
the situation giving rise to the lessor's certification under 
paragraph (1) existed or has been remedied.
    (C) If the debtor can demonstrate to the satisfaction of 
the court that the situation giving rise to the lessor's 
certification under paragraph (1) did not exist or has been 
remedied, the stay provided under subsection (a)(3) shall 
remain in effect until the termination of the stay under this 
section.
    (D) If the debtor cannot demonstrate to the satisfaction of 
the court that the situation giving rise to the lessor's 
certification under paragraph (1) did not exist or has been 
remedied--
            (i) relief from the stay provided under subsection 
        (a)(3) shall not be required to enable the lessor to 
        proceed with the eviction; and
            (ii) the clerk of the court shall immediately serve 
        upon the lessor and the debtor a certified copy of the 
        court's order upholding the lessor's certification.
    (3) If the debtor fails to file, within 15 days, an 
objection under paragraph (2)(A)--
            (A) subsection (b)(23) shall apply immediately upon 
        such failure and relief from the stay provided under 
        subsection (a)(3) shall not be required to enable the 
        lessor to complete the process to recover full 
        possession of the property; and
            (B) the clerk of the court shall immediately serve 
        upon the lessor and the debtor a certified copy of the 
        docket indicating such failure.
    (n)(1) Except as provided in paragraph (2), subsection (a) 
does not apply in a case in which the debtor--
            (A) is a debtor in a small business case pending at 
        the time the petition is filed;
            (B) was a debtor in a small business case that was 
        dismissed for any reason by an order that became final 
        in the 2-year period ending on the date of the order 
        for relief entered with respect to the petition;
            (C) was a debtor in a small business case in which 
        a plan was confirmed in the 2-year period ending on the 
        date of the order for relief entered with respect to 
        the petition; or
            (D) is an entity that has acquired substantially 
        all of the assets or business of a small business 
        debtor described in subparagraph (A), (B), or (C), 
        unless such entity establishes by a preponderance of 
        the evidence that such entity acquired substantially 
        all of the assets or business of such small business 
        debtor in good faith and not for the purpose of evading 
        this paragraph.
    (2) Paragraph (1) does not apply--
            (A) to an involuntary case involving no collusion 
        by the debtor with creditors; or
            (B) to the filing of a petition if--
                    (i) the debtor proves by a preponderance of 
                the evidence that the filing of the petition 
                resulted from circumstances beyond the control 
                of the debtor not foreseeable at the time the 
                case then pending was filed; and
                    (ii) it is more likely than not that the 
                court will confirm a feasible plan, but not a 
                liquidating plan, within a reasonable period of 
                time.
    (o) The exercise of rights not subject to the stay arising 
under subsection (a) pursuant to paragraph (6), (7), (17), or 
(27) of subsection (b) shall not be stayed by any order of a 
court or administrative agency in any proceeding under this 
title.

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

    (a) * * *
    (b)(1) The trustee, after notice and a hearing, may use, 
sell, or lease, other than in the ordinary course of business, 
property of the estate[.], except that if the debtor in 
connection with offering a product or a service discloses to an 
individual a policy prohibiting the transfer of personally 
identifiable information about individuals to persons that are 
not affiliated with the debtor and if such policy is in effect 
on the date of the commencement of the case, then the trustee 
may not sell or lease personally identifiable information to 
any person unless--
            (A) such sale or such lease is consistent with such 
        policy; or
            (B) after appointment of a consumer privacy 
        ombudsman in accordance with section 332, and after 
        notice and a hearing, the court approves such sale or 
        such lease--
                    (i) giving due consideration to the facts, 
                circumstances, and conditions of such sale or 
                such lease; and
                    (ii) finding that no showing was made that 
                such sale or such lease would violate 
                applicable nonbankruptcy law.

           *       *       *       *       *       *       *

    (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.

           *       *       *       *       *       *       *

    (o) Notwithstanding subsection (f), if a person purchases 
any interest in a consumer credit transaction that is subject 
to the Truth in Lending Act or any interest in a consumer 
credit contract (as defined in section 433.1 of title 16 of the 
Code of Federal Regulations (January 1, 2004), as amended from 
time to time), and if such interest is purchased through a sale 
under this section, then such person shall remain subject to 
all claims and defenses that are related to such consumer 
credit transaction or such consumer credit contract, to the 
same extent as such person would be subject to such claims and 
defenses of the consumer had such interest been purchased at a 
sale not under this section.
    [(o)] (p) In any hearing under this section--
            (1) * * *

           *       *       *       *       *       *       *


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 this paragraph;

           *       *       *       *       *       *       *

    (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 
        provision] 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.
    [(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.]
    (4)(A) Subject to subparagraph (B), an unexpired lease of 
nonresidential real property under which the debtor is the 
lessee shall be deemed rejected, and the trustee shall 
immediately surrender that nonresidential real property to the 
lessor, if the trustee does not assume or reject the unexpired 
lease by the earlier of--
            (i) the date that is 120 days after the date of the 
        order for relief; or
            (ii) the date of the entry of an order confirming a 
        plan.
    (B)(i) The court may extend the period determined under 
subparagraph (A), prior to the expiration of the 120-day 
period, for 90 days on the motion of the trustee or lessor for 
cause.
    (ii) If the court grants an extension under clause (i), the 
court may grant a subsequent extension only upon prior written 
consent of the lessor in each instance.
    [(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) If the debtor in a case under chapter 7 is an 
individual, the debtor may notify the creditor in writing that 
the debtor desires to assume the lease. Upon being so notified, 
the creditor may, at its option, notify the debtor that it is 
willing to have the lease assumed by the debtor and may 
condition such assumption on cure of any outstanding default on 
terms set by the contract.
    (B) If, not later than 30 days after notice is provided 
under subparagraph (A), the debtor notifies the lessor in 
writing that the lease is assumed, the liability under the 
lease will be assumed by the debtor and not by the estate.
    (C) The stay under section 362 and the injunction under 
section 524(a)(2) shall not be violated by notification of the 
debtor and negotiation of cure under this subsection.
    (3) In a case under chapter 11 in which the debtor is an 
individual and in a case under chapter 13, if the debtor is the 
lessee with respect to personal property and the lease is not 
assumed in the plan confirmed by the court, the lease is deemed 
rejected as of the conclusion of the hearing on confirmation. 
If the lease is rejected, the stay under section 362 and any 
stay under section 1301 is automatically terminated with 
respect to the property subject to the lease.

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) and (4), with respect to a 
case filed under chapter 11, a utility referred to in 
subsection (a) may alter, refuse, or discontinue utility 
service, if during the 30-day period beginning on the date of 
the filing of the petition, the utility does not receive from 
the debtor or the trustee adequate assurance of payment for 
utility service that is satisfactory to the utility.
    (3)(A) On request of a party in interest and after notice 
and a hearing, the court may order modification of the amount 
of an assurance of payment under paragraph (2).
    (B) In making a determination under this paragraph whether 
an assurance of payment is adequate, the court may not 
consider--
            (i) the absence of security before the date of the 
        filing of the petition;
            (ii) the payment by the debtor of charges for 
        utility service in a timely manner before the date of 
        the filing of the petition; or
            (iii) the availability of an administrative expense 
        priority.
    (4) Notwithstanding any other provision of law, with 
respect to a case subject to this subsection, a utility may 
recover or set off against a security deposit provided to the 
utility by the debtor before the date of the filing of the 
petition without notice or order of the court.

           *       *       *       *       *       *       *


            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.  Restrictions on debt relief agencies.
527.  Disclosures.
528.  Requirements for debt relief agencies.
     * * * * * * *

                       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; 
          proceedings under chapter 15.
562.  Timing of 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 (as 
defined in section 31701 of title 49) 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 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 an unsecured consumer debt by not more than 20 percent 
of the claim, if--
            (A) the claim was filed by a creditor who 
        unreasonably refused to negotiate a reasonable 
        alternative repayment schedule proposed on behalf of 
        the debtor by an approved nonprofit budget and credit 
        counseling agency described in section 111;
            (B) the offer of the debtor under subparagraph 
        (A)--
                    (i) was made at least 60 days before the 
                date of the filing of the petition; and
                    (ii) provided for payment of at least 60 
                percent of the amount of the debt over a period 
                not to exceed the repayment period of the loan, 
                or a reasonable extension thereof; and
            (C) no part of the debt under the alternative 
        repayment schedule is nondischargeable.
    (2) The debtor shall have the burden of proving, by clear 
and convincing evidence, that--
            (A) the creditor unreasonably refused to consider 
        the debtor's proposal; and
            (B) the proposed alternative repayment schedule was 
        made prior to expiration of the 60-day period specified 
        in paragraph (1)(B)(i).

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) the actual, necessary costs and expenses of 
        preserving the estate, including wages, salaries, or 
        commissions for services rendered after the 
        commencement of the case;] (A) the actual, necessary 
        costs and expenses of preserving the estate including--
                    (i) wages, salaries, and commissions for 
                services rendered after the commencement of the 
                case; and
                    (ii) wages and benefits awarded pursuant to 
                a judicial proceeding or a proceeding of the 
                National Labor Relations Board as back pay 
                attributable to any period of time occurring 
                after commencement of the case under this 
                title, as a result of a violation of Federal or 
                State law by the debtor, without regard to the 
                time of the occurrence of unlawful conduct on 
                which such award is based or to whether any 
                services were rendered, if the court determines 
                that payment of wages and benefits by reason of 
                the operation of this clause will not 
                substantially increase the probability of 
                layoff or termination of current employees, or 
                of nonpayment of domestic support obligations, 
                during the case under this title;
            (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 a penalty 
        provision, for the period of 2 years following the 
        later of the rejection date or the date of actual 
        turnover of the premises, without reduction or setoff 
        for any reason whatsoever except for sums actually 
        received or to be received from an entity other than 
        the debtor, and the claim for remaining sums due for 
        the balance of the term of the lease shall be a claim 
        under section 502(b)(6);
            (8) the actual, necessary costs and expenses of 
        closing a health care business incurred by a trustee or 
        by a Federal agency (as defined in section 551(1) of 
        title 5) or a department or agency of a State or 
        political subdivision thereof, including any cost or 
        expense incurred--
                    (A) in disposing of patient records in 
                accordance with section 351; or
                    (B) in connection with transferring 
                patients from the health care business that is 
                in the process of being closed to another 
                health care business; and
            (9) the value of any goods received by the debtor 
        within 20 days before the date of commencement of a 
        case under this title in which the goods have been sold 
        to the debtor in the ordinary course of such debtor's 
        business.
    (c) Notwithstanding subsection (b), there shall neither be 
allowed, nor paid--
            (1) a transfer made to, or an obligation incurred 
        for the benefit of, an insider of the debtor for the 
        purpose of inducing such person to remain with the 
        debtor's business, absent a finding by the court based 
        on evidence in the record that--
                    (A) the transfer or obligation is essential 
                to retention of the person because the 
                individual has a bona fide job offer from 
                another business at the same or greater rate of 
                compensation;
                    (B) the services provided by the person are 
                essential to the survival of the business; and
                    (C) either--
                            (i) the amount of the transfer made 
                        to, or obligation incurred for the 
                        benefit of, the person is not greater 
                        than an amount equal to 10 times the 
                        amount of the mean transfer or 
                        obligation of a similar kind given to 
                        nonmanagement employees for any purpose 
                        during the calendar year in which the 
                        transfer is made or the obligation is 
                        incurred; or
                            (ii) if no such similar transfers 
                        were made to, or obligations were 
                        incurred for the benefit of, such 
                        nonmanagement employees during such 
                        calendar year, the amount of the 
                        transfer or obligation is not greater 
                        than an amount equal to 25 percent of 
                        the amount of any similar transfer or 
                        obligation made to or incurred for the 
                        benefit of such insider for any purpose 
                        during the calendar year before the 
                        year in which such transfer is made or 
                        obligation is incurred;
            (2) a severance payment to an insider of the 
        debtor, unless--
                    (A) the payment is part of a program that 
                is generally applicable to all full-time 
                employees; and
                    (B) the amount of the payment is not 
                greater than 10 times the amount of the mean 
                severance pay given to nonmanagement employees 
                during the calendar year in which the payment 
                is made; or
            (3) other transfers or obligations that are outside 
        the ordinary course of business and not justified by 
        the facts and circumstances of the case, including 
        transfers made to, or obligations incurred for the 
        benefit of, officers, managers, or consultants hired 
        after the date of the filing of the petition.

Sec. 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) * * *
                    (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 shall maintain a list under which a 
Federal, State, or local governmental unit responsible for the 
collection of taxes within the district may--
            (i) designate an address for service of requests 
        under this subsection; and
            (ii) describe where further information concerning 
        additional requirements for filing such requests may be 
        found.
    (B) If such governmental unit does not designate an address 
and provide such address to the clerk under subparagraph (A), 
any request made under this subsection may be served at the 
address for the filing of a tax return or protest with the 
appropriate taxing authority of such governmental unit.
    [(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) If the debtor is an individual in a case under chapter 
7 or 13, such value with respect to personal property securing 
an allowed claim shall be determined based on the replacement 
value of such property as of the date of the filing of the 
petition without deduction for costs of sale or marketing. With 
respect to property acquired for personal, family, or household 
purposes, replacement value shall mean the price a retail 
merchant would charge for property of that kind considering the 
age and condition of the property at the time value is 
determined.
    (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 in a case under this 
                title, are owed to or recoverable by a spouse, 
                former spouse, or child of the debtor, or such 
                child's parent, legal guardian, or responsible 
                relative, without regard to whether the claim 
                is filed by such person or is filed by a 
                governmental unit on behalf of such person, on 
                the condition that funds received under this 
                paragraph by a governmental unit under this 
                title after the date of the filing of the 
                petition shall be applied and distributed in 
                accordance with applicable nonbankruptcy law.
                    (B) Subject to claims under subparagraph 
                (A), allowed unsecured claims for domestic 
                support obligations that, as of the date of the 
                filing of the petition, are assigned by a 
                spouse, former spouse, child of the debtor, or 
                such child's parent, legal guardian, or 
                responsible relative to a governmental unit 
                (unless such obligation is assigned voluntarily 
                by the spouse, former spouse, child, parent, 
                legal guardian, or responsible relative of the 
                child for the purpose of collecting the debt) 
                or are owed directly to or recoverable by a 
                governmental unit under applicable 
                nonbankruptcy law, on the condition that funds 
                received under this paragraph by a governmental 
                unit under this title after the date of the 
                filing of the petition be applied and 
                distributed in accordance with applicable 
                nonbankruptcy law.
                    (C) If a trustee is appointed or elected 
                under section 701, 702, 703, 1104, 1202, or 
                1302, the administrative expenses of the 
                trustee allowed under paragraphs (1)(A), (2), 
                and (6) of section 503(b) shall be paid before 
                payment of claims under subparagraphs (A) and 
                (B), to the extent that the trustee administers 
                assets that are otherwise available for the 
                payment of such claims.
            [(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] $10,000 for each 
        individual or corporation, as the case may be, earned 
        within [90] 180 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) * * *
                    (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) * * *
                    (B) for each such plan, to the extent of--
                            (i) the number of employees covered 
                        by each such plan multiplied by 
                        [$4,000] $10,000; less
                            (ii) the aggregate amount paid to 
                        such employees under paragraph [(3)] 
                        (4) of this subsection, plus the 
                        aggregate amount paid by the estate on 
                        behalf of such employees to any other 
                        employee benefit plan.
            [(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 the filing of the petition--
                            (i) [for a taxable year ending on 
                        or before the date of the filing of the 
                        petition] for which a return, if 
                        required, is last due, including 
                        extensions, after three years before 
                        the date of the filing of the petition;
                            [(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;

           *       *       *       *       *       *       *

                    (D) an employment tax on a wage, salary, or 
                commission of a kind specified in paragraph 
                [(3)] (4) of this subsection earned from the 
                debtor before the date of the filing of the 
                petition, whether or not actually paid before 
                such date, for which a return is last due, 
                under applicable law or under any extension, 
                after three years before the date of the filing 
                of the petition;

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

            (10) Tenth, allowed claims for death or personal 
        injury resulting from the operation of a motor vehicle 
        or vessel if such operation was unlawful because the 
        debtor was intoxicated from using alcohol, a drug, or 
        another substance.
    (b) If the trustee, under section 362, 363, or 364 of this 
title, provides adequate protection of the interest of a holder 
of a claim secured by a lien on property of the debtor and if, 
notwithstanding such protection, such creditor has a claim 
allowable under subsection [(a)(1)] (a)(2) of this section 
arising from the stay of action against such property under 
section 362 of this title, from the use, sale, or lease of such 
property under section 363 of this title, or from the granting 
of a lien under section 364(d) of this title, then such 
creditor's claim under such subsection shall have priority over 
every other claim allowable under such subsection.

           *       *       *       *       *       *       *

    (d) An entity that is subrogated to the rights of a holder 
of a claim of a kind specified in subsection [(a)(3)] (a)(1), 
(a)(4), (a)(5), (a)(6), (a)(7), (a)(8), or (a)(9) of this 
section is not subrogated to the right of the holder of such 
claim to priority under such subsection.

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 section 
                        342(b) applies, a certificate--
                                    (I) of an attorney whose 
                                name is indicated on the 
                                petition as the attorney for 
                                the debtor, or a bankruptcy 
                                petition preparer signing the 
                                petition under section 
                                110(b)(1), indicating that such 
                                attorney or the bankruptcy 
                                petition preparer delivered to 
                                the debtor the notice required 
                                by section 342(b); or
                                    (II) if no attorney is so 
                                indicated, and no bankruptcy 
                                petition preparer signed the 
                                petition, of the debtor that 
                                such notice was received and 
                                read by the debtor;
                            (iv) copies of all payment advices 
                        or other evidence of payment received 
                        within 60 days before the date of the 
                        filing of the petition, by the debtor 
                        from any employer of the debtor;
                            (v) a statement of the amount of 
                        monthly net income, itemized to show 
                        how the amount is calculated; and
                            (vi) a statement disclosing any 
                        reasonably anticipated increase in 
                        income or expenditures over the 12-
                        month period following the date of the 
                        filing of the petition;
            (2) if an individual debtor's schedule of assets 
        and liabilities includes [consumer] debts which are 
        secured by property of the estate--
                    (A)  * * *
                    (B) within [forty-five days after the 
                filing of a notice of intent under this 
                section] 30 days after the first date set for 
                the meeting of creditors under section 341(a), 
                or within such additional time as the court, 
                for cause, within such [forty-five day] 30-day 
                period fixes, the debtor shall perform his 
                intention with respect to such property, as 
                specified by subparagraph (A) of this 
                paragraph; and
                    (C) nothing in subparagraphs (A) and (B) of 
                this paragraph shall alter the debtor's or the 
                trustee's rights with regard to such property 
                under this title, except as provided in section 
                362(h);
            (3) if a trustee is serving in the case or an 
        auditor serving 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 serving 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[.];
            (6) in a case under chapter 7 of this title in 
        which the debtor is an individual, not retain 
        possession of personal property as to which a creditor 
        has an allowed claim for the purchase price secured in 
        whole or in part by an interest in such personal 
        property unless the debtor, not later than 45 days 
        after the first meeting of creditors under section 
        341(a), either--
                    (A) enters into an agreement with the 
                creditor pursuant to section 524(c) with 
                respect to the claim secured by such property; 
                or
                    (B) redeems such property from the security 
                interest pursuant to section 722.
            (7) unless a trustee is serving in the case, 
        continue to perform the obligations required of the 
        administrator (as defined in section 3 of the Employee 
        Retirement Income Security Act of 1974) of an employee 
        benefit plan if at the time of the commencement of the 
        case the debtor (or any entity designated by the 
        debtor) served as such administrator.
If the debtor fails to so act within the 45-day period referred 
to in paragraph (6), the stay under section 362(a) is 
terminated with respect to the personal property of the estate 
or of the debtor which is affected, such property shall no 
longer be property of the estate, and the creditor may take 
whatever action as to such property as is permitted by 
applicable nonbankruptcy law, unless the court determines on 
the motion of the trustee filed before the expiration of such 
45-day period, and after notice and a hearing, that such 
property is of consequential value or benefit to the estate, 
orders appropriate adequate protection of the creditor's 
interest, and orders the debtor to deliver any collateral in 
the debtor's possession to the trustee.
    (b) In addition to the requirements under subsection (a), a 
debtor who is an individual shall file with the court--
            (1) a certificate from the approved nonprofit 
        budget and credit counseling agency that provided the 
        debtor services under section 109(h) describing the 
        services provided to the debtor; and
            (2) a copy of the debt repayment plan, if any, 
        developed under section 109(h) through the approved 
        nonprofit budget and credit counseling agency referred 
        to in paragraph (1).
    (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), with respect to property which a lessor 
or bailor owns and has leased, rented, or bailed to the debtor 
or as to which a creditor holds a security interest not 
otherwise voidable under section 522(f), 544, 545, 547, 548, or 
549, nothing in this title shall prevent or limit the operation 
of a provision in the underlying lease or agreement that has 
the effect of placing the debtor in default under such lease or 
agreement by reason of the occurrence, pendency, or existence 
of a proceeding under this title or the insolvency of the 
debtor. Nothing in this subsection shall be deemed to justify 
limiting such a provision in any other circumstance.
    (e)(1) If the debtor in a case under chapter 7 or 13 is an 
individual and if a creditor files with the court at any time a 
request to receive a copy of the petition, schedules, and 
statement of financial affairs filed by the debtor, then the 
court shall make such petition, such schedules, and such 
statement available to such creditor.
    (2)(A) The debtor shall provide--
            (i) not later than 7 days before the date first set 
        for the first meeting of creditors, to the trustee a 
        copy of the Federal income tax return required under 
        applicable law (or at the election of the debtor, a 
        transcript of such return) for the most recent tax year 
        ending immediately before the commencement of the case 
        and for which a Federal income tax return was filed; 
        and
            (ii) at the same time the debtor complies with 
        clause (i), a copy of such return (or if elected under 
        clause (i), such transcript) to any creditor that 
        timely requests such copy.
    (B) If the debtor fails to comply with clause (i) or (ii) 
of subparagraph (A), the court shall dismiss the case unless 
the debtor demonstrates that the failure to so comply is due to 
circumstances beyond the control of the debtor.
    (C) If a creditor requests a copy of such tax return or 
such transcript and if the debtor fails to provide a copy of 
such tax return or such transcript to such creditor at the time 
the debtor provides such tax return or such transcript to the 
trustee, then the court shall dismiss the case unless the 
debtor demonstrates that the failure to provide a copy of such 
tax return or such transcript is due to circumstances beyond 
the control of the debtor.
    (3) If a creditor in a case under chapter 13 files with the 
court at any time a request to receive a copy of the plan filed 
by the debtor, then the court shall make available to such 
creditor a copy of the plan--
            (A) at a reasonable cost; and
            (B) not later than 5 days after such request is 
        filed.
    (f) At the request of the court, the United States trustee, 
or any party in interest in a case under chapter 7, 11, or 13, 
a debtor who is an individual shall file with the court--
            (1) at the same time filed with the taxing 
        authority, a copy of each Federal income tax return 
        required under applicable law (or at the election of 
        the debtor, a transcript of such tax return) with 
        respect to each tax year of the debtor ending while the 
        case is pending under such chapter;
            (2) at the same time filed with the taxing 
        authority, each Federal income tax return required 
        under applicable law (or at the election of the debtor, 
        a transcript of such tax return) that had not been 
        filed with such authority as of the date of the 
        commencement of the case and that was subsequently 
        filed for any tax year of the debtor ending in the 3-
        year period ending on the date of the commencement of 
        the case;
            (3) a copy of each amendment to any Federal income 
        tax return or transcript filed with the court under 
        paragraph (1) or (2); and
            (4) in a case under chapter 13--
                    (A) on the date that is either 90 days 
                after the end of such tax year or 1 year after 
                the date of the commencement of the case, 
                whichever is later, if a plan is not confirmed 
                before such later date; and
                    (B) annually after the plan is confirmed 
                and until the case is closed, not later than 
                the date that is 45 days before the anniversary 
                of the confirmation of the plan;
        a statement, under penalty of perjury, of the income 
        and expenditures of the debtor during the tax year of 
        the debtor most recently concluded before such 
        statement is filed under this paragraph, and of the 
        monthly income of the debtor, that shows how income, 
        expenditures, and monthly income are calculated.
    (g)(1) A statement referred to in subsection (f)(4) shall 
disclose--
            (A) the amount and sources of the income of the 
        debtor;
            (B) the identity of any person responsible with the 
        debtor for the support of any dependent of the debtor; 
        and
            (C) the identity of any person who contributed, and 
        the amount contributed, to the household in which the 
        debtor resides.
    (2) The tax returns, amendments, and statement of income 
and expenditures described in subsections (e)(2)(A) and (f) 
shall be available to the United States trustee (or the 
bankruptcy administrator, if any), the trustee, and any party 
in interest for inspection and copying, subject to the 
requirements of section 315(c) of the Bankruptcy Abuse 
Prevention and Consumer Protection Act of 2005.
    (h) If requested by the United States trustee or by the 
trustee, the debtor shall provide--
            (1) a document that establishes the identity of the 
        debtor, including a driver's license, passport, or 
        other document that contains a photograph of the 
        debtor; or
            (2) such other personal identifying information 
        relating to the debtor that establishes the identity of 
        the debtor.
    (i)(1) Subject to paragraphs (2) and (4) and 
notwithstanding section 707(a), if an individual debtor in a 
voluntary case under chapter 7 or 13 fails to file all of the 
information required under subsection (a)(1) within 45 days 
after the date of the filing of the petition, the case shall be 
automatically dismissed effective on the 46th day after the 
date of the filing of the petition.
    (2) Subject to paragraph (4) and with respect to a case 
described in paragraph (1), any party in interest may request 
the court to enter an order dismissing the case. If requested, 
the court shall enter an order of dismissal not later than 5 
days after such request.
    (3) Subject to paragraph (4) and upon request of the debtor 
made within 45 days after the date of the filing of the 
petition described in paragraph (1), the court may allow the 
debtor an additional period of not to exceed 45 days to file 
the information required under subsection (a)(1) if the court 
finds justification for extending the period for the filing.
    (4) Notwithstanding any other provision of this subsection, 
on the motion of the trustee filed before the expiration of the 
applicable period of time specified in paragraph (1), (2), or 
(3), and after notice and a hearing, the court may decline to 
dismiss the case if the court finds that the debtor attempted 
in good faith to file all the information required by 
subsection (a)(1)(B)(iv) and that the best interests of 
creditors would be served by administration of the case.
    (j)(1) Notwithstanding any other provision of this title, 
if the debtor fails to file a tax return that becomes due after 
the commencement of the case or to properly obtain an extension 
of the due date for filing such return, the taxing authority 
may request that the court enter an order converting or 
dismissing the case.
    (2) If the debtor does not file the required return or 
obtain the extension referred to in paragraph (1) within 90 
days after a request is filed by the taxing authority under 
that paragraph, the court shall convert or dismiss the case, 
whichever is in the best interests of creditors and the estate.

Sec. 522. Exemptions

    (a)  * * *
    [(b) Notwithstanding] (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) any property]
    (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 days] 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.
If the effect of the domiciliary requirement under subparagraph 
(A) is to render the debtor ineligible for any exemption, the 
debtor may elect to exempt property that is specified under 
subsection (d).
    (4) For purposes of paragraph (3)(C) and subsection 
(d)(12), the following shall apply:
            (A) If the retirement funds are in a retirement 
        fund that has received a favorable determination under 
        section 7805 of the Internal Revenue Code of 1986, and 
        that determination is in effect as of the date of the 
        filing of the petition in a case under this title, 
        those funds shall be presumed to be exempt from the 
        estate.
            (B) If the retirement funds are in a retirement 
        fund that has not received a favorable determination 
        under such section 7805, those funds are exempt from 
        the estate if the debtor demonstrates that--
                    (i) no prior determination to the contrary 
                has been made by a court or the Internal 
                Revenue Service; and
                    (ii)(I) the retirement fund is in 
                substantial compliance with the applicable 
                requirements of the Internal Revenue Code of 
                1986; or
                    (II) the retirement fund fails to be in 
                substantial compliance with the applicable 
                requirements of the Internal Revenue Code of 
                1986 and the debtor is not materially 
                responsible for that failure.
            (C) A direct transfer of retirement funds from 1 
        fund or account that is exempt from taxation under 
        section 401, 403, 408, 408A, 414, 457, or 501(a) of the 
        Internal Revenue Code of 1986, under section 401(a)(31) 
        of the Internal Revenue Code of 1986, or otherwise, 
        shall not cease to qualify for exemption under 
        paragraph (3)(C) or subsection (d)(12) by reason of 
        such direct transfer.
            (D)(i) Any distribution that qualifies as an 
        eligible rollover distribution within the meaning of 
        section 402(c) of the Internal Revenue Code of 1986 or 
        that is described in clause (ii) shall not cease to 
        qualify for exemption under paragraph (3)(C) or 
        subsection (d)(12) by reason of such distribution.
            (ii) A distribution described in this clause is an 
        amount that--
                    (I) has been distributed from a fund or 
                account that is exempt from taxation under 
                section 401, 403, 408, 408A, 414, 457, or 
                501(a) of the Internal Revenue Code of 1986; 
                and
                    (II) to the extent allowed by law, is 
                deposited in such a fund or account not later 
                than 60 days after the distribution of such 
                amount.
    (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;
            (xii) medical equipment and supplies;
            (xiii) furniture exclusively for the use of minor 
        children, or elderly or disabled dependents of the 
        debtor;
            (xiv) personal effects (including the toys and 
        hobby equipment of minor dependent children and wedding 
        rings) of the debtor and the dependents of the debtor; 
        and
            (xv) 1 personal computer and related equipment.
    (B) The term ``household goods'' does not include--
            (i) works of art (unless by or of the debtor, or 
        any relative of the debtor);
            (ii) electronic entertainment equipment with a fair 
        market value of more than $500 in the aggregate (except 
        1 television, 1 radio, and 1 VCR);
            (iii) items acquired as antiques with a fair market 
        value of more than $500 in the aggregate;
            (iv) jewelry with a fair market value of more than 
        $500 in the aggregate (except wedding rings); and
            (v) a computer (except as otherwise provided for in 
        this section), motor vehicle (including a tractor or 
        lawn tractor), boat, or a motorized recreational 
        device, conveyance, vehicle, watercraft, or aircraft.

           *       *       *       *       *       *       *

    (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)] subsection (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 such Code or a simple retirement account under section 
408(p) of such Code, the aggregate value of such assets 
exempted under this section, without regard to amounts 
attributable to rollover contributions under section 402(c), 
402(e)(6), 403(a)(4), 403(a)(5), and 403(b)(8) of the Internal 
Revenue Code of 1986, and earnings thereon, shall not exceed 
$1,000,000 in a case filed by a debtor who is an individual, 
except that such amount may be increased if the interests of 
justice so require.
    (o) For purposes of subsection (b)(3)(A), and 
notwithstanding subsection (a), the value of an interest in--
            (1) real or personal property that the debtor or a 
        dependent of the debtor uses as a residence;
            (2) a cooperative that owns property that the 
        debtor or a dependent of the debtor uses as a 
        residence;
            (3) a burial plot for the debtor or a dependent of 
        the debtor; or
            (4) real or personal property that the debtor or a 
        dependent of the debtor claims as a homestead;
shall be reduced to the extent that such value is attributable 
to any portion of any property that the debtor disposed of in 
the 10-year period ending on the date of the filing of the 
petition with the intent to hinder, delay, or defraud a 
creditor and that the debtor could not exempt, or that portion 
that the debtor could not exempt, under subsection (b), if on 
such date the debtor had held the property so disposed of.
    (p)(1) Except as provided in paragraph (2) of this 
subsection and sections 544 and 548, as a result of electing 
under subsection (b)(3)(A) to exempt property under State or 
local law, a debtor may not exempt any amount of interest that 
was acquired by the debtor during the 1215-day period preceding 
the date of the filing of the petition that exceeds in the 
aggregate $125,000 in value in--
            (A) real or personal property that the debtor or a 
        dependent of the debtor uses as a residence;
            (B) a cooperative that owns property that the 
        debtor or a dependent of the debtor uses as a 
        residence;
            (C) a burial plot for the debtor or a dependent of 
        the debtor; or
            (D) real or personal property that the debtor or 
        dependent of the debtor claims as a homestead.
    (2)(A) The limitation under paragraph (1) shall not apply 
to an exemption claimed under subsection (b)(3)(A) by a family 
farmer for the principal residence of such farmer.
    (B) For purposes of paragraph (1), any amount of such 
interest does not include any interest transferred from a 
debtor's previous principal residence (which was acquired prior 
to the beginning of such 1215-day period) into the debtor's 
current principal residence, if the debtor's previous and 
current residences are located in the same State.
    (q)(1) As a result of electing under subsection (b)(3)(A) 
to exempt property under State or local law, a debtor may not 
exempt any amount of an interest in property described in 
subparagraphs (A), (B), (C), and (D) of subsection (p)(1) which 
exceeds in the aggregate $125,000 if--
            (A) the court determines, after notice and a 
        hearing, that the debtor has been convicted of a felony 
        (as defined in section 3156 of title 18), which under 
        the circumstances, demonstrates that the filing of the 
        case was an abuse of the provisions of this title; or
            (B) the debtor owes a debt arising from--
                    (i) any violation of the Federal securities 
                laws (as defined in section 3(a)(47) of the 
                Securities Exchange Act of 1934), any State 
                securities laws, or any regulation or order 
                issued under Federal securities laws or State 
                securities laws;
                    (ii) fraud, deceit, or manipulation in a 
                fiduciary capacity or in connection with the 
                purchase or sale of any security registered 
                under section 12 or 15(d) of the Securities 
                Exchange Act of 1934 or under section 6 of the 
                Securities Act of 1933;
                    (iii) any civil remedy under section 1964 
                of title 18; or
                    (iv) any criminal act, intentional tort, or 
                willful or reckless misconduct that caused 
                serious physical injury or death to another 
                individual in the preceding 5 years.
    (2) Paragraph (1) shall not apply to the extent the amount 
of an interest in property described in subparagraphs (A), (B), 
(C), and (D) of subsection (p)(1) is reasonably necessary for 
the support of the debtor and any dependent of the debtor.

Sec. 523. Exceptions to discharge

    (a) A discharge under section 727, 1141, 1228(a), 1228(b), 
or 1328(b) of this title does not discharge an individual 
debtor from any debt--
            (1) for a tax or a customs duty--
                    (A) of the kind and for the periods 
                specified in section [507(a)(2)] 507(a)(3) or 
                507(a)(8) of this title, whether or not a claim 
                for such tax was filed or allowed;
                    (B) with respect to which a return, or 
                equivalent report or notice, if required--
                            (i) was not filed or given; or
                            (ii) was filed or given after the 
                        date on which such return, report, or 
                        notice was last due, under applicable 
                        law or under any extension, and after 
                        two years before the date of the filing 
                        of the petition; or

           *       *       *       *       *       *       *

            (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 $500 
                        for luxury goods or services incurred 
                        by an individual debtor on or within 90 
                        days before the order for relief under 
                        this title are presumed to be 
                        nondischargeable; and
                            (II) cash advances aggregating more 
                        than $750 that are extensions of 
                        consumer credit under an open end 
                        credit plan obtained by an individual 
                        debtor on or within 70 days before the 
                        order for relief under this title, are 
                        presumed to be nondischargeable; and
                    (ii) for purposes of this subparagraph--
                            (I) the terms ``consumer'', 
                        ``credit'', and ``open end credit 
                        plan'' have the same meanings as in 
                        section 103 of the Truth in Lending 
                        Act; and
                            (II) the term ``luxury goods or 
                        services'' does not include goods or 
                        services reasonably necessary for the 
                        support or maintenance of the debtor or 
                        a dependent of the debtor.

           *       *       *       *       *       *       *

            [(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 defined in section 
                221(d)(1) of the Internal Revenue Code of 1986, 
                incurred by a debtor who is an individual;
            (9) for death or personal injury caused by the 
        debtor's operation of a [motor vehicle] 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);
            (14B) incurred to pay fines or penalties imposed 
        under Federal election law;
            (15) to a spouse, former spouse, or child of the 
        debtor and not of the kind described in paragraph (5) 
        that is incurred by the debtor in the course of a 
        divorce or separation or in connection with a 
        separation agreement, divorce decree or other order of 
        a court of record, or a determination made in 
        accordance with State or territorial law by a 
        governmental unit [unless--
                    [(A) the debtor does not have the ability 
                to pay such debt from income or property of the 
                debtor not reasonably necessary to be expended 
                for the maintenance or support of the debtor or 
                a dependent of the debtor and, if the debtor is 
                engaged in a business, for the payment of 
                expenditures necessary for the continuation, 
                preservation, and operation of such business; 
                or
                    [(B) discharging such debt would result in 
                a benefit to the debtor that outweighs the 
                detrimental consequences to a spouse, former 
                spouse, or child of the debtor;];
            (16) for a fee or assessment that becomes due and 
        payable after the order for relief to a membership 
        association with respect to the debtor's interest in a 
        [dwelling] unit that has condominium ownership [or], 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);
            [(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.); or]
            (18) owed to a pension, profit-sharing, stock 
        bonus, or other plan established under section 401, 
        403, 408, 408A, 414, 457, or 501(c) of the Internal 
        Revenue Code of 1986, under--
                    (A) a loan permitted under section 
                408(b)(1) of the Employee Retirement Income 
                Security Act of 1974, or subject to section 
                72(p) of the Internal Revenue Code of 1986; or
                    (B) a loan from a thrift savings plan 
                permitted under subchapter III of chapter 84 of 
                title 5, that satisfies the requirements of 
                section 8433(g) of such title;
        but nothing in this paragraph may be construed to 
        provide that any loan made under a governmental plan 
        under section 414(d), or a contract or account under 
        section 403(b), of the Internal Revenue Code of 1986 
        constitutes a claim or a debt under this title; or
            (19) that--
                    (A) * * *
                    (B) results, before, on, or after the date 
                on which the petition was filed, from--
                            (i) * * *

           *       *       *       *       *       *       *

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 insured] an 
insured depository institution shall be considered to be acting 
in a fiduciary capacity with respect to the purposes of 
subsection (a)(4) or (11).

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, unless the 
order confirming the plan is revoked, the plan is in default, 
or the creditor has not received payments required to be made 
under the plan in the manner required by the plan (including 
crediting the amounts required under the plan), shall 
constitute a violation of an injunction under subsection (a)(2) 
if the act of the creditor to collect and failure to credit 
payments in the manner required by the plan caused material 
injury to the debtor.
    (j) Subsection (a)(2) does not operate as an injunction 
against an act by a creditor that is the holder of a secured 
claim, if--
            (1) such creditor retains a security interest in 
        real property that is the principal residence of the 
        debtor;
            (2) such act is in the ordinary course of business 
        between the creditor and the debtor; and
            (3) such act is limited to seeking or obtaining 
        periodic payments associated with a valid security 
        interest in lieu of pursuit of in rem relief to enforce 
        the lien.
    (k)(1) The disclosures required under subsection (c)(2) 
shall consist of the disclosure statement described in 
paragraph (3), completed as required in that paragraph, 
together with the agreement specified in subsection (c), 
statement, declaration, motion and order described, 
respectively, in paragraphs (4) through (8), and shall be the 
only disclosures required in connection with entering into such 
agreement.
    (2) Disclosures made under paragraph (1) shall be made 
clearly and conspicuously and in writing. The terms ``Amount 
Reaffirmed'' and ``Annual Percentage Rate'' shall be disclosed 
more conspicuously than other terms, data or information 
provided in connection with this disclosure, except that the 
phrases ``Before agreeing to reaffirm a debt, review these 
important disclosures'' and ``Summary of Reaffirmation 
Agreement'' may be equally conspicuous. Disclosures may be made 
in a different order and may use terminology different from 
that set forth in paragraphs (2) through (8), except that the 
terms ``Amount Reaffirmed'' and ``Annual Percentage Rate'' must 
be used where indicated.
    (3) The disclosure statement required under this paragraph 
shall consist of the following:
            (A) The statement: ``Part A: Before agreeing to 
        reaffirm a debt, review these important disclosures:'';
            (B) Under the heading ``Summary of Reaffirmation 
        Agreement'', the statement: ``This Summary is made 
        pursuant to the requirements of the Bankruptcy Code'';
            (C) The ``Amount Reaffirmed'', using that term, 
        which shall be--
                    (i) the total amount of debt that the 
                debtor agrees to reaffirm by entering into an 
                agreement of the kind specified in subsection 
                (c), and
                    (ii) the total of any fees and costs 
                accrued as of the date of the disclosure 
                statement, related to such total amount.
            (D) In conjunction with the disclosure of the 
        ``Amount Reaffirmed'', the statements--
                    (i) ``The amount of debt you have agreed to 
                reaffirm''; and
                    (ii) ``Your credit agreement may obligate 
                you to pay additional amounts which may come 
                due after the date of this disclosure. Consult 
                your credit agreement.''.
            (E) The ``Annual Percentage Rate'', using that 
        term, which shall be disclosed as--
                    (i) if, at the time the petition is filed, 
                the debt is an extension of credit under an 
                open end credit plan, as the terms ``credit'' 
                and ``open end credit plan'' are defined in 
                section 103 of the Truth in Lending Act, then--
                            (I) the annual percentage rate 
                        determined under paragraphs (5) and (6) 
                        of section 127(b) of the Truth in 
                        Lending Act, as applicable, as 
                        disclosed to the debtor in the most 
                        recent periodic statement prior to 
                        entering into an agreement of the kind 
                        specified in subsection (c) or, if no 
                        such periodic statement has been given 
                        to the debtor during the prior 6 
                        months, the annual percentage rate as 
                        it would have been so disclosed at the 
                        time the disclosure statement is given 
                        to the debtor, or to the extent this 
                        annual percentage rate is not readily 
                        available or not applicable, then
                            (II) the simple interest rate 
                        applicable to the amount reaffirmed as 
                        of the date the disclosure statement is 
                        given to the debtor, or if different 
                        simple interest rates apply to 
                        different balances, the simple interest 
                        rate applicable to each such balance, 
                        identifying the amount of each such 
                        balance included in the amount 
                        reaffirmed, or
                            (III) if the entity making the 
                        disclosure elects, to disclose the 
                        annual percentage rate under subclause 
                        (I) and the simple interest rate under 
                        subclause (II); or
                    (ii) if, at the time the petition is filed, 
                the debt is an extension of credit other than 
                under an open end credit plan, as the terms 
                ``credit'' and ``open end credit plan'' are 
                defined in section 103 of the Truth in Lending 
                Act, then--
                            (I) the annual percentage rate 
                        under section 128(a)(4) of the Truth in 
                        Lending Act, as disclosed to the debtor 
                        in the most recent disclosure statement 
                        given to the debtor prior to the 
                        entering into an agreement of the kind 
                        specified in subsection (c) with 
                        respect to the debt, or, if no such 
                        disclosure statement was given to the 
                        debtor, the annual percentage rate as 
                        it would have been so disclosed at the 
                        time the disclosure statement is given 
                        to the debtor, or to the extent this 
                        annual percentage rate is not readily 
                        available or not applicable, then
                            (II) the simple interest rate 
                        applicable to the amount reaffirmed as 
                        of the date the disclosure statement is 
                        given to the debtor, or if different 
                        simple interest rates apply to 
                        different balances, the simple interest 
                        rate applicable to each such balance, 
                        identifying the amount of such balance 
                        included in the amount reaffirmed, or
                            (III) if the entity making the 
                        disclosure elects, to disclose the 
                        annual percentage rate under (I) and 
                        the simple interest rate under (II).
            (F) If the underlying debt transaction was 
        disclosed as a variable rate transaction on the most 
        recent disclosure given under the Truth in Lending Act, 
        by stating ``The interest rate on your loan may be a 
        variable interest rate which changes from time to time, 
        so that the annual percentage rate disclosed here may 
        be higher or lower.''.
            (G) If the debt is secured by a security interest 
        which has not been waived in whole or in part or 
        determined to be void by a final order of the court at 
        the time of the disclosure, by disclosing that a 
        security interest or lien in goods or property is 
        asserted over some or all of the debts the debtor is 
        reaffirming and listing the items and their original 
        purchase price that are subject to the asserted 
        security interest, or if not a purchase-money security 
        interest then listing by items or types and the 
        original amount of the loan.
            (H) At the election of the creditor, a statement of 
        the repayment schedule using 1 or a combination of the 
        following--
                    (i) by making the statement: ``Your first 
                payment in the amount of $___ is due on ___ but 
                the future payment amount may be different. 
                Consult your reaffirmation agreement or credit 
                agreement, as applicable.'', and stating the 
                amount of the first payment and the due date of 
                that payment in the places provided;
                    (ii) by making the statement: ``Your 
                payment schedule will be:'', and describing the 
                repayment schedule with the number, amount, and 
                due dates or period of payments scheduled to 
                repay the debts reaffirmed to the extent then 
                known by the disclosing party; or
                    (iii) by describing the debtor's repayment 
                obligations with reasonable specificity to the 
                extent then known by the disclosing party.
            (I) The following statement: ``Note: When this 
        disclosure refers to what a creditor `may' do, it does 
        not use the word `may' to give the creditor specific 
        permission. The word `may' is used to tell you what 
        might occur if the law permits the creditor to take the 
        action. If you have questions about your reaffirming a 
        debt or what the law requires, consult with the 
        attorney who helped you negotiate this agreement 
        reaffirming a debt. If you don't have an attorney 
        helping you, the judge will explain the effect of your 
        reaffirming a debt when the hearing on the 
        reaffirmation agreement is held.''.
            (J)(i) The following additional statements:
    ``Reaffirming a debt is a serious financial decision. The 
law requires you to take certain steps to make sure the 
decision is in your best interest. If these steps are not 
completed, the reaffirmation agreement is not effective, even 
though you have signed it.
            ``1. Read the disclosures in this Part A carefully. 
        Consider the decision to reaffirm carefully. Then, if 
        you want to reaffirm, sign the reaffirmation agreement 
        in Part B (or you may use a separate agreement you and 
        your creditor agree on).
            ``2. Complete and sign Part D and be sure you can 
        afford to make the payments you are agreeing to make 
        and have received a copy of the disclosure statement 
        and a completed and signed reaffirmation agreement.
            ``3. If you were represented by an attorney during 
        the negotiation of your reaffirmation agreement, the 
        attorney must have signed the certification in Part C.
            ``4. If you were not represented by an attorney 
        during the negotiation of your reaffirmation agreement, 
        you must have completed and signed Part E.
            ``5. The original of this disclosure must be filed 
        with the court by you or your creditor. If a separate 
        reaffirmation agreement (other than the one in Part B) 
        has been signed, it must be attached.
            ``6. If you were represented by an attorney during 
        the negotiation of your reaffirmation agreement, your 
        reaffirmation agreement becomes effective upon filing 
        with the court unless the reaffirmation is presumed to 
        be an undue hardship as explained in Part D.
            ``7. If you were not represented by an attorney 
        during the negotiation of your reaffirmation agreement, 
        it will not be effective unless the court approves it. 
        The court will notify you of the hearing on your 
        reaffirmation agreement. You must attend this hearing 
        in bankruptcy court where the judge will review your 
        reaffirmation agreement. The bankruptcy court must 
        approve your reaffirmation agreement as consistent with 
        your best interests, except that no court approval is 
        required if your reaffirmation agreement is for a 
        consumer debt secured by a mortgage, deed of trust, 
        security deed, or other lien on your real property, 
        like your home.
    ``Your right to rescind (cancel) your reaffirmation 
agreement. You may rescind (cancel) your reaffirmation 
agreement at any time before the bankruptcy court enters a 
discharge order, or before the expiration of the 60-day period 
that begins on the date your reaffirmation agreement is filed 
with the court, whichever occurs later. To rescind (cancel) 
your reaffirmation agreement, you must notify the creditor that 
your reaffirmation agreement is rescinded (or canceled).
    ``What are your obligations if you reaffirm the debt? A 
reaffirmed debt remains your personal legal obligation. It is 
not discharged in your bankruptcy case. That means that if you 
default on your reaffirmed debt after your bankruptcy case is 
over, your creditor may be able to take your property or your 
wages. Otherwise, your obligations will be determined by the 
reaffirmation agreement which may have changed the terms of the 
original agreement. For example, if you are reaffirming an open 
end credit agreement, the creditor may be permitted by that 
agreement or applicable law to change the terms of that 
agreement in the future under certain conditions.
    ``Are you required to enter into a reaffirmation agreement 
by any law? No, you are not required to reaffirm a debt by any 
law. Only agree to reaffirm a debt if it is in your best 
interest. Be sure you can afford the payments you agree to 
make.
    ``What if your creditor has a security interest or lien? 
Your bankruptcy discharge does not eliminate any lien on your 
property. A `lien' is often referred to as a security interest, 
deed of trust, mortgage or security deed. Even if you do not 
reaffirm and your personal liability on the debt is discharged, 
because of the lien your creditor may still have the right to 
take the security property if you do not pay the debt or 
default on it. If the lien is on an item of personal property 
that is exempt under your State's law or that the trustee has 
abandoned, you may be able to redeem the item rather than 
reaffirm the debt. To redeem, you make a single payment to the 
creditor equal to the current value of the security property, 
as agreed by the parties or determined by the court.''.
            (ii) In the case of a reaffirmation under 
        subsection (m)(2), numbered paragraph 6 in the 
        disclosures required by clause (i) of this subparagraph 
        shall read as follows:
            ``6. If you were represented by an attorney during 
        the negotiation of your reaffirmation agreement, your 
        reaffirmation agreement becomes effective upon filing 
        with the court.''.
    (4) The form of such agreement required under this 
paragraph shall consist of the following:
    ``Part B: Reaffirmation Agreement. I (we) agree to reaffirm 
the debts arising under the credit agreement described below.
    ``Brief description of credit agreement:
    ``Description of any changes to the credit agreement made 
as part of this reaffirmation agreement:
    ``Signature:                    Date:
    ``Borrower:
    ``Co-borrower, if also reaffirming these debts:
    ``Accepted by creditor:
    ``Date of creditor acceptance:''.
    (5) The declaration shall consist of the following:
            (A) The following certification:
    ``Part C: Certification by Debtor's Attorney (If Any).
    ``I hereby certify that (1) this agreement represents a 
fully informed and voluntary agreement by the debtor; (2) this 
agreement does not impose an undue hardship on the debtor or 
any dependent of the debtor; and (3) I have fully advised the 
debtor of the legal effect and consequences of this agreement 
and any default under this agreement.
    ``Signature of Debtor's Attorney:      Date:''.
            (B) If a presumption of undue hardship has been 
        established with respect to such agreement, such 
        certification shall state that in the opinion of the 
        attorney, the debtor is able to make the payment.
    (C) In the case of a reaffirmation agreement under 
subsection (m)(2), subparagraph (B) is not applicable.
    (6)(A) The statement in support of such agreement, which 
the debtor shall sign and date prior to filing with the court, 
shall consist of the following:
    ``Part D: Debtor's Statement in Support of Reaffirmation 
Agreement.
    ``1. I believe this reaffirmation agreement will not impose 
an undue hardship on my dependents or me. I can afford to make 
the payments on the reaffirmed debt because my monthly income 
(take home pay plus any other income received) is $___, and my 
actual current monthly expenses including monthly payments on 
post-bankruptcy debt and other reaffirmation agreements total 
$___, leaving $___ to make the required payments on this 
reaffirmed debt. I understand that if my income less my monthly 
expenses does not leave enough to make the payments, this 
reaffirmation agreement is presumed to be an undue hardship on 
me and must be reviewed by the court. However, this presumption 
may be overcome if I explain to the satisfaction of the court 
how I can afford to make the payments here: ___.
    ``2. I received a copy of the Reaffirmation Disclosure 
Statement in Part A and a completed and signed reaffirmation 
agreement.''.
    (B) Where the debtor is represented by an attorney and is 
reaffirming a debt owed to a creditor defined in section 
19(b)(1)(A)(iv) of the Federal Reserve Act, the statement of 
support of the reaffirmation agreement, which the debtor shall 
sign and date prior to filing with the court, shall consist of 
the following:
    ``I believe this reaffirmation agreement is in my financial 
interest. I can afford to make the payments on the reaffirmed 
debt. I received a copy of the Reaffirmation Disclosure 
Statement in Part A and a completed and signed reaffirmation 
agreement.''.
    (7) The motion that may be used if approval of such 
agreement by the court is required in order for it to be 
effective, shall be signed and dated by the movant and shall 
consist of the following:
    ``Part E: Motion for Court Approval (To be completed only 
if the debtor is not represented by an attorney.). I (we), the 
debtor(s), affirm the following to be true and correct:
    ``I am not represented by an attorney in connection with 
this reaffirmation agreement.
    ``I believe this reaffirmation agreement is in my best 
interest based on the income and expenses I have disclosed in 
my Statement in Support of this reaffirmation agreement, and 
because (provide any additional relevant reasons the court 
should consider):
    ``Therefore, I ask the court for an order approving this 
reaffirmation agreement.''.
    (8) The court order, which may be used to approve such 
agreement, shall consist of the following:
    ``Court Order: The court grants the debtor's motion and 
approves the reaffirmation agreement described above.''.
    (l) Notwithstanding any other provision of this title the 
following shall apply:
            (1) A creditor may accept payments from a debtor 
        before and after the filing of an agreement of the kind 
        specified in subsection (c) with the court.
            (2) A creditor may accept payments from a debtor 
        under such agreement that the creditor believes in good 
        faith to be effective.
            (3) The requirements of subsections (c)(2) and (k) 
        shall be satisfied if disclosures required under those 
        subsections are given in good faith.
    (m)(1) Until 60 days after an agreement of the kind 
specified in subsection (c) is filed with the court (or such 
additional period as the court, after notice and a hearing and 
for cause, orders before the expiration of such period), it 
shall be presumed that such agreement is an undue hardship on 
the debtor if the debtor's monthly income less the debtor's 
monthly expenses as shown on the debtor's completed and signed 
statement in support of such agreement required under 
subsection (k)(6)(A) is less than the scheduled payments on the 
reaffirmed debt. This presumption shall be reviewed by the 
court. The presumption may be rebutted in writing by the debtor 
if the statement includes an explanation that identifies 
additional sources of funds to make the payments as agreed upon 
under the terms of such agreement. If the presumption is not 
rebutted to the satisfaction of the court, the court may 
disapprove such agreement. No agreement shall be disapproved 
without notice and a hearing to the debtor and creditor, and 
such hearing shall be concluded before the entry of the 
debtor's discharge.
    (2) This subsection does not apply to reaffirmation 
agreements where the creditor is a credit union, as defined in 
section 19(b)(1)(A)(iv) of the Federal Reserve Act.

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

Sec. 527. Disclosures

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

Sec. 528. Requirements for debt relief agencies

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

                       SUBCHAPTER III--THE ESTATE

Sec. 541. Property of the estate

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

           *       *       *       *       *       *       *

            (4) any interest of the debtor in liquid or gaseous 
        hydrocarbons to the extent that--
                    (A)  * * *
                    (B)(i)  * * *
                    (ii) but for the operation of this 
                paragraph, the estate could include the 
                interest referred to in clause (i) only by 
                virtue of section 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 the filing of the petition in a 
        case under this title, but--
                    (A) only if the designated beneficiary of 
                such account was a child, stepchild, 
                grandchild, or stepgrandchild of the debtor for 
                the taxable year for which funds were placed in 
                such account;
                    (B) only to the extent that such funds--
                            (i) are not pledged or promised to 
                        any entity in connection with any 
                        extension of credit; and
                            (ii) are not excess contributions 
                        (as described in section 4973(e) of the 
                        Internal Revenue Code of 1986); and
                    (C) in the case of funds placed in all such 
                accounts having the same designated beneficiary 
                not earlier than 720 days nor later than 365 
                days before such date, only so much of such 
                funds as does not exceed $5,000;
            (6) funds used to purchase a tuition credit or 
        certificate or contributed to an account in accordance 
        with section 529(b)(1)(A) of the Internal Revenue Code 
        of 1986 under a qualified State tuition program (as 
        defined in section 529(b)(1) of such Code) not later 
        than 365 days before the date of the filing of the 
        petition in a case under this title, but--
                    (A) only if the designated beneficiary of 
                the amounts paid or contributed to such tuition 
                program was a child, stepchild, grandchild, or 
                stepgrandchild of the debtor for the taxable 
                year for which funds were paid or contributed;
                    (B) with respect to the aggregate amount 
                paid or contributed to such program having the 
                same designated beneficiary, only so much of 
                such amount as does not exceed the total 
                contributions permitted under section 529(b)(7) 
                of such Code with respect to such beneficiary, 
                as adjusted beginning on the date of the filing 
                of the petition in a case under this title by 
                the annual increase or decrease (rounded to the 
                nearest tenth of 1 percent) in the education 
                expenditure category of the Consumer Price 
                Index prepared by the Department of Labor; and
                    (C) in the case of funds paid or 
                contributed to such program having the same 
                designated beneficiary not earlier than 720 
                days nor later than 365 days before such date, 
                only so much of such funds as does not exceed 
                $5,000;
            (7) any amount--
                    (A) withheld by an employer from the wages 
                of employees for payment as contributions--
                            (i) to--
                                    (I) an employee benefit 
                                plan that is subject to title I 
                                of the Employee Retirement 
                                Income Security Act of 1974 or 
                                under an employee benefit plan 
                                which is a governmental plan 
                                under section 414(d) of the 
                                Internal Revenue Code of 1986;
                                    (II) a deferred 
                                compensation plan under section 
                                457 of the Internal Revenue 
                                Code of 1986; or
                                    (III) a tax-deferred 
                                annuity under section 403(b) of 
                                the Internal Revenue Code of 
                                1986;
                        except that such amount under this 
                        subparagraph shall not constitute 
                        disposable income as defined in section 
                        1325(b)(2); or
                            (ii) to a health insurance plan 
                        regulated by State law whether or not 
                        subject to such title; or
                    (B) received by an employer from employees 
                for payment as contributions--
                            (i) to--
                                    (I) an employee benefit 
                                plan that is subject to title I 
                                of the Employee Retirement 
                                Income Security Act of 1974 or 
                                under an employee benefit plan 
                                which is a governmental plan 
                                under section 414(d) of the 
                                Internal Revenue Code of 1986;
                                    (II) a deferred 
                                compensation plan under section 
                                457 of the Internal Revenue 
                                Code of 1986; or
                                    (III) a tax-deferred 
                                annuity under section 403(b) of 
                                the Internal Revenue Code of 
                                1986;
                        except that such amount under this 
                        subparagraph shall not constitute 
                        disposable income, as defined in 
                        section 1325(b)(2); or
                            (ii) to a health insurance plan 
                        regulated by State law whether or not 
                        subject to such title;
            (8) subject to subchapter III of chapter 5, any 
        interest of the debtor in property where the debtor 
        pledged or sold tangible personal property (other than 
        securities or written or printed evidences of 
        indebtedness or title) as collateral for a loan or 
        advance of money given by a person licensed under law 
        to make such loans or advances, where--
                    (A) the tangible personal property is in 
                the possession of the pledgee or transferee;
                    (B) the debtor has no obligation to repay 
                the money, redeem the collateral, or buy back 
                the property at a stipulated price; and
                    (C) neither the debtor nor the trustee have 
                exercised any right to redeem provided under 
                the contract or State law, in a timely manner 
                as provided under State law and section 108(b); 
                or
            [(5)] (9) 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) 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 in section 507(c), and subject to the prior rights of a 
holder of a security interest in such goods or the proceeds 
thereof, the rights and powers of the trustee under sections 
544(a), 545, 547, and 549 are subject to the right of a seller 
of goods that has sold goods to the debtor, in the ordinary 
course of such seller's business, to reclaim such goods if the 
debtor has received such goods while insolvent, within 45 days 
before the date of the commencement of a case under this title, 
but such seller may not reclaim such goods unless such seller 
demands in writing reclamation of such goods--
            (A) not later than 45 days after the date of 
        receipt of such goods by the debtor; or
            (B) not later than 20 days after the date of 
        commencement of the case, if the 45-day period expires 
        after the commencement of the case.
    (2) If a seller of goods fails to provide notice in the 
manner described in paragraph (1), the seller still may assert 
the rights contained in section 503(b)(9).

           *       *       *       *       *       *       *

    (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.
    (f) 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 741 or 761 of 
this title, or settlement payment, as defined in section 741 of 
this title, made by or to a repo participant or financial 
participant, in connection with a repurchase agreement and 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 or 
financial 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)] (h) 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 and subject to the prior rights of 
holders of security interests in such goods or the proceeds of 
such goods, 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.
    (i)(1) Notwithstanding paragraphs (2) and (3) of section 
545, the trustee may not avoid a warehouseman's lien for 
storage, transportation, or other costs incidental to the 
storage and handling of goods.
    (2) The prohibition under paragraph (1) shall be applied in 
a manner consistent with any State statute applicable to such 
lien that is similar to section 7-209 of the Uniform Commercial 
Code, as in effect on the date of enactment of the Bankruptcy 
Abuse Prevention and Consumer Protection Act of 2005, or any 
successor to such section 7-209.
    (j) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), 
and 548(b) the trustee may not avoid a transfer made by or to a 
master netting agreement participant under or in connection 
with any master netting agreement or any individual contract 
covered thereby that is made before the commencement of the 
case, except under section 548(a)(1)(A) and except to the 
extent that the trustee could otherwise avoid such a transfer 
made under an individual contract covered by such master 
netting agreement.

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 schedule between 
the debtor and any creditor of the debtor created by an 
approved nonprofit budget and 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)(1) The trustee may avoid any transfer (including any 
transfer to or for the benefit of an insider under an 
employment contract) of an interest of the debtor in property, 
or any obligation (including any obligation to or for the 
benefit of an insider under an employment contract) incurred by 
the debtor, that was made or incurred on or within [one year] 2 
years before the date of the filing of the petition, if the 
debtor voluntarily or involuntarily--
            (A) * * *

           *       *       *       *       *       *       *

            (B)(i) * * *
            (ii)(I) * * *
            (II) was engaged in business or a transaction, or 
        was about to engage in business or a transaction, for 
        which any property remaining with the debtor was an 
        unreasonably small capital; [or]
            (III) intended to incur, or believed that the 
        debtor would incur, debts that would be beyond the 
        debtor's ability to pay as such debts matured[.]; or
            (IV) made such transfer to or for the benefit of an 
        insider, or incurred such obligation to or for the 
        benefit of an insider, under an employment contract and 
        not in the ordinary course of business.

           *       *       *       *       *       *       *

    (b) The trustee of a partnership debtor may avoid any 
transfer of an interest of the debtor in property, or any 
obligation incurred by the debtor, that was made or incurred on 
or within [one year] 2 years before the date of the filing of 
the petition, to a general partner in the debtor, if the debtor 
was insolvent on the date such transfer was made or such 
obligation was incurred, or became insolvent as a result of 
such transfer or obligation.

           *       *       *       *       *       *       *

    (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 or financial 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 or financial 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.

           *       *       *       *       *       *       *

    (e)(1) In addition to any transfer that the trustee may 
otherwise avoid, the trustee may avoid any transfer of an 
interest of the debtor in property that was made on or within 
10 years before the date of the filing of the petition, if--
            (A) such transfer was made to a self-settled trust 
        or similar device;
            (B) such transfer was by the debtor;
            (C) the debtor is a beneficiary of such trust or 
        similar device; and
            (D) the debtor made such transfer with actual 
        intent to hinder, delay, or defraud any entity to which 
        the debtor was or became, on or after the date that 
        such transfer was made, indebted.
    (2) For the purposes of this subsection, a transfer 
includes a transfer made in anticipation of any money judgment, 
settlement, civil penalty, equitable order, or criminal fine 
incurred by, or which the debtor believed would be incurred 
by--
            (A) any violation of the securities laws (as 
        defined in section 3(a)(47) of the Securities Exchange 
        Act of 1934 (15 U.S.C. 78c(a)(47))), any State 
        securities laws, or any regulation or order issued 
        under Federal securities laws or State securities laws; 
        or
            (B) fraud, deceit, or manipulation in a fiduciary 
        capacity or in connection with the purchase or sale of 
        any security registered under section 12 or 15(d) of 
        the Securities Exchange Act of 1934 (15 U.S.C. 78l and 
        78o(d)) or under section 6 of the Securities Act of 
        1933 (15 U.S.C. 77f).

           *       *       *       *       *       *       *


Sec. 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 property] 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)  * * *
            (2) such claim was transferred, by an entity other 
        than the debtor, to such creditor--
                    (A)  * * *
                    (B)(i)  * * *
                    (ii) while the debtor was insolvent (except 
                for a setoff of a kind described in section 
                362(b)(6), 362(b)(7), 362(b)(17), 362(b)(27), 
                555, 556, 559, 560, or 561); or
            (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)(27), 555, 556, 
                559, 560, or 561).
    (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)(27), 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] 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.] As used in this section, the term ``contractual 
right'' includes a right set forth in a rule or bylaw of a 
derivatives clearing organization (as defined in the Commodity 
Exchange Act), a multilateral clearing organization (as defined 
in the Federal Deposit Insurance Corporation Improvement Act of 
1991), a national securities exchange, a national securities 
association, a securities clearing agency, a contract market 
designated under the Commodity Exchange Act, a derivatives 
transaction execution facility registered under the Commodity 
Exchange Act, or a board of trade (as defined in the Commodity 
Exchange Act), or in a resolution of the governing board 
thereof, and a right, whether or not in writing, arising under 
common law, under law merchant, or by reason of normal business 
practice.

[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] 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,] As used 
in this section, the term ``contractual right'' includes a 
right set forth in a rule or bylaw of a derivatives clearing 
organization (as defined in the Commodity Exchange Act), a 
multilateral clearing organization (as defined in the Federal 
Deposit Insurance Corporation Improvement Act of 1991), a 
national securities exchange, a national securities 
association, a securities clearing agency, a contract market 
designated under the Commodity Exchange Act, a derivatives 
transaction execution facility registered under the Commodity 
Exchange Act, or a board of trade (as defined in the Commodity 
Exchange Act) or in a resolution of the governing board thereof 
and a right, whether or not evidenced in writing, arising under 
common law, under law merchant or by reason of normal business 
practice.

           *       *       *       *       *       *       *


[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 
or financial participant to cause the [liquidation] 
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 or financial 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,] As used in this section, the term 
``contractual right'' includes a right set forth in a rule or 
bylaw of a derivatives clearing organization (as defined in the 
Commodity Exchange Act), a multilateral clearing organization 
(as defined in the Federal Deposit Insurance Corporation 
Improvement Act of 1991), a national securities exchange, a 
national securities association, a securities clearing agency, 
a contract market designated under the Commodity Exchange Act, 
a derivatives transaction execution facility registered under 
the Commodity Exchange Act, or a board of trade (as defined in 
the Commodity Exchange Act) or in a resolution of the governing 
board thereof and a right, whether or not evidenced in writing, 
arising under common law, under law merchant or by reason of 
normal business practice.

[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 or financial 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,] As used in this section, the term 
``contractual right'' includes a right set forth in a rule or 
bylaw of a derivatives clearing organization (as defined in the 
Commodity Exchange Act), a multilateral clearing organization 
(as defined in the Federal Deposit Insurance Corporation 
Improvement Act of 1991), a national securities exchange, a 
national securities association, a securities clearing agency, 
a contract market designated under the Commodity Exchange Act, 
a derivatives transaction execution facility registered under 
the Commodity Exchange Act, or a board of trade (as defined in 
the Commodity Exchange Act) or in a resolution of the governing 
board thereof and a right, whether or not evidenced in writing, 
arising under common law, under law merchant, or by reason of 
normal business practice.

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

    (a) Subject to subsection (b), the exercise of any 
contractual right, because of a condition of the kind specified 
in section 365(e)(1), to cause the termination, liquidation, or 
acceleration of or to offset or net termination values, payment 
amounts, or other transfer obligations arising under or in 
connection with one or more (or the termination, liquidation, 
or acceleration of one or more)--
            (1) securities contracts, as defined in section 
        741(7);
            (2) commodity contracts, as defined in section 
        761(4);
            (3) forward contracts;
            (4) repurchase agreements;
            (5) swap agreements; or
            (6) master netting agreements,
shall not be stayed, avoided, or otherwise limited by operation 
of any provision of this title or by any order of a court or 
administrative agency in any proceeding under this title.
    (b)(1) A party may exercise a contractual right described 
in subsection (a) to terminate, liquidate, or accelerate only 
to the extent that such party could exercise such a right under 
section 555, 556, 559, or 560 for each individual contract 
covered by the master netting agreement in issue.
    (2) If a debtor is a commodity broker subject to subchapter 
IV of chapter 7--
            (A) a party may not net or offset an obligation to 
        the debtor arising under, or in connection with, a 
        commodity contract traded on or subject to the rules of 
        a contract market designated under the Commodity 
        Exchange Act or a derivatives transaction execution 
        facility registered under the Commodity Exchange Act 
        against any claim arising under, or in connection with, 
        other instruments, contracts, or agreements listed in 
        subsection (a) except to the extent that the party has 
        positive net equity in the commodity accounts at the 
        debtor, as calculated under such subchapter; and
            (B) another commodity broker may not net or offset 
        an obligation to the debtor arising under, or in 
        connection with, a commodity contract entered into or 
        held on behalf of a customer of the debtor and traded 
        on or subject to the rules of a contract market 
        designated under the Commodity Exchange Act or a 
        derivatives transaction execution facility registered 
        under the Commodity Exchange Act against any claim 
        arising under, or in connection with, other 
        instruments, contracts, or agreements listed in 
        subsection (a).
    (3) No provision of subparagraph (A) or (B) of paragraph 
(2) shall prohibit the offset of claims and obligations that 
arise under--
            (A) a cross-margining agreement or similar 
        arrangement that has been approved by the Commodity 
        Futures Trading Commission or submitted to the 
        Commodity Futures Trading Commission under paragraph 
        (1) or (2) of section 5c(c) of the Commodity Exchange 
        Act and has not been abrogated or rendered ineffective 
        by the Commodity Futures Trading Commission; or
            (B) any other netting agreement between a clearing 
        organization (as defined in section 761) and another 
        entity that has been approved by the Commodity Futures 
        Trading Commission.
    (c) As used in this section, the term ``contractual right'' 
includes a right set forth in a rule or bylaw of a derivatives 
clearing organization (as defined in the Commodity Exchange 
Act), a multilateral clearing organization (as defined in the 
Federal Deposit Insurance Corporation Improvement Act of 1991), 
a national securities exchange, a national securities 
association, a securities clearing agency, a contract market 
designated under the Commodity Exchange Act, a derivatives 
transaction execution facility registered under the Commodity 
Exchange Act, or a board of trade (as defined in the Commodity 
Exchange Act) or in a resolution of the governing board 
thereof, and a right, whether or not evidenced in writing, 
arising under common law, under law merchant, or by reason of 
normal business practice.
    (d) Any provisions of this title relating to securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements, or master netting agreements shall 
apply in a case under chapter 15, so that enforcement of 
contractual provisions of such contracts and agreements in 
accordance with their terms will not be stayed or otherwise 
limited by operation of any provision of this title or by order 
of a court in any case under this title, and to limit avoidance 
powers to the same extent as in a proceeding under chapter 7 or 
11 of this title (such enforcement not to be limited based on 
the presence or absence of assets of the debtor in the United 
States).

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

    (a) If the trustee rejects a swap agreement, securities 
contract (as defined in section 741), forward contract, 
commodity contract (as defined in section 761), repurchase 
agreement, or master netting agreement pursuant to section 
365(a), or if a forward contract merchant, stockbroker, 
financial institution, securities clearing agency, repo 
participant, financial participant, master netting agreement 
participant, or swap participant liquidates, terminates, or 
accelerates such contract or agreement, damages shall be 
measured as of the earlier of--
            (1) the date of such rejection; or
            (2) the date or dates of such liquidation, 
        termination, or acceleration.
    (b) If there are not any commercially reasonable 
determinants of value as of any date referred to in paragraph 
(1) or (2) of subsection (a), damages shall be measured as of 
the earliest subsequent date or dates on which there are 
commercially reasonable determinants of value.
    (c) For the purposes of subsection (b), if damages are not 
measured as of the date or dates of rejection, liquidation, 
termination, or acceleration, and the forward contract 
merchant, stockbroker, financial institution, securities 
clearing agency, repo participant, financial participant, 
master netting agreement participant, or swap participant or 
the trustee objects to the timing of the measurement of 
damages--
            (1) the trustee, in the case of an objection by a 
        forward contract merchant, stockbroker, financial 
        institution, securities clearing agency, repo 
        participant, financial participant, master netting 
        agreement participant, or swap participant; or
            (2) the forward contract merchant, stockbroker, 
        financial institution, securities clearing agency, repo 
        participant, financial participant, master netting 
        agreement participant, or swap participant, in the case 
        of an objection by the trustee,
has the burden of proving that there were no commercially 
reasonable determinants of value as of such date or dates.

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

     * * * * * * *
[728.  Special tax provisions.]

                 SUBCHAPTER III--STOCKBROKER LIQUIDATION

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

               SUBCHAPTER IV--COMMODITY BROKER LIQUIDATION

     * * * * * * *
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.

           *       *       *       *       *       *       *


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 the debtor there is a claim 
        for a domestic support obligation, provide the 
        applicable notice specified in subsection (c);
            (11) if, at the time of the commencement of the 
        case, the debtor (or any entity designated by the 
        debtor) served as the administrator (as defined in 
        section 3 of the Employee Retirement Income Security 
        Act of 1974) of an employee benefit plan, continue to 
        perform the obligations required of the administrator; 
        and
            (12) use all reasonable and best efforts to 
        transfer patients from a health care business that is 
        in the process of being closed to an appropriate health 
        care business that--
                    (A) is in the vicinity of the health care 
                business that is closing;
                    (B) provides the patient with services that 
                are substantially similar to those provided by 
                the health care business that is in the process 
                of being closed; and
                    (C) maintains a reasonable quality of care.
    (b)(1) With respect to a debtor who is an individual in a 
case under this chapter--
            (A) the United States trustee (or the bankruptcy 
        administrator, if any) shall review all materials filed 
        by the debtor and, not later than 10 days after the 
        date of the first meeting of creditors, file with the 
        court a statement as to whether the debtor's case would 
        be presumed to be an abuse under section 707(b); and
            (B) not later than 5 days after receiving a 
        statement under subparagraph (A), the court shall 
        provide a copy of the statement to all creditors.
    (2) The United States trustee (or bankruptcy administrator, 
if any) shall, not later than 30 days after the date of filing 
a statement under paragraph (1), either file a motion to 
dismiss or convert under section 707(b) or file a statement 
setting forth the reasons the United States trustee (or the 
bankruptcy administrator, if any) does not consider such a 
motion to be appropriate, if the United States trustee (or the 
bankruptcy administrator, if any) determines that the debtor's 
case should be presumed to be an abuse under section 707(b) and 
the product of the debtor's current monthly income, multiplied 
by 12 is not less than--
            (A) in the case of a debtor in a household of 1 
        person, the median family income of the applicable 
        State for 1 earner; or
            (B) in the case of a debtor in a household of 2 or 
        more individuals, the highest median family income of 
        the applicable State for a family of the same number or 
        fewer individuals.
    (c)(1) In a case described in subsection (a)(10) to which 
subsection (a)(10) applies, the trustee shall--
            (A)(i) provide written notice to the holder of the 
        claim described in subsection (a)(10) of such claim and 
        of the right of such holder to use the services of the 
        State child support enforcement agency established 
        under sections 464 and 466 of the Social Security Act 
        for the State in which such holder resides, for 
        assistance in collecting child support during and after 
        the case under this title;
            (ii) include in the notice provided under clause 
        (i) the address and telephone number of such State 
        child support enforcement agency; and
            (iii) include in the notice provided under clause 
        (i) an explanation of the rights of such holder to 
        payment of such claim under this chapter;
            (B)(i) provide written notice to such State child 
        support enforcement agency of such claim; and
            (ii) include in the notice provided under clause 
        (i) the name, address, and telephone number of such 
        holder; and
            (C) at such time as the debtor is granted a 
        discharge under section 727, provide written notice to 
        such holder and to such State child support enforcement 
        agency of--
                    (i) the granting of the discharge;
                    (ii) the last recent known address of the 
                debtor;
                    (iii) the last recent known name and 
                address of the debtor's employer; and
                    (iv) the name of each creditor that holds a 
                claim that--
                            (I) is not discharged under 
                        paragraph (2), (4), or (14A) of section 
                        523(a); or
                            (II) was reaffirmed by the debtor 
                        under section 524(c).
    (2)(A) The holder of a claim described in subsection 
(a)(10) or the State child support enforcement agency of the 
State in which such holder resides may request from a creditor 
described in paragraph (1)(C)(iv) the last known address of the 
debtor.
    (B) Notwithstanding any other provision of law, a creditor 
that makes a disclosure of a last known address of a debtor in 
connection with a request made under subparagraph (A) shall not 
be liable by reason of making such disclosure.

           *       *       *       *       *       *       *


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 (or bankruptcy 
administrator, if any), 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 order 
for relief, for the debtor, the dependents of the debtor, and 
the spouse of the debtor in a joint case, if the spouse is not 
otherwise a dependent. Such expenses shall include reasonably 
necessary health insurance, disability insurance, and health 
savings account expenses for the debtor, the spouse of the 
debtor, or the dependents of the debtor. Notwithstanding any 
other provision of this clause, the monthly expenses of the 
debtor shall not include any payments for debts. In addition, 
the debtor's monthly expenses shall include the debtor's 
reasonably necessary expenses incurred to maintain the safety 
of the debtor and the family of the debtor from family violence 
as identified under section 309 of the Family Violence 
Prevention and Services Act, or other applicable Federal law. 
The expenses included in the debtor's monthly expenses 
described in the preceding sentence shall be kept confidential 
by the court. In addition, if it is demonstrated that it is 
reasonable and necessary, the debtor's monthly expenses may 
also include an additional allowance for food and clothing of 
up to 5 percent of the food and clothing categories as 
specified by the National Standards issued by the Internal 
Revenue Service.
    (II) In addition, the debtor's monthly expenses may 
include, if applicable, the continuation of actual expenses 
paid by the debtor that are reasonable and necessary for care 
and support of an elderly, chronically ill, or disabled 
household member or member of the debtor's immediate family 
(including parents, grandparents, siblings, children, and 
grandchildren of the debtor, the dependents of the debtor, and 
the spouse of the debtor in a joint case who is not a 
dependent) and who is unable to pay for such reasonable and 
necessary expenses.
    (III) In addition, for a debtor eligible for chapter 13, 
the debtor's monthly expenses may include the actual 
administrative expenses of administering a chapter 13 plan for 
the district in which the debtor resides, up to an amount of 10 
percent of the projected plan payments, as determined under 
schedules issued by the Executive Office for United States 
Trustees.
    (IV) In addition, the debtor's monthly expenses may include 
the actual expenses for each dependent child less than 18 years 
of age, not to exceed $1,500 per year per child, to attend a 
private or public elementary or secondary school if the debtor 
provides documentation of such expenses and a detailed 
explanation of why such expenses are reasonable and necessary, 
and why such expenses are not already accounted for in the 
National Standards, Local Standards, or Other Necessary 
Expenses referred to in subclause (I).
    (V) In addition, the debtor's monthly expenses may include 
an allowance for housing and utilities, in excess of the 
allowance specified by the Local Standards for housing and 
utilities issued by the Internal Revenue Service, based on the 
actual expenses for home energy costs if the debtor provides 
documentation of such actual expenses and demonstrates that 
such actual expenses are reasonable and necessary.
    (iii) The debtor's average monthly payments on account of 
secured debts shall be calculated as the sum of--
            (I) the total of all amounts scheduled as 
        contractually due to secured creditors in each month of 
        the 60 months following the date of the petition; and
            (II) any additional payments to secured creditors 
        necessary for the debtor, in filing a plan under 
        chapter 13 of this title, to maintain possession of the 
        debtor's primary residence, motor vehicle, or other 
        property necessary for the support of the debtor and 
        the debtor's dependents, that serves as collateral for 
        secured debts;
divided by 60.
    (iv) The debtor's expenses for payment of all priority 
claims (including priority child support and alimony claims) 
shall be calculated as the total amount of debts entitled to 
priority, divided by 60.
    (B)(i) In any proceeding brought under this subsection, the 
presumption of abuse may only be rebutted by demonstrating 
special circumstances, such as a serious medical condition or a 
call or order to active duty in the Armed Forces, to the extent 
such special circumstances that justify additional expenses or 
adjustments of current monthly income for which there is no 
reasonable alternative.
    (ii) In order to establish special circumstances, the 
debtor shall be required to itemize each additional expense or 
adjustment of income and to provide--
            (I) documentation for such expense or adjustment to 
        income; and
            (II) a detailed explanation of the special 
        circumstances that make such expenses or adjustment to 
        income necessary and reasonable.
    (iii) The debtor shall attest under oath to the accuracy of 
any information provided to demonstrate that additional 
expenses or adjustments to income are required.
    (iv) The presumption of abuse may only be rebutted if the 
additional expenses or adjustments to income referred to in 
clause (i) cause the product of the debtor's current monthly 
income reduced by the amounts determined under clauses (ii), 
(iii), and (iv) of subparagraph (A) when multiplied by 60 to be 
less than the lesser of--
            (I) 25 percent of the debtor's nonpriority 
        unsecured claims, or $6,000, whichever is greater; or
            (II) $10,000.
    (C) As part of the schedule of current income and 
expenditures required under section 521, the debtor shall 
include a statement of the debtor's current monthly income, and 
the calculations that determine whether a presumption arises 
under subparagraph (A)(i), that show how each such amount is 
calculated.
    (D) Subparagraphs (A) through (C) shall not apply, and the 
court may not dismiss or convert a case based on any form of 
means testing, if the debtor is a disabled veteran (as defined 
in section 3741(1) of title 38), and the indebtedness occurred 
primarily during a period during which he or she was--
            (i) on active duty (as defined in section 101(d)(1) 
        of title 10); or
            (ii) performing a homeland defense activity (as 
        defined in section 901(1) of title 32).
    (3) In considering under paragraph (1) whether the granting 
of relief would be an abuse of the provisions of this chapter 
in a case in which the presumption in subparagraph (A)(i) of 
such paragraph does not arise or is rebutted, the court shall 
consider--
            (A) whether the debtor filed the petition in bad 
        faith; or
            (B) the totality of the circumstances (including 
        whether the debtor seeks to reject a personal services 
        contract and the financial need for such rejection as 
        sought by the debtor) of the debtor's financial 
        situation demonstrates abuse.
    (4)(A) The court, on its own initiative or on the motion of 
a party in interest, in accordance with the procedures 
described in rule 9011 of the Federal Rules of Bankruptcy 
Procedure, may order the attorney for the debtor to reimburse 
the trustee for all reasonable costs in prosecuting a motion 
filed under section 707(b), including reasonable attorneys' 
fees, if--
            (i) a trustee files a motion for dismissal or 
        conversion under this subsection; and
            (ii) the court--
                    (I) grants such motion; and
                    (II) finds that the action of the attorney 
                for the debtor in filing a case under this 
                chapter violated rule 9011 of the Federal Rules 
                of Bankruptcy Procedure.
    (B) If the court finds that the attorney for the debtor 
violated rule 9011 of the Federal Rules of Bankruptcy 
Procedure, the court, on its own initiative or on the motion of 
a party in interest, in accordance with such procedures, may 
order--
            (i) the assessment of an appropriate civil penalty 
        against the attorney for the debtor; and
            (ii) the payment of such civil penalty to the 
        trustee, the United States trustee (or the bankruptcy 
        administrator, if any).
    (C) The signature of an attorney on a petition, pleading, 
or written motion shall constitute a certification that the 
attorney has--
            (i) performed a reasonable investigation into the 
        circumstances that gave rise to the petition, pleading, 
        or written motion; and
            (ii) determined that the petition, pleading, or 
        written motion--
                    (I) is well grounded in fact; and
                    (II) is warranted by existing law or a good 
                faith argument for the extension, modification, 
                or reversal of existing law and does not 
                constitute an abuse under paragraph (1).
    (D) The signature of an attorney on the petition shall 
constitute a certification that the attorney has no knowledge 
after an inquiry that the information in the schedules filed 
with such petition is incorrect.
    (5)(A) Except as provided in subparagraph (B) and subject 
to paragraph (6), the court, on its own initiative or on the 
motion of a party in interest, in accordance with the 
procedures described in rule 9011 of the Federal Rules of 
Bankruptcy Procedure, may award a debtor all reasonable costs 
(including reasonable attorneys' fees) in contesting a motion 
filed by a party in interest (other than a trustee or United 
States trustee (or bankruptcy administrator, if any)) under 
this subsection if--
            (i) the court does not grant the motion; and
            (ii) the court finds that--
                    (I) the position of the party that filed 
                the motion violated rule 9011 of the Federal 
                Rules of Bankruptcy Procedure; or
                    (II) the attorney (if any) who filed the 
                motion did not comply with the requirements of 
                clauses (i) and (ii) of paragraph (4)(C), and 
                the motion was made solely for the purpose of 
                coercing a debtor into waiving a right 
                guaranteed to the debtor under this title.
    (B) A small business that has a claim of an aggregate 
amount less than $1,000 shall not be subject to subparagraph 
(A)(ii)(I).
    (C) For purposes of this paragraph--
            (i) the term ``small business'' means an 
        unincorporated business, partnership, corporation, 
        association, or organization that--
                    (I) has fewer than 25 full-time employees 
                as determined on the date on which the motion 
                is filed; and
                    (II) is engaged in commercial or business 
                activity; and
            (ii) the number of employees of a wholly owned 
        subsidiary of a corporation includes the employees of--
                    (I) a parent corporation; and
                    (II) any other subsidiary corporation of 
                the parent corporation.
    (6) Only the judge or United States trustee (or bankruptcy 
administrator, if any) may file a motion under section 707(b), 
if the current monthly income of the debtor, or in a joint 
case, the debtor and the debtor's spouse, as of the date of the 
order for relief, when multiplied by 12, is equal to or less 
than--
            (A) in the case of a debtor in a household of 1 
        person, the median family income of the applicable 
        State for 1 earner;
            (B) in the case of a debtor in a household of 2, 3, 
        or 4 individuals, the highest median family income of 
        the applicable State for a family of the same number or 
        fewer individuals; or
            (C) in the case of a debtor in a household 
        exceeding 4 individuals, the highest median family 
        income of the applicable State for a family of 4 or 
        fewer individuals, plus $525 per month for each 
        individual in excess of 4.
    (7)(A) No judge, United States trustee (or bankruptcy 
administrator, if any), trustee, or other party in interest may 
file a motion under paragraph (2) if the current monthly income 
of the debtor, including a veteran (as that term is defined in 
section 101 of title 38), and the debtor's spouse combined, as 
of the date of the order for relief when multiplied by 12, is 
equal to or less than--
            (i) in the case of a debtor in a household of 1 
        person, the median family income of the applicable 
        State for 1 earner;
            (ii) in the case of a debtor in a household of 2, 
        3, or 4 individuals, the highest median family income 
        of the applicable State for a family of the same number 
        or fewer individuals; or
            (iii) in the case of a debtor in a household 
        exceeding 4 individuals, the highest median family 
        income of the applicable State for a family of 4 or 
        fewer individuals, plus $525 per month for each 
        individual in excess of 4.
    (B) In a case that is not a joint case, current monthly 
income of the debtor's spouse shall not be considered for 
purposes of subparagraph (A) if--
            (i)(I) the debtor and the debtor's spouse are 
        separated under applicable nonbankruptcy law; or
            (II) the debtor and the debtor's spouse are living 
        separate and apart, other than for the purpose of 
        evading subparagraph (A); and
            (ii) the debtor files a statement under penalty of 
        perjury--
                    (I) specifying that the debtor meets the 
                requirement of subclause (I) or (II) of clause 
                (i); and
                    (II) disclosing the aggregate, or best 
                estimate of the aggregate, amount of any cash 
                or money payments received from the debtor's 
                spouse attributed to the debtor's current 
                monthly income.
    (c)(1) In this subsection--
            (A) the term ``crime of violence'' has the meaning 
        given such term in section 16 of title 18; and
            (B) the term ``drug trafficking crime'' has the 
        meaning given such term in section 924(c)(2) of title 
        18.
    (2) Except as provided in paragraph (3), after notice and a 
hearing, the court, on a motion by the victim of a crime of 
violence or a drug trafficking crime, may when it is in the 
best interest of the victim dismiss a voluntary case filed 
under this chapter by a debtor who is an individual if such 
individual was convicted of such crime.
    (3) The court may not dismiss a case under paragraph (2) if 
the debtor establishes by a preponderance of the evidence that 
the filing of a case under this chapter is necessary to satisfy 
a claim for a domestic support obligation.

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

           *       *       *       *       *       *       *


Sec. 722. Redemption

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

           *       *       *       *       *       *       *


Sec. 724. Treatment of certain liens

    (a)  * * *
    (b) Property in which the estate has an interest and that 
is subject to a lien that is not avoidable under this title 
(other than to the extent that there is a properly perfected 
unavoidable tax lien arising in connection with an ad valorem 
tax on real or personal property of the estate) and that 
secures an allowed claim for a tax, or proceeds of such 
property, shall be distributed--
            (1)  * * *
            (2) second, to any holder of a claim of a kind 
        specified in section 507(a)(1) (except that such 
        expenses, other than claims for wages, salaries, or 
        commissions that arise after the date of the filing of 
        the petition, shall be limited to expenses incurred 
        under chapter 7 of this title and shall not include 
        expenses incurred under chapter 11 of this title), 
        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 such property.
    (f) Notwithstanding the exclusion of ad valorem tax liens 
under this section and subject to the requirements of 
subsection (e), the following may be paid from property of the 
estate which secures a tax lien, or the proceeds of such 
property:
            (1) Claims for wages, salaries, and commissions 
        that are entitled to priority under section 507(a)(4).
            (2) Claims for contributions to an employee benefit 
        plan entitled to priority under section 507(a)(5).

           *       *       *       *       *       *       *


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)  * * *
                    (B)(i)  * * *
                    (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[.];
            (11) after filing the petition, the debtor failed 
        to complete an instructional course concerning personal 
        financial management described in section 111, except 
        that this paragraph shall not apply with respect to a 
        debtor who is a person described in section 109(h)(4) 
        or who resides in a district for which the United 
        States trustee (or the bankruptcy administrator, if 
        any) determines that the approved instructional courses 
        are not adequate to service the additional individuals 
        who would otherwise be required to complete such 
        instructional courses under this section (The United 
        States trustee (or the bankruptcy administrator, if 
        any) who makes a determination described in this 
        paragraph shall review such determination not later 
        than 1 year after the date of such determination, and 
        not less frequently than annually thereafter.); or
            (12) the court after notice and a hearing held not 
        more than 10 days before the date of the entry of the 
        order granting the discharge finds that there is 
        reasonable cause to believe that--
                    (A) section 522(q)(1) may be applicable to 
                the debtor; and
                    (B) there is pending any proceeding in 
                which the debtor may be found guilty of a 
                felony of the kind described in section 
                522(q)(1)(A) or liable for a debt of the kind 
                described in section 522(q)(1)(B).

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *


Sec. 752. Customer property

    (a) The trustee shall distribute customer property ratably 
to customers on the basis and to the extent of such customers' 
allowed net equity claims and in priority to all other claims, 
except claims of the kind specified in section [507(a)(1)] 
507(a)(2) of this title that are attributable to the 
administration of such customer property.

           *       *       *       *       *       *       *


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

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

              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, including any guarantee or 
                reimbursement obligation by or to a commodity 
                broker or financial participant in connection 
                with any agreement or transaction referred to 
                in this paragraph, but not to exceed the 
                damages in connection with any such agreement 
                or transaction, measured in accordance with 
                section 562;

           *       *       *       *       *       *       *


Sec. 766. Treatment of customer property

    (a) * * *

           *       *       *       *       *       *       *

    (h) Except as provided in subsection (b) of this section, 
the trustee shall distribute customer property ratably to 
customers on the basis and to the extent of such customers' 
allowed net equity claims, and in priority to all other claims, 
except claims of a kind specified in section [507(a)(1)] 
507(a)(2) of this title that are attributable to the 
administration of customer property. Such distribution shall be 
in the form of--
            (1) * * *

           *       *       *       *       *       *       *

    (i) If the debtor is a clearing organization, the trustee 
shall distribute--
            (1) customer property, other than member property, 
        ratably to customers on the basis and to the extent of 
        such customers' allowed net equity claims based on such 
        customers' accounts other than proprietary accounts, 
        and in priority to all other claims, except claims of a 
        kind specified in section [507(a)(1)] 507(a)(2) of this 
        title that are attributable to the administration of 
        such customer property; and
            (2) member property ratably to customers on the 
        basis and to the extent of such customers' allowed net 
        equity claims based on such customers' proprietary 
        accounts, and in priority to all other claims, except 
        claims of a kind specified in section [507(a)(1)] 
        507(a)(2) of this title that are attributable to the 
        administration of member property or customer property.

           *       *       *       *       *       *       *


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)] 507(a)(2), 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).

           *       *       *       *       *       *       *


SUBCHAPTER III--THE PLAN

           *       *       *       *       *       *       *


Sec. 943. Confirmation

    (a) * * *
    (b) The court shall confirm the plan if--
            (1) * * *

           *       *       *       *       *       *       *

            (5) except to the extent that the holder of a 
        particular claim has agreed to a different treatment of 
        such claim, the plan provides that on the effective 
        date of the plan each holder of a claim of a kind 
        specified in section [507(a)(1)] 507(a)(2) of this 
        title will receive on account of such claim cash equal 
        to the allowed amount of such claim;

           *       *       *       *       *       *       *


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.

           *       *       *       *       *       *       *


SUBCHAPTER I--OFFICERS AND ADMINISTRATION

           *       *       *       *       *       *       *


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

    (a)(1)  * * *

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

    (e) The United States trustee shall move for the 
appointment of a trustee under subsection (a) if there are 
reasonable grounds to suspect that current members of the 
governing body of the debtor, the debtor's chief executive or 
chief financial officer, or members of the governing body who 
selected the debtor's chief executive or chief financial 
officer, participated in actual fraud, dishonesty, or criminal 
conduct in the management of the debtor or the debtor's public 
financial reporting.

Sec. 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) of 
        this title;]
            (1) perform the duties of the trustee, as specified 
        in paragraphs (2), (5), (7), (8), (9), (10), (11), and 
        (12) of section 704;

           *       *       *       *       *       *       *

            (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 the debtor there is a claim 
        for a domestic support obligation, provide the 
        applicable notice specified in subsection (c).

           *       *       *       *       *       *       *

    (c)(1) In a case described in subsection (a)(8) to which 
subsection (a)(8) applies, the trustee shall--
            (A)(i) provide written notice to the holder of the 
        claim described in subsection (a)(8) of such claim and 
        of the right of such holder to use the services of the 
        State child support enforcement agency established 
        under sections 464 and 466 of the Social Security Act 
        for the State in which such holder resides, for 
        assistance in collecting child support during and after 
        the case under this title; and
            (ii) include in the notice required by clause (i) 
        the address and telephone number of such State child 
        support enforcement agency;
            (B)(i) provide written notice to such State child 
        support enforcement agency of such claim; and
            (ii) include in the notice required by clause (i) 
        the name, address, and telephone number of such holder; 
        and
            (C) at such time as the debtor is granted a 
        discharge under section 1141, provide written notice to 
        such holder and to such State child support enforcement 
        agency of--
                    (i) the granting of the discharge;
                    (ii) the last recent known address of the 
                debtor;
                    (iii) the last recent known name and 
                address of the debtor's employer; and
                    (iv) the name of each creditor that holds a 
                claim that--
                            (I) is not discharged under 
                        paragraph (2), (4), or (14A) of section 
                        523(a); or
                            (II) was reaffirmed by the debtor 
                        under section 524(c).
    (2)(A) The holder of a claim described in subsection (a)(8) 
or the State child enforcement support agency of the State in 
which such holder resides may request from a creditor described 
in paragraph (1)(C)(iv) the last known address of the debtor.
    (B) Notwithstanding any other provision of law, a creditor 
that makes a disclosure of a last known address of a debtor in 
connection with a request made under subparagraph (A) shall not 
be liable by reason of making such disclosure.

           *       *       *       *       *       *       *


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, absent unusual circumstances specifically 
identified by the court that establish that the requested 
conversion or dismissal is not in the best interests of 
creditors and the estate, the court shall convert a case under 
this chapter to a case under chapter 7 or dismiss a case under 
this chapter, whichever is in the best interests of creditors 
and the estate, if the movant establishes cause.
    (2) The relief provided in paragraph (1) shall not be 
granted absent unusual circumstances specifically identified by 
the court that establish that such relief is not in the best 
interests of creditors and the estate, if the debtor or another 
party in interest objects and establishes that--
            (A) there is a reasonable likelihood that a plan 
        will be confirmed within the timeframes established in 
        sections 1121(e) and 1129(e) of this title, or if such 
        sections do not apply, within a reasonable period of 
        time; and
            (B) the grounds for granting such relief include an 
        act or omission of the debtor other than under 
        paragraph (4)(A)--
                    (i) for which there exists a reasonable 
                justification for the act or omission; and
                    (ii) that will be cured within a reasonable 
                period of time fixed by the court.
    (3) The court shall commence the hearing on a motion under 
this subsection not later than 30 days after filing of the 
motion, and shall decide the motion not later than 15 days 
after commencement of such hearing, unless the movant expressly 
consents to a continuance for a specific period of time or 
compelling circumstances prevent the court from meeting the 
time limits established by this paragraph.
    (4) For purposes of this subsection, the term ``cause'' 
includes--
            (A) substantial or continuing loss to or diminution 
        of the estate and the absence of a reasonable 
        likelihood of rehabilitation;
            (B) gross mismanagement of the estate;
            (C) failure to maintain appropriate insurance that 
        poses a risk to the estate or to the public;
            (D) unauthorized use of cash collateral 
        substantially harmful to 1 or more creditors;
            (E) failure to comply with an order of the court;
            (F) unexcused failure to satisfy timely any filing 
        or reporting requirement established by this title or 
        by any rule applicable to a case under this chapter;
            (G) failure to attend the meeting of creditors 
        convened under section 341(a) or an examination ordered 
        under rule 2004 of the Federal Rules of Bankruptcy 
        Procedure without good cause shown by the debtor;
            (H) failure timely to provide information or attend 
        meetings reasonably requested by the United States 
        trustee (or the bankruptcy administrator, if any);
            (I) failure timely to pay taxes owed after the date 
        of the order for relief or to file tax returns due 
        after the date of the order for relief;
            (J) failure to file a disclosure statement, or to 
        file or confirm a plan, within the time fixed by this 
        title or by order of the court;
            (K) failure to pay any fees or charges required 
        under chapter 123 of title 28;
            (L) revocation of an order of confirmation under 
        section 1144;
            (M) inability to effectuate substantial 
        consummation of a confirmed plan;
            (N) material default by the debtor with respect to 
        a confirmed plan;
            (O) termination of a confirmed plan by reason of 
        the occurrence of a condition specified in the plan; 
        and
            (P) failure of the debtor to pay any domestic 
        support obligation that first becomes payable after the 
        date of the filing of the petition.

           *       *       *       *       *       *       *


Sec. 1114. Payment of insurance benefits to retired employees

    (a)  * * *

           *       *       *       *       *       *       *

    (d) The court, upon a motion by any party in interest, and 
after notice and a hearing, shall [appoint] order the 
appointment of a committee of retired employees if the debtor 
seeks to modify or not pay the retiree benefits or if the court 
otherwise determines that it is appropriate, to serve as the 
authorized representative, under this section, of those persons 
receiving any retiree benefits not covered by a collective 
bargaining agreement. The United States trustee shall appoint 
any such committee.

           *       *       *       *       *       *       *

    (l) If the debtor, during the 180-day period ending on the 
date of the filing of the petition--
            (1) modified retiree benefits; and
            (2) was insolvent on the date such benefits were 
        modified;
the court, on motion of a party in interest, and after notice 
and a hearing, shall issue an order reinstating as of the date 
the modification was made, such benefits as in effect 
immediately before such date unless the court finds that the 
balance of the equities clearly favors such modification.
    [(l)] (m) This section shall not apply to any retiree, or 
the spouse or dependents of such retiree, if such retiree's 
gross income for the twelve months preceding the filing of the 
bankruptcy petition equals or exceeds $250,000, unless such 
retiree can demonstrate to the satisfaction of the court that 
he is unable to obtain health, medical, life, and disability 
coverage for himself, his spouse, and his dependents who would 
otherwise be covered by the employer's insurance plan, 
comparable to the coverage provided by the employer on the day 
before the filing of a petition under this title.

Sec. 1115. Property of the estate

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

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

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

                        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 a hearing; or
                    (B) the court, for cause, orders otherwise;
            (2) the plan and a disclosure statement (if any) 
        shall be filed not later than 300 days after the date 
        of the order for relief; and
            (3) the time periods specified in paragraphs (1) 
        and (2), and the time fixed in section 1129(e) within 
        which the plan shall be confirmed, may be extended only 
        if--
                    (A) the debtor, after providing notice to 
                parties in interest (including the United 
                States trustee), demonstrates by a 
                preponderance of the evidence that it is more 
                likely than not that the court will confirm a 
                plan within a reasonable period of time;
                    (B) a new deadline is imposed at the time 
                the extension is granted; and
                    (C) the order extending time is signed 
                before the existing deadline has expired.

           *       *       *       *       *       *       *


Sec. 1123. Contents of plan

    (a) Notwithstanding any otherwise applicable nonbankruptcy 
law, a plan shall--
            (1) designate, subject to section 1122 of this 
        title, classes of claims, other than claims of a kind 
        specified in section [507(a)(1), 507(a)(2)] 507(a)(2), 
        507(a)(3), or 507(a)(8) of this title, and classes of 
        interests;

           *       *       *       *       *       *       *

            (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 in which the debtor is an individual, 
        provide for the payment to creditors under the plan of 
        all or such portion of earnings from personal services 
        performed by the debtor after the commencement of the 
        case or other future income of the debtor as is 
        necessary for the execution of the plan.

           *       *       *       *       *       *       *


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) 
                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 nonresidential real 
                property lease subject to section 365(b)(1)(A), 
                compensates the holder of such claim or such 
                interest (other than the debtor or an insider) 
                for any actual pecuniary loss incurred by such 
                holder as a result of such failure; and
                    [(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 25 days before 
        the date of the hearing on confirmation of the plan; 
        and
            (C) the hearing on the disclosure statement may be 
        combined with the hearing on confirmation of a plan.
    (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) If the debtor is an individual, the plan may be 
modified at any time after confirmation of the plan but before 
the completion of payments under the plan, whether or not the 
plan has been substantially consummated, upon request of the 
debtor, the trustee, the United States trustee, or the holder 
of an allowed unsecured claim, to--
            (1) increase or reduce the amount of payments on 
        claims of a particular class provided for by the plan;
            (2) extend or reduce the time period for such 
        payments; or
            (3) alter the amount of the distribution to a 
        creditor whose claim is provided for by the plan to the 
        extent necessary to take account of any payment of such 
        claim made other than under the plan.
    (f)(1) Sections 1121 through 1128 and the requirements of 
section 1129 apply to any modification under subsection (a).
    (2) The plan, as modified, shall become the plan only after 
there has been disclosure under section 1125 as the court may 
direct, notice and a hearing, and such modification is 
approved.

           *       *       *       *       *       *       *


Sec. 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) with respect to a claim of a kind 
                specified in section [507(a)(1) or 507(a)(2)] 
                507(a)(2) or 507(a)(3) of this title, on the 
                effective date of the plan, the holder of such 
                claim will receive on account of such claim 
                cash equal to the allowed amount of such claim;
                    (B) with respect to a class of claims of a 
                kind specified in section [507(a)(3)] 
                507(a)(1), 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 
                        order for relief under section 301, 
                        302, or 303; and
                            (iii) in a manner not less 
                        favorable than the most favored 
                        nonpriority unsecured claim provided 
                        for by the plan (other than cash 
                        payments made to a class of creditors 
                        under section 1122(b)); and
                    (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 by statute, to pay a domestic 
        support obligation, the debtor has paid all amounts 
        payable under such order or such statute for such 
        obligation that first become payable after the date of 
        the filing of the petition.
            (15) In a case in which the debtor is an individual 
        and in which the holder of an allowed unsecured claim 
        objects to the confirmation of the plan--
                    (A) the value, as of the effective date of 
                the plan, of the property to be distributed 
                under the plan on account of such claim is not 
                less than the amount of such claim; or
                    (B) the value of the property to be 
                distributed under the plan is not less than the 
                projected disposable income of the debtor (as 
                defined in section 1325(b)(2)) to be received 
                during the 5-year period beginning on the date 
                that the first payment is due under the plan, 
                or during the period for which the plan 
                provides payments, whichever is longer.
            (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 in which the debtor is an 
                individual, the debtor may retain property 
                included in the estate under section 1115, 
                subject to the requirements of subsection 
                (a)(14) of this section.

           *       *       *       *       *       *       *

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

                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 who is an individual from any debt excepted 
from discharge under section 523 of this title.

           *       *       *       *       *       *       *

    (5) In a case in which the debtor is an individual--
            (A) unless after notice and a hearing the court 
        orders otherwise for cause, confirmation of the plan 
        does not discharge any debt provided for in the plan 
        until the court grants a discharge on completion of all 
        payments under the plan;
            (B) at any time after the confirmation of the plan, 
        and after notice and a hearing, the court may grant a 
        discharge to the debtor who has not completed payments 
        under the plan if--
                    (i) the value, as of the effective date of 
                the plan, of property actually distributed 
                under the plan on account of each allowed 
                unsecured claim is not less than the amount 
                that would have been paid on such claim if the 
                estate of the