%1

To reenact chapter 12 of title 11, United States Code, and for other purposes.

To amend title XVIII of the Social Security Act to establish additional provisions to combat waste, fraud, and abuse within the medicare program, and for other purposes.

Making appropriations for the Departments of Commerce, Justice, and State, the Judiciary, and related agencies for the fiscal year ending September 30, 2000, and for other purposes.

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

To amend certain banking and securities laws with respect to financial contracts.

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

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS (Senate - May 3, 1999)
As Reported Online at http://www.thomas.gov
Posted by the Amerian Bankruptcy Institute
CONSUMER BANKRUPTCY REFORM ACT OF 1999

CONSUMER BANKRUPTCY REFORM ACT OF 1999

Mr. DURBIN.

Mr. President, today, joined by colleagues, Senator
Leahy, Senator Kennedy, Senator

Feingold and Senator Sarbanes, I am
introducing the bankruptcy reform bill that passed the Senate last year
by a vote of 97-1.

A constant theme that has guided me throughout the consideration of
bankruptcy legislation is balanced reform. You cannot have meaningful
bankruptcy reform without addressing both sides of the
problem--irresponsible debtors and irresponsible creditors.

Unfortunately, the bill we worked so hard to develop, was decimated
in conference and the result was a one-sided bill designed to reward the
credit industry and penalize American consumers. I could not support it.
I hope this year will be different.

The bankruptcy code is delicate balance. When you push one thing,
almost invariably something else will give. For that reason, it is
crucial for bankruptcy reform to be thoughtful and for the changes to be
targeted and not create more problems than they attempt to solve.

This year, Senator Grassley has introduced S.625,
the bankruptcy reform bill of 1999. This bill has more similarities to
last year's conference report than the bipartisan measure that passed
the Senate last year by an overwhelming margin.

The Durbin-Leahy bill is fairer. S.625 uses a means test adopted from
IRS collection allowances. The test would require every debtor,
regardless of income, who files for Chapter 7 bankruptcy to be
scrutinized by the U.S. trustee to determine whether the filling is
abusive. The bill creates a presumption that a case is abusive if a
debtor can pay the lesser of 25% of unsecured nonpriority claims or
$15,000 over 5 years. The IRS means test was designed for use on a case
by case basis, not as an automatic template.

In my home state, the average annual income for bankruptcy filers in
the Central District of Illinois for 1998 was $20,448, yet the average
amount of unsecured debt was $22,900. This figure shows that many filers
were hopelessly insolvent. They owed more money on debt that had no
collateral than their total income for the entire year. These debtors
don't even come close to meeting the standards that would require them
to convert their case to a

chapter 13 case, but they will be forced to go through additional
scrutiny at extra costs to everyone involved.

In contrast, the Durbin-Leahy bill gives courts discretion to dismiss
or convert a Chapter 7 bankruptcy case if the debtor can fund a Chapter
13 repayment plan. One of the factors for the court to consider in
making the decision is whether the debtor is capable of paying 30% of
unsecured claims under a 3 year plan. This reform can address abuses
without the complexity of certifying ability to pay in every case as
required by S.625.

The Durbin-Leahy bill is cheaper because every case does not go
through means testing. By requiring the trustee to submit reports on all
filers the cost to trustees is dramatically increased with little
reward.

The means test in S. 625 looks a lot like the means test in the House
bill. We now know that the means test in the House bill would only apply
to far less than 10% of Chapter 7 filings. A study released by the
American Bankruptcy Institute found that by using the test from the
House bill, 97% of sample Chapter 7 debtors had too little income to
repay even 20% of their unsecured debts over five years. As a result,
only 3% of the sample Chapter 7 filers had sufficient repayment capacity
to be barred from Chapter 7 under the rigid means test. This means 100%
of the filers would have to go through a process that would only apply
to 3% of the cases.

Beyond the administrative costs, there is the unneeded stress on poor
families. According to the National Conference on Bankruptcy Judges, a
review of surveys of Chapter 7 cases from 46 judicial districts in 33
states reveals that the median gross annual income for the 3151 cases in
1998 was $21,540, some $15,000 lower than the 1997 national median
income for all families in the United States. Yet, the median amount of
unsecured nonpriority debt for these same debtors was $23,411. These
people are insolvent, and forcing them to go through unnecessary hoops
for little reward is unfair and ineffective.
The Durbin-Leahy bill is more balanced. The Durbin-Leahy bill includes
credit disclosures designed to help families understand their debt and
prevent them from incurring debt which makes them financially
vulnerable. Many families file for bankruptcy after a health crisis or
some other catastrophic event that prevents them from paying their
debts. For example, the survey conducted by the bankruptcy judges shows
that on average over 25% of bankruptcy cases involve debtors with
medical debts over $1000. By requiring more complete information for
debtors, they can make better credit decisions and avoid bankruptcy
altogether.

The Durbin-Leahy bill addresses abusive creditor practices. The
Durbin-Leahy bill protects the elderly from predatory lending practices.
Much of our discussion concerning reform of the nation's bankruptcy laws
has focused upon perceived abuses of the bankruptcy system by consumer
debtors. Far less discussion has occurred with regard to abuses by
creditors that help usher the nation's consumers into bankruptcy. I
believe that abuses exist on both sides of the debtor-creditor
relationship and that bankruptcy reform is incomplete if it fails to
address documented abuses among creditors.

Last year, I worked to protect elderly Americans by prohibiting a
high-cost mortgage lender who extended credit in violation of the
provisions of the Truth-In-Lending Act from collecting its claim in
bankruptcy. If the lender has failed to comply with the requirements of
the Truth-in-Lending Act for high-cost second mortgages, the lender will
have absolutely no claim against the bankruptcy estate. This provision
is not aimed at all lenders or at all second mortgages. Indeed, it is
aimed only at the worst, most predatory, of these by and large worthy
lenders. It is aimed only at practices that are already illegal and it
does not deal with technical or immaterial violations of the Truth in
Lending Act.

Disallowing the claims of predatory lenders in bankruptcy cases will
not end these predatory practices altogether. Yet it is one step we can
take to curb creditor abuse in a situation where the lender bears
primary responsibility for the deterioration of a consumer's financial
situation.

I encourage my Senate colleagues to join Senator
Leahy and me in this effort. Bankruptcy reform must be
balanced and must not create a nation of financial outlaws.

Mr. President, I ask unanimous consent that a copy of the bill be
printed in the Record.

There being no objection, the bill was ordered to be printed in the
Record, as follows:

See http://www.abiworld.org/legis/bills/99mays945.html

END

To amend title 11, United States Code, to provide for health care and employee benefits, and for other purposes. (Introduced in Senate)

Mr. President, I rise today to introduce legislation that would modify our bankruptcy laws to deal with bankruptcies in the health care sector.

Mr. GRASSLEY. Mr. President, I rise today to introduce legislation that would modify our bankruptcy laws to deal with bankruptcies in the health care sector. According to testimony I received in the Subcommittee on Administrative Oversight and the Courts, almost one-third of our hospitals could face foreclosure because they are not financially sound. And a number of nursing homes are in terrible financial trouble. I believe that chapter 11 and chapter 9 of the Bankruptcy Code could be vitally important in keeping troubled hospitals in business. The bill we are proposing will ensure that chapter 11 will work fairly and efficiently in the unfortunate event that we face a rash of health care bankruptcies. The bill will also make sure the health care businesses which liquidate under Chapter 7 don't just throw patients by the wayside in a rush to sell assets and pay creditors.

Currently, the Bankruptcy Code does an adequate job of helping debtors reorganize and helping creditors recover losses. However, the code does not provide protection for the interests of patients. This bill contains several important reforms to protect patients when health care providers declare bankruptcy. Specifically, the bill addresses the disposal of patient records, the costs associated with closing a health care business, the duty to transfer patients upon the closing of a health care facility and the appointment of an ombudsman to protect patient rights.

Section 102 covers the disposal of patient records. The legislation provides clear and specific guidance to trustees who may not be aware of state law requirements for maintaining the patient records or the confidentiality issues associated with patient records. Section 102 is necessary given the patient's need for the records and the apparent lack of clear instruction, whether statutory or otherwise, describing a proper procedure in dealing with patient records when closing a facility.

Section 103 brings the costs associated with closing a health care business, including any expenses incurred by disposing of patient records and transferring patients to another health care facility, within the administrative expense umbrella of the Bankruptcy Act.

Section 104 provides for an ombudsman to act as an advocate for the patient. This change will ensure that judges are fully aware of all the facts when they guide a health care provider through bankruptcy. Prior to a chapter 11 filing or immediately thereafter, the debtor employs a health care crisis consultant to help it in its reorganization effort. The first step is usually cutting costs. Sometimes, this step may result in a lower quality of patient care. The appointment of an ombudsman should balance the interests between the creditor and the patient. These interests need balancing because the court appointed professionals owe fiduciary duties to creditors and the estate but not necessarily to the patients. There will be occasions which illustrate that what may be in the best interest of creditors may not always be consistent with the patients' best interest. The trustee's interest, for example, is to maximize the amount of the estate to pay off the creditors. The more assets the trustees disburses, the
more his payment will be. On the other hand, the ombudsman is designed to insure continued quality of care at least above some minimum standard. Such quality of care standards currently exist throughout the health care environment, from the health care facility itself to State standards and Federal standards.

Consider the following excerpt from the Los Angeles Times on September 28, 1997 which describes the unconscionable, pathetic, and traumatizing consequences of sudden nursing home closings:

It could not be determined Saturday how many more elderly and chronically ill patients may be affected by the health care company's financial problems. Those at the Reseda Care Center in the San Fernando Valley, including a 106-year-old woman, were rolled into the street late Friday in wheelchairs and on hospital beds, bundled in blankets as relatives scurried to gather up clothes and other personal belongings.

The presence of an ombudsman probably would result in fewer instances similar to what I just described, where trustees quickly close health care facilities without notifying appropriate state and federal agencies and without notifying the bankruptcy court.

Section 1105 requires a trustee to use reasonable and best efforts to transfer patients in the face of a health care business closing. This provision is both useful and necessary in that it outlines a trustee's duty with respect to a transfer of vulnerable patients.

For all these reasons, I urge you to join me and my colleagues in supporting this bill which will protect the interests of patients in health care bankruptcies.

Mr. LEAHY. Mr. President, I am pleased to join Senator Grassley and Senator Torricelli in introducing legislation to protect patient privacy when a hospital, nursing home, HMO or other institution holding medical records is involved in a bankruptcy proceeding that leads to liquidation.

Of course, in the best case scenario any institution holding patient health care records would continue to follow applicable state or federal law requiring proper storage and safeguards. The fact is, however, under current law during a business liquidation an individual would have to wait until there has been a serious breach of their privacy rights before anyone stepped in to ensure that patient privacy is protected. Under current law it is questionable what protection these most sensitive personal records would have during a liquidation.

The reality of this situation and the practical questions of what recourse an individual would have if their personal medical records were not properly safeguarded against a business that is going out of business makes this provision essential. Our legislation would set in law the procedure that an institution holding medical records would have to follow during a liquidation proceeding.

The bottom line is that we do not want to have to wait until there has been a breach of privacy before steps are taken to protect patient privacy. Once privacy is breached--there is nothing one can really do to give that back to an individual.

I have been working on the overall issue of medical privacy for many years. I look forward to working with Senator Grassley and Senator Torricelli on this issue to make sure that patient privacy rights are protected in bankruptcy.

END

To amend the Truth in Lending Act to enhance consumer disclosures regarding credit card terms and charges, to restrict issuance of credit cards to students, to expand protections in connection with unsolicited credit cards and third-party checks, and to protect consumers from unreasonable practices that result in unnecessary credit costs or loss of credit, and for other purposes.