Bankruptcy Reform Legislation in the 107th Congress: A Comparison of H.R. 333 As Passed by the House and the Senate

Bankruptcy Reform Legislation in the 107th Congress: A Comparison of H.R. 333 As Passed by the House and the Senate

Order Code RL30865
Report for Congress
Received through the CRS Web
Bankruptcy Reform Legislation
in the 107th Congress: A Comparison of H.R. 333
As Passed by the House and the Senate
Updated July 10, 2002
Robin Jeweler
Legislative Attorney
American Law Division
Congressional Research Service ˜ The Library of Congress

Bankruptcy Reform Legislation in the 107th Congress:
A Comparison of H.R. 333 As Passed by the House
and the Senate
Summary
H.R. 333, 107th Congress, 1st Sess. (2001), the “Bankruptcy Abuse Prevention
and Consumer Protection Act of 2001” and its counterpart in the Senate, S. 220,
107th Congress, 1st Sess. (2001), the “Bankruptcy Reform Act of 2001” were
introduced on January 31, 2001.
As introduced, the bills were essentially identical both to each other and to H.R.
2415, 106th Congress, 2d Sess. (2000), which passed both chambers but was pocket
vetoed by former President Clinton. On March 1, 2001, the House passed a slightly
amended version of H.R. 333 by a vote of 306-108, after having first rejected a
Democratic-sponsored substitute on a 160-258 vote.
The Senate Judiciary Committee completed a two-day mark up of S. 220 by
reporting out a clean bill, S. 420, on a 10-8 vote. S. 420 was similar to S. 220. It was
brought to the floor on March 7. After several days of debate, cloture was invoked.
Amendments were agreed to and the bill was passed on March 15, 2001 by a vote of
85-15. On July 17, 2001 the Senate passed H.R. 333 with an amendment in the
nature of a substitute. It struck the language of the House version and replaced it
with the language of S. 420. H.R. 333, as amended, passed the Senate by a vote of
82-16.
The bills, which were identical when introduced, retain their core features. But,
because H.R. 333 passed the House and the Senate in different forms, it required a
conference. Both the House and the Senate appointed conferees in July, 2001. The
conference met on May 22, 2002, but has not yet released its report.
So far, the 107th Congress has demonstrated widespread support for the bills
evidenced by the votes. Although President Bush is expected to sign bankruptcy
reform into law, the White House has indicated that a bankruptcy bill that contains
a federal homestead cap may be unacceptable.
This report surveys the bills and the major amendments that have been adopted.
It provides a sectional analysis comparing selected provisions, with an emphasis on
consumer bankruptcy.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background in the 106th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The 107th Congress: H.R. 333 as Passed by the House . . . . . . . . . . . . . . . . . 3
S. 420 as Reported and Passed by the Senate . . . . . . . . . . . . . . . . . . . . . . . . 3
Senate Passage of H.R. 333 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Structural Overview of the Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Summary and Comparison of Selected Provisions . . . . . . . . . . . . . . . . . . . . 8

Bankruptcy Reform Legislation in the 107th
Congress: A Comparison of H.R. 333 As
Passed by the House and the Senate
Introduction
H.R. 333, 107th Congress, 1st Sess. (2001), the “Bankruptcy Abuse Prevention
and Consumer Protection Act of 2001” and its counterpart in the Senate, S. 220,
107th Congress, 1st Sess. (2001), the “Bankruptcy Reform Act of 2001” were
introduced on January 31, 2001.
As introduced, the bills were essentially identical both to each other and to H.R.
2415, 106th Congress, 2d Sess. (2000), which passed both chambers but was pocket
vetoed by former President Clinton. On March 1, 2001, the House passed a slightly
amended version of H.R. 333 by a vote of 306-108,1 after having first rejected a
Democratic-sponsored substitute on a 160-258 vote.
The Senate Judiciary Committee completed a two-day mark up of S. 220 by
reporting out a clean bill, S. 420, on a 10-8 vote. S. 420, as introduced, was similar
to S. 220. S. 420 was brought to the floor on March 7. After several days of debate,
cloture was invoked. Amendments were agreed to and the bill passed on March 15,
2001 by a vote of 85-15.2 Several of the amendments adopted represent the
reintroduction of provisions which were passed by the Senate during the 106th
Congress in H.R. 833 but were omitted from the conference version of the bill, H.R.
2415. These include, e.g., adding a new category of “family fisherman” to chapter
12 governing family farmer reorganization,3 making fines and penalties of the Federal
Election Commission nondischargeable,4 and prohibiting political committees from
filing in bankruptcy.5
On July 17, 2001 the Senate passed H.R. 333 with an amendment in the nature
of a substitute. It struck the language of the House version and replaced it with the
language of S. 420. H.R. 333, as amended, passed the Senate by a vote of 82-16.6
1147 CONG. REC. H601 (daily ed. March 1, 2001).
2147 CONG. REC. S2379 (daily ed. March 15, 2001).
3S. Amdt.16, 107th Congress, 1st Sess. (2001).
4S. Amdt. 49
5S. Amdt. 50
6147 CONG. REC. S7742 (daily ed. July 17, 2001).

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The bills, which were identical when introduced, retain their core features.
Because H.R. 333 passed the House and the Senate in different forms, it required a
conference.
Both the House and the Senate appointed conferees in July, 2001. Members of
the conference include Senators Leahy, Kennedy, Biden, Kohl, Feingold, Schumer,
Durbin, Hatch, Grassley, Kyl, DeWine, Sessions, McConnell, and Representatives
Sensenbrenner, Hyde, Gekas, Smith of Texas, Chabot, Barr, Boucher, Nadler, Watt,
Oxley, Bachus, LaFalce, Tauzin, Barton, Dingell, Boehner, Castle, and Kildee. The
conference met on May 22, 2002. Unofficial accounts suggest the conference was
able to agree on all outstanding issues, including a compromise version of homestead
exemption language. The sole outstanding issue is reported to be a compromise on
language governing dischargeability of liability incurred in connection with violence
against abortion clinics. Sen. Schumer and Rep. Hyde have been the lead negotiators
on this issue.
So far, the 107th Congress has demonstrated widespread support for the bills
evidenced by the votes. Although President Bush is expected to sign bankruptcy
reform into law, the White House has indicated that a bankruptcy bill that contains
a federal homestead cap may be unacceptable.
Background in the 106th Congress
Bankruptcy reform legislation to amend the U.S. Bankruptcy Code, 11 U.S.C.
§ 101 et seq, was introduced shortly before the close of the first session of the 105th
Congress. Supporters of bankruptcy reform hope to stem the historically high
volume of consumer filings and to increase the recovery creditors realize on their
claims by channeling more debtors in chapter 13. With respect to consumer filings,
the thrust of the reform proposal is to increase the complexity of filing requirements
by adding new jurisdictional requirements, e.g., pre-bankruptcy financial counseling,
imposing a means test on filers to determine whether they may file under chapter 7
or 13, and to impose uniform standards on debtor expense allowances in bankruptcy.
The proposed changes to business bankruptcy are less dramatic, although small
businesses will be subject to more rigid, hence stricter procedural requirements.
In the 106th Congress, the House passed H.R. 833 by a vote of 313-108. The
Senate brought S. 625 to the floor on November 4, 1999. After considerable debate
and the adoption of many germane and nongermane amendments, the Senate struck
the language of the House version, substituted its language, and passed H.R. 833 by
a vote of 83-14.
H.R.833 was informally negotiated by House and Senate Republican leadership.
As the 106th Congress headed towards adjournment sine die, a final push toward
enactment took place. The product of the negotiations was substituted as H.R. 2415,
106th Cong., 1st Sess. (1999), previously entitled “the American Embassy Security
Act of 1999.” On Oct. 12, 2000, the House passed the conference report to H.R.
2415. It was passed by the Senate on December 7, 2000. Because the bill retained
features which the White House objected to, it was pocket vetoed by former
President Clinton.

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The 107th Congress: H.R. 333 as Passed by the House
The House Judiciary Committee, by a vote of 19 to 8, reported H.R. 333
favorably.7 The bill passed the House with few amendments by a vote of 306 to 108.
In addition to a manager’s amendment to make technical and conforming changes,8
the House adopted a floor amendment to add public school – in addition to already
existing private school – tuition costs to the debtor’s permissible monthly expenses;9
an amendment to prevent the names of children from being disclosed in bankruptcy
filings;10 and, an amendment to reflect changes made by enactment of the Commodity
Futures Modernization Act and current market practices.11
S. 420 as Reported and Passed by the Senate
The Senate Judiciary Committee reported a clean bill, S. 420, favorably on
March 1, 2001. Among the amendments adopted in committee was a compromise
provision sponsored by Senators Hatch and Schumer to make nondischargeable
liability for violence at reproductive health clinics. The compromise language is
broader than the provision adopted by the Senate during the 106th Congress. It does
not refer specifically to reproductive health clinics but would make nondischargeable
debts incurred through violations of laws relating to the provision of lawful goods
and services.12 Another amendment would create a “consumer privacy ombudsman”
to prevent companies in bankruptcy from selling personal information about
consumer customers.13 The Committee also adopted an amendment which narrows
the grounds upon which a lessor may evict a residential tenant in bankruptcy.14
Several amendments were made to Title X of the bill dealing with chapter 12 of the
Bankruptcy Code governing family farmer reorganization.15 The bill changes the
jurisdictional filing requirements by raising the permissible debt limit for farmers
from $1,500,000 to $3,000,000 and broadens the requirement that over 50 percent of
income in the year prior to filing under chapter 12 be derived from farming.
The Senate bill, like the house bill, provides that the automatic stay, 11 U.S.C.
§ 362, would no longer prevent the continuation or commencement of eviction
proceedings against a residential tenant. The amendment to S. 420 conditions relief
from the stay upon the debtor’s making rent payments and the landlord certifying that
certain conditions exist.
7H.Rept. 107-3, Part 1, 107th Congress, 1st Sess. (2001).
8Id. at H575.
9Id. at H577. H.R. 333 at § 102.
10Id. at H578. H.R. 333 at § 231.
11Id. at H579.
12S. 420, 107th Congress, 1st Sess. § 328 (2001).
13Id. at §§ 231, 232.
14Id. at § 311.
15Id. at §§ 1004 - 1006.

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The Senate began debate on S. 420 the week of March 5 and passed it on March
15, 2001. On March 14, a motion for cloture to limit debate was passed by a vote of
80 to 19. Approximately fifty amendments were submitted. Several were provisions
passed by the Senate during the 106th Congress. These include, e.g., adding a new
category of “family fisherman” to chapter 12,16 making fines and penalties of the
Federal Election Commission nondischargeable,17 and prohibiting political
committees from filing in bankruptcy.18
In addition to those listed below, nongermane amendments added new titles
XIV and XVI to the bill. Title XIV, entitled “Emergency Energy Assistance and
Conservation Measures,”19 raises the amount authorized to be appropriated for
weatherization programs under the Low-Income Home Energy Assistance Act of
1981. New Title XVI entitled “Miscellaneous Provisions” adds § 1601 directing the
Federal Crop Insurance Corporation to promulgate specified regulations under 7
U.S.C. § 522(b).20
The amendments to S. 420 included:
! A provision adding a new § 1235 entitled “Involuntary cases.”21
! A provision, discussed above, to add a new category of “family fisherman” to
chapter 12.22
! A provision that if a lender who makes predatory loans sells or transfers the
loan to a third party, any claims or defenses that a customer may have against
the lender will be preserved despite the lender’s filing in bankruptcy.23
! A provision adding a new § 329 making specified prepetition wages and
benefits an administrative expense.24
! A provision adding a new § 420 permitting a debtor to continue as a plan
administrator of an employee benefit plan.25
16S. Amdt.16, 107th Congress, 1st Sess. (2001).
17S. Amdt.49
18S. Amdt.50
19S. Amdt.28
20S. Amdt.109
21S. Amdt. 15
22S. Amdt. 16
23S. Amdt. 25
24S. Amdt. 30
25S. Amdt. 35

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! A provision permitting the debtor’s reasonable and necessary medical
expenses to be deducted from the “disposable income” which must be paid to
creditors under a chapter 13 plan.26
! A provision permitting a debtor to include in calculating monthly expenses
reasonable and necessary actual expenses (that is costs in excess of the IRS
Local Standards) for home energy costs.27
! A provision, similar to one adopted by the House, preventing the names of
children from being disclosed in bankruptcy filings.28
! A provision which raises the threshold from $250 to $750 for amounts
incurred within 90 days of bankruptcy which will be presumed to be
nondischargeable. In other words, consumer debts owed to a single creditor
for more than $750 for luxury goods or services incurred within 90 days of
filing will be presumed nondischargeable.29
! A provision which restores the status quo by permitting corporate debtors in
chapter 11 to discharge debt. Prior to adoption of this amendment, the House
and Senate bills would have made debts which are nondischargeable to
individuals nondischargeable to chapter 11 corporate debtors as well. The
amendment also limits nondischargeability of fraudulent debts incurred by a
corporation to those owed to governmental units.30
! A provision requiring that small business reorganization plans be confirmed
within 45 days after the plan is filed with possible extensions of time (rather
than within 175 days of filing in bankruptcy). 31
! A provision deleting § 1310 of the bill, popularly referred to as the “Lloyds of
London” provision. This section of the S. 420 was intended to assist a small
group of investors in Lloyds insurance company who have outstanding
liability as a result of contracts and legal judgments entered in England.32
! A provision that would prohibit a chapter 13 discharge if the debtor received
a discharge under chapters 7, 11, or 12 within the three preceding years, or a
26S. Amdt. 38
27S. Amdt. 40
28S. Amdt. 41
29S. Amdt. 42
30S. Amdt. 43
31S. Amdt. 45
32S. Amdt. 51

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chapter 13 discharge within two preceding years (unless the debtor can
demonstrate “extreme hardship.”)33
! A provision that would alter § 1235 governing expedited bankruptcy appeals.
It omits the deadlines for presuming “final” action by a U.S. district court.34
! A provision that lays out the procedure for a landlord to lift the automatic stay
in order to evict or continue eviction proceedings against a residential tenant
who files in bankruptcy.35
! A provision addressing the filing of tax returns by individual debtors with the
expressed purpose of saving storage costs.36
! A provision imposing a federal cap of $125,000 on state homestead
exemptions available in bankruptcy.37
! A provision adding a new § 205 to the bill directing the General Accounting
Office to study the reaffirmation process and report to Congress.38
! A provision to reduce the prohibition on cramdown – that is, lien stripping
– on automobiles in chapter 13 from 5 years to 3 years.39
! A provision adding a new bankruptcy judgeship for the district of Nevada.40
! A provision amending the means test to allow a debtor to include in monthly
expenses up to $1,500 per year per child for tuition at public school. This
amendment is comparable, but not identical, to the provision in H.R. 333
which added public school in addition to private school tuition.41
Additional amendments effected technical and conforming corrections.42
Among the amendments that did not pass were provisions limiting the extension of
33S. Amdt. 54
34S. Amdt. 58
35S. Amdt. 59
36S. Amdt. 66
37S. Amdt. 68
38S. Amdt. 81
39S. Amdt.105
40S. Amdt.107
41S. Amdt.108
42See, e.g., S. Amdts. 19, 20, 24, 60 and 106.

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credit to minors,43 an amendment discouraging “payday loans”,44and, an amendment
removing the $1,000,000 cap on exempt retirement funds.45
Senate Passage of H.R. 333
As stated earlier, the Senate passed H.R. 333 on July 17, 2001 by striking the
language of the House bill and substituting the language of S. 420. The Senate
adopted one floor amendment sponsored by Sen. Wellstone which would require the
General Accounting Office (GAO) to study the impact of bankruptcy reform on
chapter 7 and 13 filings; on the number of confirmed and successful chapter 13 plans;
on the costs of filing under chapters 7 and 13; on the availability and price of
consumer credit; and, on low income debtors’ ability to obtain bankruptcy relief.46
The GAO would report to Congress within two years of the law’s effective date.
Structural Overview of the Bills
Like their predecessors, the bills in the 107th Congress are comprehensive.
Selected provisions are examined below. Titles I through III of each bill deals with
consumer bankruptcy reform. Title IV deals with business bankruptcy, including
small business bankruptcies.
Municipal bankruptcy. Amendments to chapter 9 of the Code dealing with
municipal reorganization are set forth in Title V. Provisions clarify that special rules
govern the commencement of a voluntary case of an unincorporated tax or special
assessment district, and that certain financial transactions are excepted from the
automatic stay.
Improved bankruptcy statistics and data. Title VI establishes rules for enhanced
collection and analysis of bankruptcy statistics. It is designed, in part, to create a
standardized and centralized method for collecting relevant bankruptcy statistics, e.g.,
how much debt is discharged, for cases involving consumer debts filed under
chapters 7, 11, and 13.
Bankruptcy tax provisions. Title VII contains extensive provisions governing
taxation of the bankruptcy estate. For example, it provides greater protection for
holders (which are often school boards) of ad valorem tax liens. It simplifies the
calculation of interest on tax claims in bankruptcy. It repeals the “superdischarge”
for individuals under chapter 13 and prohibits discharge for corporations under
chapter 11 for fraudulent or non-filed taxes. It addresses, inter alia, tax liens,
priorities, timing of payments, and the dischargeability of tax obligations

Ancillary and cross-border cases. Title VIII would add a new chapter 15 to the
Code to address issues arising from international insolvencies.
43S. Amdt. 27
44S. Amdt. 36
45S. Amdt. 39
46S. Amdt. 977.

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Financial contract provisions. Title IX deals with commercial banking and
financial issues such as forward contracts, netting, swap and repurchase agreements,
and asset-backed securitization.
Protection of Family Farmers. Title X would enact chapter 12 governing family
farmer reorganization permanently, retroactive to its expiration date, July 1, 2000.
It adjusts the jurisdictional debt limit so it may be adjusted periodically pursuant to
the Consumer Price Index and provides different treatment for certain tax claims
arising from the disposition of a family farm.
Health care and employee benefits. Title XI of the bills have provisions
providing for the disposal of patient records and/or transfer of patients of a specified
“health care facility” in the event of a bankruptcy necessitating closure. It designates
the costs incurred by a trustee or federal agency in closing the business, disposing of
records, and transferring patients as administrative expenses. The trustee is expressly
directed to “use all reasonable and best efforts” in the transfer of patients to
appropriate facilities. A patient ombudsman must be appointed by the court to
monitor patient care and report to the court during the bankruptcy.

Technical amendments. Title XII is entitled “Technical Amendments.” It
embodies a wide range of provisions, several of which are arguably substantive, for
example:
! lifting the $4,000,000 cap on single-asset real estate bankruptcy (§ 1201(5));
! adding “the Bankruptcy Judgeship Act of 2001” which creates 23 temporary
judgeships;
! requiring debtors to provide requested tax documents in order to obtain a
discharge or confirmation of a reorganization plan; and
! allowing parties to take expedited appeals to a court of appeals by imposing
specified deadlines for district court actions (§ 1234 of the House’s version of
H.R. 333).
Consumer credit disclosure. Title XIII would amend the Truth in Lending Act
to require specified disclosures by credit lenders.
The Senate bill includes a new Title XIV entitled “Emergency Energy
Assistance and Conservation Measures” and a new Title XVI which adds § 1601
directing specified rulemaking by the Federal Crop Insurance Corp. There are not
comparable titles in the House version of H.R. 333.
Summary and Comparison of Selected Provisions
The chart below provides a brief summary of and reference to selected
provisions in the House and Senate bills as passed by their respective chamber.
However, if and when the bankruptcy conference on H.R. 333 releases its report,
Members are likely to be voting on a version of the bankruptcy reform bill that

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contains additional amendments and substitute language governing the provisions
reviewed below.
Selected Provisions
H.R. 333, 107th Cong.,
H.R. 333 (S. 420),107th
1st Sess. (2001) As
Cong.,1st Sess. (2001)
Passed by the House
As Passed by the
Senate
Means test, 11 U.S.C. § § 704, 707:
Implementation
Would amend 11 U.S.C. § 707 to permit creditors, the
trustee, or any party in interest to challenge a debtor’s
eligibility to file under chapter 7. If indicated, the U.S.
trustee must file a statement that the debtor’s case is a
presumed abuse of chapter 7. § 102.
Definition of “current
Excludes Social Security benefits and payments to victims
monthly income”
of war crimes or crimes against humanity. § 102.
Presumed abuse
Debtor presumed to be abusing chapter 7 if current
monthly income, excluding allowed deductions, secured
debt payments, and priority unsecured debt payments,
multiplied by 60, would permit a debtor to pay not less
than the lesser of (a) 25% of nonpriority unsecured debt or
$6,000 (or $100 a month), whichever is greater, or (b)
$10,000. § 102.

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Selected Provisions
H.R. 333, 107th Cong.,
H.R. 333 (S. 420),107th
1st Sess. (2001) As
Cong.,1st Sess. (2001)
Passed by the House
As Passed by the
Senate
Calculation of permissible
Expenses to be calculated
Comparable provisions at §
monthly living expenses
as specified under the
102.
National Standards and
Local Standards, and the
debtor’s actual monthly
expenses for the categories
s p e c i f i e d a s O t h e r
Necessary Expenses issued
by the Internal Revenue
Service for the area in
which the debtor resides. A
debtor may also subtract an
allowance of up to 5% of
the IRS food and clothing
categories.
A m e n d m e n t s t o
Individualized expenses
individualized expenses
may include debts incurred
added public (as well as
to protect the debtor’s
private) school tuition, and
family from domestic
reasonable and necessary
violence; actual expenses
costs for home energy
for the care and support of
costs.
nondependent, elderly, ill
or disabled household or
family members; private or
public school tuition of up
to $1,500 per year;
administrative expenses for
chapter 13 candidates; and
average monthly expenses
for secured and priority
debts. § 102.
To rebut the presumption
A debtor must demonstrate “special circumstances.”§ 102.
of abuse

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Selected Provisions
H.R. 333, 107th Cong.,
H.R. 333 (S. 420),107th
1st Sess. (2001) As
Cong.,1st Sess. (2001)
Passed by the House
As Passed by the
Senate
Safe harbor exemption
Only the judge, U.S. trustee or bankruptcy administrator
from the means test
may bring a substantial abuse motion if the debtor’s
current monthly income is less than the highest national or
the applicable State median family income.
No party may make a motion to convert the debtor to
chapter 13 if the debtor (and spouse combined) have a
monthly income equal to or less than the state median
household income reported by the Bureau of the Census.
The U.S. trustee may also decline to file a motion to
convert if the debtor’s monthly income is between 100%
and 150% of the national or applicable State median
income, and would permit a debtor to pay the lesser of (a)
25% of nonpriority unsecured debt or $6,000, whichever
is greater, or (b) $10,000. § 102.
IRS Living Standards
A chapter 13 debtor’s
Comparable but adds a new
applicable to chapter 13
“disposable income” which
11 U.S.C. § § 1329(a)(4)
reorganization plan
may be directed to the
permitting a chapter 13
repayment plan will be
debtor to deduct the costs
calculated in accordance
of health insurance from
with IRS Living Standards
plan payments.
if the debtor meets the
applicable means test for
s t a t e median fami l y
income. § 102.
Attorney sanctions for
If a panel trustee brings a successful motion for dismissal
improper motion
or conversion, counsel for the debtor will be liable to
reimburse the trustee for costs, attorneys’ fees, and
payment of a civil penalty if the court finds a violation of
Bankruptcy Rule 9011. § 102.
Creditor sanctions for an
The court may award the debtor costs for contesting an
improper motion
unsuccessful motion to convert if the court finds that the
motion violated Rule 9011, or was intended to coerce the
debtor into waiving rights under the Bankruptcy Code. A
creditor whose claim is less than $1000 is not liable for
sanctions. § 102
Dismissal of filings by
A crime victim or party in interest may request dismissal
persons convicted of
of the voluntary bankruptcy case of the convicted
violent crimes or drug
debtor. The court must grant the dismissal unless the
trafficking
filing is necessary to satisfy a domestic support
obligation. § 102
Additional consumer provisions

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Selected Provisions
H.R. 333, 107th Cong.,
H.R. 333 (S. 420),107th
1st Sess. (2001) As
Cong.,1st Sess. (2001)
Passed by the House
As Passed by the
Senate
Mandatory credit
Debtor must undergo credit counseling within 180 days of
counseling
filing, and may not obtain a discharge until completion of
a personal financial management instructional course.
The jurisdictional filing requirement may be waived for 30
to 45 days if the debtor certifies exigent circumstances or
was denied service from an approved counseling agency.
The U.S. trustee or bankruptcy administrator for the
judicial district is directed to oversee and approve
nonprofit budget and credit counseling agencies. § 106
Promotion of alternative
A creditor’s allowable claim may be reduced by 20% if a
dispute resolution
court finds that the creditor “unreasonably refused to
negotiate a reasonable alternative repayment schedule
proposed by an approved credit counseling agency that
provides repayment of at least 60% of the debt, and the
debtor can prove by “clear and convincing” evidence that
a creditor unreasonably refused to consider the offer.”
§ 201.
Reaffirmation agreements
Imposes enhanced requirements for approval of
a
reaffirmation agreement when the debtor is not
represented by counsel but exempts credit unions from
creditor disclosure requirements; requires U.S. Attorney
and FBI to investigate abusive reaffirmation practices. §
203.
Preserving defenses
No comparable provision
Amends 11 U.S.C. § 363 to
against predatory lenders
add a new subsection
preserving defenses that a
party to a consumer credit
transaction may have if the
contract is sold by a debtor
in bankruptcy. § 204.
GAO reaffirmation study
No comparable provision.
R e q u i r e s a s t u d y o f
reaffirmation practices and
a report to Congress. § 205
Domestic support owed to
Would move domestic support obligations to first priority,
individuals and
which is currently allocated to administrative expenses of
government units made
the bankruptcy estate. Administrative expenses would
first priority
become second priority. § 212.
Trustee notification of
Would direct the trustee to notify a priority child support
child support claim
recipient of the existence of a state child support
holders
enforcement agency, and, upon discharge, the existence of
nondischargeable and reaffirmed debt. § 219.

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Selected Provisions
H.R. 333, 107th Cong.,
H.R. 333 (S. 420),107th
1st Sess. (2001) As
Cong.,1st Sess. (2001)
Passed by the House
As Passed by the
Senate
Priority assigned to claims
A new § 507 tenth priority is created for unsecured claims
for liability incurred by
for liability incurred by a debtor from operating a vessel
the debtor DUI
while under the influence of alcohol or drugs. Claims of
this nature are also nondischargeable. § 223.
Retirement savings
Would clarify and expand the law to provide that
exemption broadened
retirement accounts that are tax exempt under the Internal
Revenue Code are exempted from the debtor’s estate up to
a $1,000,000 cap. § 224
Exemption for saving for
Subject to certain IRS requirements, excludes funds up to
postsecondary education
$5000 per specified beneficiary made within a year of
filing in an education individual retirement account and/or
any funds used to purchase a tuition credit or certificate
under a qualified state tuition program. §225
Protection of nonpublic
No comparable provisions.
Prohibits the transfer by the
personal information and
debtor of personal customer
consumer privacy
i n f o r m a t i o n u n l e s s
ombudsman
approved by the court.
P r o v i d e s f o r t h e
appointment of a consumer
privacy ombudsman if a
debtor wishes to sell or
lease such information. §§
231,232.
Prohibition on disclosure
Debtor may not be required
Comparable provision, but
of identify of minor
to disclose the name of a
gives access to nonpublic
children
minor child in public
records to U.S. trustee or
records. § 231.
auditor. § 233.
Lien stripping on security
Chapter 13 debtors would
Chapter 13 debtors would
interests in consumer
not be permitted to
not be permitted to
goods (cramdown)
bifurcate security interests
bifurcate security interests
in an automobile purchased
in an automobile purchased
within 5 years of the filing;
within 3 years of the filing;
or in other consumer goods
or in other consumer goods
purchased within 1 year of
purchased within 1 year of
the filing. § 306.
the filing. § 306.

CRS-14
Selected Provisions
H.R. 333, 107th Cong.,
H.R. 333 (S. 420),107th
1st Sess. (2001) As
Cong.,1st Sess. (2001)
Passed by the House
As Passed by the
Senate
Homestead exemption
I m p o s e s l e n g t h e n e d
Comparable provision. §
residency requirements to
307.
qualify for state exemption.
§ 307
Reduces the value of the
Adds a federal cap to state
exemption if the value is
homestead exemptions of
attributable to property that
$125,000. § 308.
the debtor disposed of
w i t h i n 7 y e a r s o f
bankruptcy with the intent
to hinder, delay or defraud
a creditor. § 308.
Omitted.
Debtors’ electing a state
homestead exemption may
not exempt any interest
acquired within 2 years of
filing which exceeds in the
aggregate $100,000, unless
the value in excess of that
amount occurs from a
transfer of residences
within the same state.
Exempts family farmers
from the limit. § 322.
Residential lease excepted
The automatic stay will not
Adds detailed requirements
from the automatic stay
operate to stop the
for lifting the automatic
continuation of, or in some
stay to continue with a
cases, the commencement
residential eviction of a
of eviction actions by a
lessor and certification
lessor against a debtor
requirements for the
involving rental property in
assertions of both the
which the debtor resides. §
l a n d l o r d a n d t h e
311.
debtor/tenant with respect
to actions under the
automatic stay. § 311
Restrictions on chapter 13
Amends chapter 13 to
Amends chapter 13 to
filings.
disallow discharge if the
disallow discharge if the
debtor has received a
debtor filed under chapters
discharge in any case filed
7, 11, or 12 within 3 years,
within 5 years. § 312.
or under chapter 13 within
2 years. § 312.

CRS-15
Selected Provisions
H.R. 333, 107th Cong.,
H.R. 333 (S. 420),107th
1st Sess. (2001) As
Cong.,1st Sess. (2001)
Passed by the House
As Passed by the
Senate
Definition of “household
Defines household goods to include clothing, furniture,
goods”
appliances, 1 radio, 1 television, 1 VCR, linens, china,
crockery, kitchenware, educational materials used by
minor dependent children (including 1 personal computer)
, medical equipment and supplies, furniture used
exclusively by minors and disabled or elderly dependents,
and personal effects. § 313.
Debtor’s duty to disclose
Comparable provision
M o d i f i e s d e b t o r
tax filings.
requiring a debtor to file,
requirement under 11
upon request, “all tax
U.S.C. § 521(f) to file tax
returns required under
returns with the court by
applicable law.” § 315.
limiting required filings to
federal tax returns. § 315.
Plan duration
Chapter 13 plans to have 5 year duration for families
whose monthly income is not less than the highest state
median family income. Families below the highest state
median income would have 3 year plans. § 318
Withheld wages for
Withheld wages for contributions to employee benefit
contributions to employee
plans would be excluded from the debtor (employer’s )
benefit plans
estate. This would override the current unsecured priority
at § 507(a)(3) which caps priority benefit claims at $4,650.
H.R. 333,§ 323; S. 420, §322.
Valuation of collateral
A secured creditor’s allowable claim would be the retail
cost to replace the item without deduction for costs of sale
or marketing. Personal property’s replacement value
would be the price a retail merchant would charge for like
items. H.R. 333, § 327; S. 420, §326.
Clarification of
No comparable provision.
M a k e s s p e c i f i e d
postpetition wages and
prepetition and postpetition
benefits
wages and benefits an
administrative expense. §
329.
Duties of a debtor who is
No comparable provision.
P e r m i t s a d e b t o r t o
also an employee benefit
continue as a plan
plan administrator
a d mi n i s t r at o r o f a n
employee benefit plan.§
420.
Audits
The Attorney General is directed to establish a procedure
to ensure random audits of no less than 1 out of every 250
individual filings; the U.S. trustee is authorized to enter
into contracts with auditors, and to take action when
misstatements in the debtor’s petition and schedules are
identified. § 603.

CRS-16
Selected Provisions
H.R. 333, 107th Cong.,
H.R. 333 (S. 420),107th
1st Sess. (2001) As
Cong.,1st Sess. (2001)
Passed by the House
As Passed by the
Senate
Nondischargeable consumer debts
Debts to government units
Defines “domestic support obligation” to include debts
for domestic support
owed to or recoverable by a governmental unit. §§ 211,
215.
Expanded definition of
Adds qualified educational loans as defined under § 221 of
student loan
the IRC to those educational loans that are currently
nondischargeable. § 220.
Loan repayments to
Makes nondischargeable, i.e., allows an employer to
debtor’s retirement
continue to withhold loan repayments to debtor’s
savings or thrift plan
savings/retirement plan from debtor’s wages. § 224(c).
Consumer debts presumed Consumer debts owed to a
Consumer debts owed to a
fraudulent
single creditor for more
single creditor for more
than $250 for “luxury
than $750 for “luxury
goods” incurred within 90
goods” incurred within 90
days of filing; and cash
days of filing; and cash
advances for more than
advances for more than
$750 under an open end
$750 under an open end
credit plan within 70 days
credit plan within 70 days
of filing are presumed to be
of filing are presumed to be
nondischargeable. § 310
nondischargeable. § 310
Debts incurred to pay
Debts incurred to a third party to pay a tax to a state or
nondischargeable debts
local government unit become nondischargeable. § 314.
are nondischargeable
Violence against providers
No comparable provision.
Makes nondischargeable
or users of lawful services
liability incurred from
(formerly reproductive
v i o l a t i o n s o f l a w
health services)
prohibiting harassment or
violence to persons who
provide or consume lawful
services; or damage or
destruction of property that
provides lawful goods or
services. § 328
Expanded definition of
Expands the types of post-petition condo and homeowners
nondischargeable
association fees that are nondischargeable by omitting
condominium and
requirement that in order to be nondischargeable the
homeowners association
debtor must reside in the residence postpetition. § 412.
fees
FEC penalties
No comparable provision.
Fines and penalties under
nondischargeable
federal election law are
made nondischargeable. §
1236.

CRS-17
Selected Provisions
H.R. 333, 107th Cong.,
H.R. 333 (S. 420),107th
1st Sess. (2001) As
Cong.,1st Sess. (2001)
Passed by the House
As Passed by the
Senate
Consumer credit disclosure
Amendments to the Truth
TILA amended to require enhanced minimum payment
in Lending Act
disclosures under an open end credit plan; enhanced
disclosures regarding the tax deductibility of credit
extensions which exceed the fair market value of a
dwelling for credit transactions secured by the consumer’s
dwelling; disclosures related to introductory “teaser” rates;
disclosures related to Internet-based open end credit
solicitations; and disclosures related to late payment
deadlines and penalties. TILA would be amended to
prohibit termination of a credit account because the
consumer has not incurred finance charges. §§ 1301-1306.
Study of bankruptcy
Comptroller General directed to study bankruptcy impact
impact of credit extended
of credit extensions to students in postsecondary school.
to dependent students
§ 1308
Consumer credit studies
The Board of Governors of the Federal Reserve would be
directed to study existing protections for consumers for
unauthorized use of a dual use debit card. § 1907
Business bankruptcy
Avoidable preferences
Amends 11 U.S.C. § 547 to liberalize the rules for
defending against an avoidable transfer in the ordinary
course of business; creates a new preference exception to
aggregate transfers of less than $5,000. § 409.

CRS-18
Selected Provisions
H.R. 333, 107th Cong.,
H.R. 333 (S. 420),107th
1st Sess. (2001) As
Cong.,1st Sess. (2001)
Passed by the House
As Passed by the
Senate
Small business bankruptcy
Subtitle B of Title IV has
provisions defining a
“small business” for
chapter 11 purposes as one
w i t h d e b t s u n d e r
$3,000,000. The debtor’s
period of exclusivity to file
a reorganization plan is 180
days.
A plan must be confirmed
A plan must be confirmed
within 45 days after the
within 175 days of filing in
plan is filed. § 438.
bankruptcy. § 438
P r o v i s i o n s r e q u i r e
establishment of uniform
accounting and reporting
s t a n d a r d s f o r smal l
businesses. Grounds for
appointment of a trustee
and the trustee’s general
supervisory duties are
expanded, as are grounds
for dismissal or conversion
of the case. §§ 431-442.

CRS-19
Selected Provisions
H.R. 333, 107th Cong.,
H.R. 333 (S. 420),107th
1st Sess. (2001) As
Cong.,1st Sess. (2001)
Passed by the House
As Passed by the
Senate
Chapter 11 corporate
Confirmation of a plan
Confirmation of a plan
nondischargeability
under chapter 11 would not
under chapter 11 would not
discharge a corporate
discharge a corporate
debtor from debts under 11
debtor from debts under 11
U.S.C. § 523(a)(2) for
U.S.C. § 523(a)(2) that are
property obtained by false
owed to a domestic
p r e t e n s e s o r
governmental unit for
representations; or any
property obtained by false
debt for taxes for which the
p r e t e n s e s o r
debtor willfully attempted
representations; or owed to
to evade or made a
a n indivi dual under
fraudulent return. § 708.
subchapter III of chapter 37
of Title 31, U.S.C.; or any
debt for taxes for which the
debtor willfully attempted
to evade or made a
fraudulent return. § 708.
Also, a provision in § 321
dealing with chapter 11
This provision is omitted.
cases filed by individuals
would amend 11 U.S.C. §
1141(d) to make all debts
which are nondischargeable
by individuals applicable to
corporate debtors. §
321(d).

CRS-20
Selected Provisions
H.R. 333, 107th Cong.,
H.R. 333 (S. 420),107th
1st Sess. (2001) As
Cong.,1st Sess. (2001)
Passed by the House
As Passed by the
Senate
Title X dealing with
M a k e s c h a p t e r 1 2
I n c l u d e s c o mp a r a b l e
chapter 12 family farmers
p e r m a n e n t ; i n c l u d e s
provisions.
jurisdictional debt limit in
a m o u n t s u b j e c t t o
readjustment in accordance
with CPI; subordinates
certain high priority
unsecured claims owed to
t h e g o v e r n m e n t t o
nonpriority claims. §§
1001-1003.
Raises jurisdictional debt
limit of family farmers to
No comparable provision.
$3,000,000 and lowers
percentage requirement of
income derived from
farming and expands the
time frame for measuring
farm income from one to
three years. §§ 1004, 1005.
P r o h i b i t s r e t r o a c t i ve
assessment of disposable
No comparable provision.
income. § 1006
Amends chapter 12 to
include “family fishermen.”
No comparable provision.
§ 1007.
General provisions
In forma pauperis filings
Directs the Judicial Conference to prescribe procedures for
waiving bankruptcy fees for an individual debtor under
chapter 7 whose income is less than 125% of the income
official poverty line and who is unable to pay the fee in
installments. § 418.
Bankruptcy judgeships
Creates new
temporary
By floor amendment, adds
bankruptcy judgeships for
an additional bankruptcy
designated districts. § 1224.
judgeship for the district of
Nevada. §1223
Discharge under chapter
M a k e s a t e c h n i c a l
No comparable provision.
12
correction to 11 U.S.C. §
1228. § 1219

CRS-21
Selected Provisions
H.R. 333, 107th Cong.,
H.R. 333 (S. 420),107th
1st Sess. (2001) As
Cong.,1st Sess. (2001)
Passed by the House
As Passed by the
Senate
Expedited bankruptcy
U.S. district court decisions
Allows immediate appeals
appeals to a court of
shall be deemed “final” for
from lower courts if
appeals
appeals purposes 31 days
d e c i s i o n i nvol ve s a
after filed if the district
substantial question of law;
court does not file a
a question requiring
decision within 30 days. §
resolution of conflicting
1234.
decision; or, a matter of
public importance. §1233.
Involuntary Bankruptcy
No comparable provision.
Technical corrections made
to 11 U.S.C. § 303 dealing
w i t h i n v o l u n t a r y
bankruptcy. § 1235.
Insolvent political
No comparable provision.
P o l i t i c a l c o m m i t t e e s
committees prohibited
subject to jurisdiction of
from filing in bankruptcy
the Federal Election
Commission may not file in
bankruptcy. § 1237
“Lloyds of London”
Prohibits U.S. courts from
Omitted.
provision barring
e n f o r c i n g f o r e i g n
enforcement of certain
judgments derived from
foreign judgments
fraudulent omissions that
occur in the U.S. during
January 1, 1975 through
December 31, 1993. §
1310.
Title XIV. Emergency
No comparable provision.
To provide assistance to
Energy Assistance and
consumers affected by high
Conservation Measures
energy prices and to
promote conservation
investments in private and
federal facilities. §§ 1401-
1408.
Title XVI. Miscellaneous
No comparable provision.
Directs the Fed. Crop Ins.
Provisions
Corp. to promulgate
regulations under 7 U.S.C.
§ 522(b). § 1601.
No comparable provision
Directs the GAO to study
the impact of enactment of
bankruptcy reform on filing
under chapters 7 and 13 and
on consumer credit. §
1602.

CRS-22
Selected Provisions
H.R. 333, 107th Cong.,
H.R. 333 (S. 420),107th
1st Sess. (2001) As
Cong.,1st Sess. (2001)
Passed by the House
As Passed by the
Senate
General effective date
S u b j e c t t o e x p r e s s
Identical provision. § 1501.
provisions otherwise, the
new law will take effect
180 days after enactment
and will not apply to cases
commenced before the
effective date. § 1401.