To amend title 11, United States Code, and for other purposes.
Tuesday, March 16, 1999
Mr. President, I rise today on behalf of myself and my colleague from Maryland, Senator Mikulski, to introduce legislation that is absolutely critical to the administration of justice and the economy in our State of Maryland.
(Presented by the American Bankruptcy Institute)
The following is an excerpt from the Congressional Record, February 24, 1999:
BANKRUPTCY JUDGESHIPS FOR THE DISTRICT OF MARYLAND
- [Begin insert]
Mr. SARBANES. Mr. President, I rise today on behalf of myself and my colleague from Maryland, Senator Mikulski, to introduce legislation that is absolutely critical to the administration of justice and the economy in our State of Maryland. This legislation provides for four additional bankruptcy judges for the federal judicial District of Maryland.
This bill represents only the most recent of our efforts to strengthen Maryland's federal bankruptcy court. Early in the 105th Congress, we introduced legislation adding two additional bankruptcy judges for the District of Maryland, in line with the then-pending request of the Judicial Conference. The House of Representatives followed suit in summer 1997, passing legislation that authorized these two judges, in addition to other new bankruptcy judgeships throughout the country. Last year, the Senate overwhelmingly passed bankruptcy reform legislation that, among other things, authorized these two judgeships, though under the Senate bill the judges were of temporary, rather than permanent, status. This legislation ultimately was not enacted into law, however, and with such inaction the problem facing Maryland's sitting bankruptcy judges has only grown. Maryland remains without the additional judgeships it so desperately needs to make our bankruptcy system work.
Our State's need for additional bankruptcy judges has long since passed the critical stage. Since November 1993, when Maryland last received an additional bankruptcy judge, the number of bankruptcy filings in the State has more than doubled. While the entire nation has witnessed a surge in bankruptcy filings over the past several years, the increase in Maryland has dwarfed the national average increase. Bankruptcy filings in Maryland in the second quarter of 1998 grew at eight times the national rate of increase for that period; for the 12-month period ending June 30, 1998, the rate of increase in Maryland was the tenth greatest of the 90 federal judicial districts in the Nation. The District of Maryland ranks first among federal judicial districts in filings per judge. As noted earlier, each House of Congress authorized two additional bankruptcy judges for Maryland during the 105th Congress. Simply put, however, the problem has outpaced this solution.
The need for the four additional judgeships sought in this legislation becomes even more evident when one considers it in the context of the case-weighting system adopted by the Judicial Conference in 1991 to assess requests for additional bankruptcy judges. Under this system, different types of bankruptcy cases are assigned different degrees of difficulty and overall weighted case-hour goals are established for the judges.
The Judicial Conference begins to consider requests for additional judges when a district's per-judge weighted caseload reaches 1500 hours. The average United States Bankruptcy Judge had a weighted case-hour load of 1429 hours per year for the 12-month period ending June 30, 1998. For that same period, Maryland's bankruptcy judges averaged a weighted case-hour load of 3020 hours--an astounding 211 percent of the national average. Not only do the Maryland figures dwarf the national average; they also dwarf the prior Maryland figures which led to legislation passed by each Houses of Congress authorizing additional judgeships. Indeed, Maryland's overall weighted case load for the 12-month period ending June 30, 1998, represented a 25% increase over its load for the prior 12-month period alone.
I ask my colleagues to consider these telling statistics:
If Maryland were to receive two additional judgeships tomorrow, its per-judge weighted caseload would still be 2013 hours--41 percent greater than the national average last year, and 34 percent greater than the 1500-hour benchmark used by the Judicial Conference to evaluate requests for additional judgeships.
If Maryland were to receive three additional judgeships tomorrow, its per-judge weighted caseload would still be 1725 hours--21 percent more than the national average, and 15 percent greater than the Judicial Conference benchmark.
Only if Maryland were to receive four additional judgeships, as requested in this bill, would the per-judge caseload in Maryland approximate the national average. And even then each Maryland judge would have a caseload of 1510 case-weighted hours--still above the 1429-hour national average, and still above the 1500-hour Judicial Conference benchmark.
The additional judgeships sought in this bill are essential not only for effective judicial administration, but also for Maryland's economy. Bankruptcy laws foster orderly, constructive relationships between debtors and creditors during times of economic difficulty. Their effective and expeditious implementation results in businesses being reorganized, jobs (provided by creditors and debtors) preserved, and debts managed fairly. Overworked bankruptcy courts have a destabilizing effect on this system, and the inevitable delays occasioned by the lack of judges harm creditors and debtors, imperiling Maryland's businesses and the people they employ.
It is expected that bankruptcy reform legislation will be one of the first items on the Senate's agenda now that it has resumed legislative business. Adding judgeships in Maryland's and other bankruptcy courts in need of relief is an essential component of any such reform, given that the legislation we are contemplating will not only not ease the burdens on these courts, but in fact will increase these burdens by imposing new responsibilities on our nation's bankruptcy judges. And even if comprehensive bankruptcy reform fails or is delayed, the current state of affairs facing Maryland's bankruptcy court requires immediate action in the form of adding judges to that court.
In closing let me once again commend the efforts of Maryland's four sitting bankruptcy judges--Chief Judge Paul Mannes and Judges Duncan Keir, James Schneider, and Steve Derby. Their dedication to the administration of justice is especially impressive given the extraordinary burdens placed on them--burdens which the Senate ought to ease at the earliest possible instance.
- [End insert]
Wednesday, February 24, 1999
To amend title 11, United States Code, and for other purposes.
Tuesday, March 16, 1999
To make chapter 12 of title 11, United States Code, permanent, and for other purposes.
Friday, February 12, 1999
To amend certain banking and securities laws with respect to financial contracts.
Tuesday, May 4, 1999
To improve pay and retirement equity for members of the Armed Forces\; and for other purposes.
Thursday, January 21, 1999
To amend title 11, United States Code, to provide for family fishermen, and to make chapter 12 of title 11, United States Code, permanent.
Tuesday, March 23, 1999
Dear Representative Nadler:
Thank you for your letter of March 4, 1999, to the President regarding bankruptcy reform. He has asked me to respond on his behalf. The President appreciates your kind words about the role that he and the First Lady played during last year’s debate on bankruptcy reform. He also appreciates your continued dedication to this issue.
Web posted and Copyright © March 24,
1999, American Bankruptcy Institute.
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
March 23, 1999
The Honorable Jerrold Nadler
Subcommittee on Commercial and Administrative Law
Committee on the Judiciary
U.S. House of Representatives
Washington, DC 20515
Dear Representative Nadler:
Thank you for your letter of March 4, 1999, to the President regarding bankruptcy
reform. He has asked me to respond on his behalf. The President appreciates your kind
words about the role that he and the First Lady played during last year’s debate on
bankruptcy reform. He also appreciates your continued dedication to this issue.
As you know, the President supports responsible bankruptcy reform that is balanced,
would reduce abuses of the bankruptcy system, and would require debtors and creditors
alike to act responsibly. The President was disappointed that the last Congress failed to
produce legislation that he could support. He remains hopeful that bipartisan consultation
and compromise will result in legislation that he can enthusiastically sign this year.
Last year the Administration expressed its strong opposition to the House-passed
version of H.R. 3150. We encouraged passage of the Senate bill "as an important step
toward balanced bankruptcy reform," but noted that the Administration would support
its enactment "only if the essential reforms incorporated by the Senate
managers’ amendment [were] preserved and strengthened and the unbalanced and
arbitrary elements of the current House bill [were] omitted." Although we thought
that the Senate bill could be further improved, we believed that the extraordinary
bipartisan support for the Senate bill was an endorsement of balance and moderation. We
were disappointed that the Conference Report failed to include key provisions of the
Senate bill, thus failing the test of balance. In my letter to Congressional leadership
dated October 9, 1998, I noted that the President’s senior advisors recommended that
the President veto the Conference Report. Our position from last year has not changed.
During this year’s debate, the Administration will continue to encourage Congress
to find an appropriate balance. Among the issues that must be addressed are:
- Access to Chapter 7: Any "means test" imposed should deny access to
Chapter 7 only to those who genuinely have the capacity to repay a portion of their debts
successfully under a Chapter 13 repayment plan. Thus, debtors affected by a means test
must be given a meaningful opportunity to have their specific circumstances considered by
bankruptcy courts with discretion to determine whether they genuinely have the capacity to
repay a portion of their debts. In addition, the time periods and thresholds used in any
means test should be set to ensure that only those debtors with a strong likelihood of
success are denied access to Chapter 7. - Nondischargeable Debts: It is generally inappropriate to make
post-bankruptcy credit card debt a new category of nondischargeable debt. The Bankruptcy
Code makes debts nondischargeable only where there is an overriding public purpose, as
with debts for child support and alimony payments, education loans, tax obligations, or
debts incurred by fraud. We remain skeptical that the current protections against fraud
and debt run-up prior to bankruptcy are ineffective and that the additional debts made
nondischargeable by this bill meet the standard of an overriding public purpose. If new
categories of nondischargeable debt are to be created, however, they should be narrowly
tailored and limited to situations where the debtor is clearly abusing the system, such as
when the debtor: (1) incurred the debt to pay nondischargeable debt with an intent to
avoid the debt in bankruptcy; and/or (2) incurred the debt on the eve of bankruptcy for
goods and services that are not reasonably acquired to support the debtor's household. - Coercive Credit Practices: Particularly if we are to provide new
opportunities for creditors to challenge debtors' use of the bankruptcy system under the
707(b) abuse test, it is imperative that we adequately limit prevalent abusive creditor
practices such as coercive reaffirmations and violations of the automatic stay. While the
Senate bill initially took laudable steps in this direction, the Conference Report rolled
back existing consumer protections by denying consumers an effective means for remedying
the harm from such practices and eliminating the current authorization for penalties for
intentional violation of debtor rights. - Consumer Information and Protection: The challenge posed by the
unprecedented level of bankruptcy filings requires us to ask greater responsibility of
both debtors and creditors. Credit card companies must give consumers more and better
information so that they can understand and better manage their debts. - Homestead Exemptions: At the same time that we are creating a system
that will deny certain moderate-income Americans access to the traditional "fresh
start," we should also close the loopholes that allow the wealthy to shield hundreds
of thousands of dollars of wealth from their creditors.
We look forward to working with you and your colleagues on both sides of the aisle to
address these and other important concerns and to produce responsible, balanced bankruptcy
reform.
Sincerely,
Jacob J. Lew
Director
Identical Letter Sent to the Honorable John Conyers, Jr.
Tuesday, March 23, 1999
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE\; TABLE OF CONTENTS.
(a) Short Title: This Act may be cited as the `Consumer Bankruptcy Reform Act of 1999'.
(b) Table of Contents: The table of contents for this Act is as follows:
Web posted © May 4,
1999, American Bankruptcy Institute.
S.
945
Introduced May 3, 1999
by Sens. Richard Dubrin (D-Ill.), Patrick Leahy (D-Vt.),
Ted Kennedy (D-Mass.), Russ Feingold (D-Wisc.) and Paul Sarbanes
(D-Md.)
Be it enacted by the Senate and House of Representatives
of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title: This Act may be cited as the `Consumer Bankruptcy
Reform Act of 1999'.
(b) Table of Contents: The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I--NEEDS-BASED BANKRUPTCY
Sec. 101. Conversion.
Sec. 102. Dismissal or conversion.
TITLE II--ENHANCED PROCEDURAL PROTECTIONS FOR
CONSUMERS
Sec. 201. Allowance of claims or interests.
Sec. 202. Exceptions to discharge.
Sec. 203. Effect of discharge.
Sec. 204. Automatic stay.
Sec. 205. Discharge.
Sec. 206. Discouraging predatory lending practices.
Sec. 207. Enhanced disclosure for credit extensions secured by dwelling.
Sec. 208. Dual-use debit card.
Sec. 209. Enhanced disclosures under an open end credit plan.
Sec. 210. Violations of the automatic stay.
Sec. 211. Discouraging abusive reaffirmation practices.
Sec. 212. Sense of Congress regarding the homestead exemption.
Sec. 213. Encouraging creditworthiness.
Sec. 214. Treasury Department study regarding security interests under
an open end credit
plan.
TITLE III--IMPROVED PROCEDURES FOR EFFICIENT
ADMINISTRATION OF THE BANKRUPTCY SYSTEM
Sec. 301. Notice of alternatives.
Sec. 302. Fair treatment of secured creditors under chapter 13.
Sec. 303. Discouragement of bad faith repeat filings.
Sec. 304. Timely filing and confirmation of plans under chapter 13.
Sec. 305. Application of the codebtor stay only when the stay protects
the debtor.
Sec. 306. Improved bankruptcy statistics.
Sec. 307. Audit procedures.
Sec. 308. Creditor representation at first meeting of creditors.
Sec. 309. Fair notice for creditors in chapter 7 and 13 cases.
Sec. 310. Stopping abusive conversions from chapter 13.
Sec. 311. Prompt relief from stay in individual cases.
Sec. 312. Dismissal for failure to timely file schedules or provide
required information.
Sec. 313. Adequate time for preparation for a hearing on confirmation of
the plan.
Sec. 314. Discharge under chapter 13.
Sec. 315. Nondischargeable debts.
Sec. 316. Credit extensions on the eve of bankruptcy presumed
nondischargeable.
Sec. 317. Definition of household goods and antiques.
Sec. 318. Relief from stay when the debtor does not complete intended
surrender of
consumer debt collateral.
Sec. 319. Adequate protection of lessors and purchase money secured
creditors.
Sec. 320. Limitation.
Sec. 321. Miscellaneous improvements.
Sec. 322. Bankruptcy judgeships.
Sec. 323. Definition of domestic support obligation.
Sec. 324. Priorities for claims for domestic support obligations.
Sec. 325. Requirements to obtain confirmation and discharge in cases
involving domestic
support obligations.
Sec. 326. Exceptions to automatic stay in domestic support obligation
proceedings.
Sec. 327. Nondischargeability of certain debts for alimony, maintenance,
and support.
Sec. 328. Continued liability of property.
Sec. 329. Protection of domestic support claims against preferential
transfer motions.
Sec. 330. Protection of retirement savings in bankruptcy.
Sec. 331. Additional amendments to title 11, United States Code.
Sec. 332. Debt limit increase.
Sec. 333. Elimination of requirement that family farmer and spouse
receive over 50 percent
of income from farming
operation in year prior to bankruptcy.
Sec. 334. Prohibition of retroactive assessment of disposable income.
Sec. 335. Amendment to section 1325 of title 11, United States Code.
Sec. 336. Protection of savings earmarked for the postsecondary
education of children.
TITLE IV--FINANCIAL INSTRUMENTS
Sec. 401. Bankruptcy Code amendments.
Sec. 402. Damage measure.
Sec. 403. Asset-backed securitizations.
Sec. 404. Prohibition on certain actions for failure to incur finance
charges.
Sec. 405. Fees arising from certain ownership interests.
Sec. 406. Bankruptcy fees.
Sec. 407. Applicability.
TITLE V--ANCILLARY AND OTHER CROSS-BORDER CASES
Sec. 501. Amendment to add chapter 6 to title 11, United States Code.
Sec. 502. Amendments to other chapters in title 11, United States Code.
TITLE VI--MISCELLANEOUS
Sec. 601. Executory contracts and unexpired leases.
Sec. 602. Expedited appeals of bankruptcy cases to courts of appeals.
Sec. 603. Creditors and equity security holders committees.
Sec. 604. Repeal of sunset provision.
Sec. 605. Cases ancillary to foreign proceedings.
Sec. 606. Limitation.
Sec. 607. Amendment to section 546 of title 11, United States Code.
Sec. 608. Amendment to section 330(a) of title 11, United States Code.
TITLE VII--TECHNICAL CORRECTIONS
Sec. 701. Adjustment of dollar amounts.
Sec. 702. Extension of time.
Sec. 703. Who may be a debtor.
Sec. 704. Penalty for persons who negligently or fraudulently prepare
bankruptcy
petitions.
Sec. 705. Limitation on compensation of professional persons.
Sec. 706. Special tax provisions.
Sec. 707. Effect of conversion.
Sec. 708. Automatic stay.
Sec. 709. Allowance of administrative expenses.
Sec. 710. Priorities.
Sec. 711. Exemptions.
Sec. 712. Exceptions to discharge.
Sec. 713. Effect of discharge.
Sec. 714. Protection against discriminatory treatment.
Sec. 715. Property of the estate.
Sec. 716. Preferences.
Sec. 717. Postpetition transactions.
Sec. 718. Technical amendment.
Sec. 719. Disposition of property of the estate.
Sec. 720. General provisions.
Sec. 721. Appointment of elected trustee.
Sec. 722. Abandonment of railroad line.
Sec. 723. Contents of plan.
Sec. 724. Discharge under chapter 12.
Sec. 725. Extensions.
Sec. 726. Bankruptcy cases and proceedings.
Sec. 727. Knowing disregard of bankruptcy law or rule.
Sec. 728. Rolling stock equipment.
Sec. 729. Curbing abusive filings.
Sec. 730. Study of operation of title 11 of the United States Code with
respect to small
businesses.
Sec. 731. Transfers made by nonprofit charitable corporations.
Sec. 732. Effective date; application of amendments.
TITLE I--NEEDS-BASED BANKRUPTCY
SEC. 101. CONVERSION.
Section 706(c) of title 11, United States Code, is amended by inserting
`or consents to'
after `requests'.
SEC. 102. DISMISSAL OR CONVERSION.
(a) In General: Section 707 of title 11, United States Code, is
amended--
(1) by striking the section heading and inserting the following:
`707. Dismissal of a case or conversion to a case under chapter 13';
and
(2) in subsection (b)--
(A) by inserting `(1)' after `(b)';
(B) in paragraph (1), as redesignated by subparagraph (A) of this
paragraph--
(i) in the first sentence--
(I) by striking `but not' and inserting `or';
(II) by inserting `, or, with the debtor's consent, convert such a case
to a case under
chapter 13,' after `consumer debts'; and
(III) by striking `substantial abuse' and inserting `abuse'; and
(ii) by striking `There shall be a presumption in favor of granting the
relief requested
by the debtor.'; and
(C) by adding at the end the following:
`(2) In considering under paragraph (1) whether the granting of relief
would be an abuse
of the provisions of this chapter, the
court shall consider whether--
`(A) under section 1325(b)(1), on the basis of the current income of the
debtor, the
debtor could pay an amount greater than or
equal to 30 percent of unsecured claims that are not considered to be
priority claims (as
determined under subchapter I of
chapter 5); or
`(B) the debtor filed a petition for the relief in bad faith.
`(3)(A) If a panel trustee appointed under section 586(a)(1) of title 28
brings a motion
for dismissal or conversion under this
subsection and the court grants that motion and finds that the action of
the counsel for
the debtor in filing under this chapter was
not substantially justified, the court shall order the counsel for the
debtor to reimburse
the trustee for all reasonable costs in
prosecuting the motion, including reasonable attorneys' fees.
`(B) If the court finds that the attorney for the debtor violated Rule
9011, at a minimum,
the court shall order--
`(i) the assessment of an appropriate civil penalty against the counsel
for the debtor;
and
`(ii) the payment of the civil penalty to the panel trustee or the
United States trustee.
`(C) In the case of a petition referred to in subparagraph (B), the
signature of an
attorney shall constitute a certificate that the
attorney has--
`(i) performed a reasonable investigation into the circumstances that
gave rise to the
petition; and
`(ii) determined that the petition--
`(I) is well grounded in fact; and
`(II) is warranted by existing law or a good faith argument for the
extension,
modification, or reversal of existing law and does
not constitute an abuse under paragraph (1).
`(4)(A) Except as provided in subparagraph (B) and paragraph (5), the
court may award a
debtor all reasonable costs in
contesting a motion brought by a party in interest (other than a panel
trustee or United
States trustee) under this subsection
(including reasonable attorneys' fees) if--
`(i) the court does not grant the motion; and
`(ii) the court finds that--
`(I) the position of the party that brought the motion was not
substantially justified; or
`(II) the party brought the motion solely for the purpose of coercing a
debtor into
waiving a right guaranteed to the debtor under
this title.
`(B) A party in interest that has a claim of an aggregate amount less
than $1,000 shall
not be subject to subparagraph (A).
`(5)(A) Only the judge, United States trustee, bankruptcy administrator,
or panel trustee
may bring a motion under this
subsection if the debtor and the debtor's spouse combined, as of the
date of the order for
relief, have current monthly total
income equal to or less than the national median household monthly
income calculated on a
monthly basis for a household of
equal size.
`(B) For purposes of subparagraph (A), for a household of more than 4
individuals, the
median monthly income for that
household shall be--
`(1) the median monthly income of a household of 4 individuals; plus
`(2) $583 for each additional member of that household.'.
(b) Clerical Amendment: The table of sections for chapter 7 of title 11,
United States
Code, is amended by striking the item
relating to section 707 and inserting the following:
`707. Dismissal of a case or conversion to a case under chapter 13.'.
TITLE II--ENHANCED PROCEDURAL PROTECTIONS FOR
CONSUMERS
SEC. 201. ALLOWANCE OF CLAIMS OR INTERESTS.
Section 502 of title 11, United States Code, is amended by adding at the
end the
following:
`(k)(1) The court may award the debtor reasonable attorneys' fees and
costs if, after an
objection is filed by a debtor, the
court--
`(A)(i) disallows the claim; or
`(ii) reduces the claim by an amount greater than 20 percent of the
amount of the initial
claim filed by a party in interest; and
`(B) finds the position of the party filing the claim is not
substantially justified.
`(2) If the court finds that the position of a claimant under this
section is not
substantially justified, the court may, in addition to
awarding a debtor reasonable attorneys' fees and costs under paragraph
(1), award such
damages as may be required by the
equities of the case.'.
SEC. 202. EXCEPTIONS TO DISCHARGE.
Section 523 of title 11, United States Code, is amended--
(1) in subsection (a)(2)(A), by striking `a false representation' and
inserting `a
material false representation upon which the
defrauded person justifiably relied'; and
(2) by striking subsection (d) and inserting the following:
`(d)(1) Subject to paragraph (3), if a creditor requests a determination
of
dischargeability of a consumer debt under this section
and that debt is discharged, the court shall award the debtor reasonable
attorneys' fees
and costs.
`(2) In addition to making an award to a debtor under paragraph (1), if
the court finds
that the position of a creditor in a
proceeding covered under this section is not substantially justified,
the court may award
reasonable attorneys' fees and costs
under paragraph (1) and such damages as may be required by the equities
of the case.
`(3)(A) A creditor may not request a determination of dischargeability
of a consumer debt
under subsection (a)(2) if--
`(i) before the filing of the petition, the debtor made a good faith
effort to negotiate a
reasonable alternative repayment schedule
(including making an offer of a reasonable alternative repayment
schedule); and
`(ii) that creditor refused to negotiate an alternative payment
schedule, and that refusal
was not reasonable.
`(B) For purposes of this paragraph, the debtor shall have the burden of
proof of
establishing that--
`(i) an offer made by that debtor under subparagraph (A)(i) was
reasonable; and
`(ii) the refusal to negotiate by the creditor involved to was not
reasonable.'.
SEC. 203. EFFECT OF DISCHARGE.
Section 524 of title 11, United States Code, is amended by adding at the
end the
following:
`(i) The willful failure of a creditor to credit payments received under
a plan confirmed
under this title (including a plan of
reorganization confirmed under chapter 11) 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).
`(j) An individual who is injured by the failure of a creditor to comply
with the
requirements for a reaffirmation agreement under
subsections (c) and (d), or by any willful violation of the injunction
under subsection
(a)(2), shall be entitled to recover--
`(1) the greater of--
`(A)(i) the amount of actual damages; multiplied by
`(ii) 3; or
`(B) $5,000; and
`(2) costs and attorneys' fees.'.
SEC. 204. AUTOMATIC STAY.
Section 362(h) of title 11, United States Code, is amended to read as
follows:
`(h)(1) An individual who is injured by any willful violation of a stay
provided in this
section shall be entitled to recover--
`(A) actual damages; and
`(B) reasonable costs, including attorneys' fees.
`(2) In addition to recovering actual damages, costs, and attorneys'
fees under paragraph
(1), an individual described in
paragraph (1) may recover punitive damages in appropriate
circumstances.'.
SEC. 205. DISCHARGE.
Section 727 of title 11, United States Code, is amended--
(1) in subsection (c), by adding at the end the following:
`(3)(A) A creditor may not request a determination of dischargeability
of a consumer debt
under subsection (a) if--
`(i) before the filing of the petition, the debtor made a good faith
effort to negotiate a
reasonable alternative repayment schedule
(including making an offer of a reasonable alternative repayment
schedule); and
`(ii) that creditor refused to negotiate an alternative payment
schedule, and that refusal
was not reasonable.
`(B) For purposes of this paragraph, the debtor shall have the burden of
proof of
establishing that--
`(i) an offer made by that debtor under subparagraph (A)(i) was
reasonable; and
`(ii) the refusal to negotiate by the creditor involved to was not
reasonable.'; and
(2) by adding at the end the following:
`(f)(1) The court may award the debtor reasonable attorneys' fees and
costs in any case in
which a creditor files a motion to
deny relief to a debtor under this section and that motion--
`(A) is denied; or
`(B) is withdrawn after the debtor has replied.
`(2) If the court finds that the position of a party filing a motion
under this section is
not substantially justified, the court may
assess against the creditor such damages as may be required by the
equities of the case.'.
SEC. 206. DISCOURAGING PREDATORY LENDING PRACTICES.
Section 502(b) of title 11, United States Code, is amended--
(1) in paragraph (8), by striking `or' at the end;
(2) in paragraph (9), by striking the period at the end and inserting `;
or'; and
(3) by adding at the end the following:
`(10) the claim is based on a secured debt if the creditor has failed to
comply with the
requirements of subsection (a), (b), (c),
(d), (e), (f), (g), (h), or (i) of section 129 of the Truth in Lending
Act (15 U.S.C.
1639).'.
SEC. 207. ENHANCED DISCLOSURE FOR CREDIT EXTENSIONS SECURED BY DWELLING.
(a) Open-End Credit Extensions:
(1) Credit applications: Section 127A(a)(13) of the Truth in Lending Act
(15 U.S.C.
1637a(a)(13)) is amended--
(A) by striking `consultation of tax advisor: A statement that the' and
inserting the
following: `tax deductibility: A statement
that--
`(A) the'; and
(B) by striking the period at the end and inserting the following: `;
and
`(B) in any case in which the extension of credit exceeds the fair
market value of the
dwelling, the interest on the portion of the
credit extension that is greater than the fair market value of the
dwelling is not tax
deductible for Federal income tax purposes.'.
(2) Credit advertisements: Section 147(b) of the Truth in Lending Act
(15 U.S.C. 1665b(b))
is amended--
(A) by striking `If any' and inserting the following:
`(1) In general: If any'; and
(B) by adding at the end the following:
`(2) Credit in excess of fair market value: Each advertisement described
in subsection (a)
that relates to an extension of
credit that may exceed the fair market value of the dwelling shall
include a clear and
conspicuous statement that--
`(A) the interest on the portion of the credit extension that is greater
than the fair
market value of the dwelling is not tax
deductible for Federal income tax purposes; and
`(B) the consumer may want to consult a tax advisor for further
information regarding the
deductibility of interest and charges.'.
(b) Non-Open End Credit Extensions:
(1) Credit applications: Section 128 of the Truth in Lending Act (15
U.S.C. 1638) is
amended--
(A) in subsection (a), by adding at the end the following:
`(15) In the case of a consumer credit transaction that is secured by
the principal
dwelling of the consumer, in which the
extension of credit may exceed the fair market value of the dwelling, a
clear and
conspicuous statement that--
`(A) the interest on the portion of the credit extension that is greater
than the fair
market value of the dwelling is not tax
deductible for Federal income tax purposes; and
`(B) the consumer should consult a tax advisor for further information
regarding the
deductibility of interest and charges.'; and
(B) in subsection (b), by adding at the end the following:
`(3) In the case of a credit transaction described in paragraph (15) of
subsection (a),
disclosures required by that paragraph
shall be made to the consumer at the time of application for such
extension of credit.'.
(2) Credit advertisements: Section 144 of the Truth in Lending Act (15
U.S.C. 1664) is
amended by adding at the end the
following:
`(e) Each advertisement to which this section applies that relates to a
consumer credit
transaction that is secured by the principal
dwelling of a consumer in which the extension of credit may exceed the
fair market value
of the dwelling shall clearly and
conspicuously state that--
`(1) the interest on the portion of the credit extension that is greater
than the fair
market value of the dwelling is not tax
deductible for Federal income tax purposes; and
`(2) the consumer may want to consult a tax advisor for further
information regarding the
deductibility of interest and charges.'.
(c) Effective Date: This section and the amendments made by this section
shall take effect
1 year after the date of enactment of
this Act.
SEC. 208. DUAL-USE DEBIT CARD.
(a) Consumer Liability:
(1) In general: Section 909 of the Electronic Fund Transfer Act (15
U.S.C. 1693g) is
amended--
(A) by redesignating subsections (b) through (e) as subsections (d)
through (g),
respectively;
(B) in subsection (a)--
(i) by redesignating paragraphs (1) and (2) as subparagraphs (A) and
(B), respectively,
and indenting appropriately;
(ii) by inserting `Cards Necessitating Unique Identifier:
`(1) In general: ' after `(a)';
(iii) by striking `other means of access can be identified as the person
authorized to use
it, such as by signature, photograph,'
and inserting `other means of access can be identified as the person
authorized to use it
by a unique identifier, such as a
photograph, retina scan,'; and
(iv) by striking `Notwithstanding the foregoing,' and inserting the
following:
`(2) Notification: Notwithstanding paragraph (1),'; and
(C) by inserting after subsection (a) the following new subsections:
`(b) Cards Not Necessitating Unique Identifier: A consumer shall be
liable for an
unauthorized electronic fund transfer only
if--
`(1) the liability is not in excess of $50;
`(2) the unauthorized electronic fund transfer is initiated by the use
of a card that has
been properly issued to a consumer other
than the person making the unauthorized transfer as a means of access to
the account of
that consumer for the purpose of
initiating an electronic fund transfer;
`(3) the unauthorized electronic fund transfer occurs before the card
issuer has been
notified that an unauthorized use of the card
has occurred or may occur as the result of loss, theft, or otherwise;
and
`(4) such unauthorized electronic fund transfer did not require the use
of a code or other
unique identifier (other than a
signature), such as a photograph, fingerprint, or retina scan.
`(c) Notice of Liability and Responsibility To Report Loss of Card,
Code, or Other Means
of Access: No consumer
shall be liable under this title for any unauthorized electronic fund
transfer unless the
consumer has received in a timely manner
the notice required under section 905(a)(1), and any subsequent notice
required under
section 905(b) with regard to any
change in the information which is the subject of the notice required
under section
905(a)(1).'.
(2) Conforming amendment: Section 905(a)(1) of the Electronic Fund
Transfer Act (15 U.S.C.
1693c(a)(1)) is amended to
read as follows:
`(1) the liability of the consumer for any unauthorized electronic fund
transfer and the
requirement for promptly reporting any
loss, theft, or unauthorized use of a card, code, or other means of
access in order to
limit the liability of the consumer for any
such unauthorized transfer;'.
(b) Validation Requirement for Dual-Use Debit Cards:
(1) In general: Section 911 of the Electronic Fund Transfer Act (15
U.S.C. 1693i) is
amended--
(A) by redesignating subsection (c) as subsection (d); and
(B) by inserting after subsection (b) the following new subsection:
`(c) Validation Requirement: No person may issue a card described in
subsection (a), the
use of which to initiate an electronic
fund transfer does not require the use of a code or other unique
identifier other than a
signature (such as a fingerprint or retina
scan), unless--
`(1) the requirements of paragraphs (1) through (4) of subsection (b)
are met; and
`(2) the issuer has provided to the consumer a clear and conspicuous
disclosure that use
of the card may not require the use of
such code or other unique identifier.'.
(2) Technical and conforming amendment: Section 911(d) of the Electronic
Fund Transfer Act
(15 U.S.C. 1993i(d)) (as
redesignated by subsection (a)(1) of this section) is amended by
striking `For the purpose
of subsection (b)' and inserting `For
purposes of subsections (b) and (c)'.
SEC. 209. ENHANCED DISCLOSURES UNDER AN OPEN END CREDIT PLAN.
(a) Amendments to the Truth in Lending Act:
(1) Enhanced disclosure of repayment terms:
(A) In general: Section 127(b) of the Truth in Lending Act (15 U.S.C.
1637(b)) is amended
by adding at the end the
following:
`(11)(A) In a clear and conspicuous manner, repayment information that
would apply to the
outstanding balance of the
consumer under the credit plan, including--
`(i) the required minimum monthly payment on that balance, represented
as both a dollar
figure and a percentage of that
balance;
`(ii) the number of months (rounded to the nearest month) that it would
take to pay the
entire amount of that current balance if
the consumer pays only the required minimum monthly payments and if no
further advances
are made;
`(iii) the total cost to the consumer, including interest and principal
payments, of
paying that balance in full if the consumer pays
only the required minimum monthly payments and if no further advances
are made; and
`(iv) the following statement: `If your current rate is a temporary
introductory rate,
your total costs may be higher.'.
`(B) In making the disclosures under subparagraph (A) the creditor shall
apply the annual
interest rate that applies to that
balance with respect to the current billing cycle for that consumer in
effect on the date
on which the disclosure is made.'.
(B) Publication of model forms: Not later than 180 days after the date
of enactment of
this Act, the Board of Governors of the
Federal Reserve System shall publish model disclosure forms in
accordance with section 105
of the Truth in Lending Act for the
purpose of compliance with section 127(b)(11) of the Truth in Lending
Act, as added by
this paragraph.
(C) Civil liability: Section 130(a) of the Truth in Lending Act (15
U.S.C. 1640(a)) is
amended, in the undesignated paragraph
following paragraph (4), by striking the second sentence and inserting
the following: `In
connection with the disclosures referred
to in subsections (a) and (b) of section 127, a creditor shall have a
liability determined
under paragraph (2) of this subsection
only for failing to comply with the requirements of section 125, 127(a),
or of paragraph
(4), (5), (6), (7), (8), (9), (10), or (11)
of section 127(b), or for failing to comply with disclosure requirements
under State law
for any term or item that the Board has
determined to be substantially the same in meaning under section
111(a)(2) as any of the
terms or items referred to in section
127(a), or paragraph (4), (5), (6), (7), (8), (9), (10), or (11) of
section 127(b).'.
(2) Disclosures in connection with solicitations:
(A) In general: Section 127(c)(1)(B) of the Truth in Lending Act (15
U.S.C. 1637(c)(1)(B))
is amended by adding at the end
the following:
`(iv) Credit worksheet: An easily understandable credit worksheet
designed to aid
consumers in determining their ability to
assume more debt, including consideration of the personal expenses of
the consumer and a
simple formula for the consumer to
determine whether the assumption of additional debt is advisable.
`(v) Basis of preapproval: In any case in which the application or
solicitation states
that the consumer has been preapproved
for an account under an open end consumer credit plan, the following
statement must appear
in a clear and conspicuous manner:
`Your preapproval for this credit card does not mean that we have
reviewed your individual
financial circumstances. You should
review your own budget before accepting this offer of credit.'.
`(vi) Availability of credit report: That the consumer is entitled to a
copy of his or her
credit report in accordance with the Fair
Credit Reporting Act.'.
(B) Publication of model forms: Not later than 180 days after the date
of enactment of
this Act, the Board of Governors of the
Federal Reserve System shall publish model disclosure forms in
accordance with section 105
of the Truth in Lending Act for the
purpose of compliance with section 127(c)(1)(B) of the Truth in Lending
Act, as amended by
this paragraph.
(b) Effective Date: This section and the amendments made by this section
shall take effect
on January 1, 2001.
SEC. 210. VIOLATIONS OF THE AUTOMATIC STAY.
Section 362(a) of title 11, United States Code, is amended--
(1) in paragraph (7), by striking `and' at the end;
(2) in paragraph (8), by striking the period and inserting `; and';
(3) by adding at the end the following:
`(9) any communication threatening a
Monday, May 3, 1999
To amend the Truth in Lending Act to expand protections for consumers by adjusting statutory exemptions and civil penalties to reflect inflation, to eliminate the Rule of 78s accounting for interest rebates in consumer credit transactions, and for other purposes.
Thursday, March 25, 1999