Web posted and Copyright © September 1, 1998, American Bankruptcy Institute.
This month's Update identifies a number of possible amendments (and the possible sponsors) to S. 1301, the Senate's bankruptcy reform bill. The bill is expected to be considered by the full Senate in early September. This list was compiled from discussions with Capitol Hill sources. The full text of the bill and the Judiciary Committee's report are available online.
"Manager's Amendment" (Grassley or Grassley/Durbin)
A complete substitute for S. 1301, making technical corrections of the bill approved 16-2 by the Judiciary Committee in May. Some substantive provisions could also be included, such as the Financial Contract Netting Improvement Act, approved by the House Banking Committee on August 5. A similar provision is included in Title II of S. 1914, the Senate's business bankruptcy bill.
May amend §546(c) to extend the number of days a seller of goods has to reclaim goods shipped to a debtor. The number of days in the amendment (perhaps 45 days) is to be determined. Could be included in the manager's amendment.
Shopping Center Leases
May amend §365(d)(4) to provide that when a debtor is the lessee under a commercial lease, the lease will be deemed rejected and property surrendered unless the lease is assumed within 120 days of filing. The only way to extend the time period is if the lessor requests an extension which is granted by the court. The actual time period in the amendment is to be determined. Could be included in the manager's amendment. See §213 of H.R. 3150 for a different approach to unexpired leases of non-residential real property.
Consumer Credit Counseling
S. 1301 now requires all consumer debtors to attempt a debt repayment plan through an approved credit counselor, and requires all debtors to successfully complete a course on personal financial management. The amendment would make these steps discretionary rather than mandatory.
High LTV Loans (Reed)
Would amend the Truth in Lending Act to require lenders offering high LTV (loan-to-value) mortgages to disclose in all advertising and at the time of the borrowers application that interest payments on loan balances above the home value are not tax deductible.
Would amend current law to permit reaffirmations only on secured loans, or otherwise limit the availability of reaffirmations of unsecured debts.
In Forma Pauperis (Specter)
Would permit an individual debtor to file a bankruptcy case without paying a filing fee. The Judiciary Committee rejected this proposal on a 9-9 vote.
Tobacco Liability Claims (Leahy)
Would make tobacco liability claims based in whole or in part on false pretense, false representation or actual fraud non-dischargeable in chapter 11. Similar to §119A of H.R. 3150.
Would provide further protection and priority for child support payments, compared to other consumer creditors.
Credit Solicitation to Minors (Dodd)
Would prohibit credit card solicitation by mail to those below age 21 (or 18).
Consumer Credit Reform (Feinstein)
Aimed at limiting the bankruptcy claims of credit grantors who have extended credit to individuals who are at 40 percent debt/income ratios. The amendment could amend the Truth in Lending Act to require lenders to notify borrowers when they have reached a certain debt threshold. Alternatively, it could limit the bankruptcy claim of a creditor who extended credit in such a situation.
Consumer Credit Reform (Durbin)
Could require the lender to disclose how long it will take the consumer to pay a debt in full while making only the monthly minimum payment.
Would limit the bankruptcy claims of creditors who extend cash advances from an ATM located in a casino or gaming establishment.
ATM Fees (D'Amato)
Would abolish bank fees charged for use of automatic teller machines.
Minimum Wage Hike (Kennedy)
Would raise the federal minimum wage, in two 50-cent increments, to $6.15 by the year 2000. (S.1805)
Pay Equity for Women (Boxer)
Would make unequal pay for equal work by women a violation of the federal civil rights laws.
Panel Trustee Judicial Review
Would provide a right of judicial review to panel and standing trustees who are removed from case rotation by the U.S. Trustee. A bill on this issue has passed the House. (H.R. 2592). The bill is opposed by the Justice Department, because it would permit review by a bankruptcy judge rather than a magistrate judge.
Chapter 12 Extension (Grassley)
Chapter 12 is due to expire in October. H.R. 3150 makes the law permanent, but with some changes. The House bill requires the chapter 12 plan to be filed within 150 days and permits secured creditors to elect to have their claims treated as secured to the extent the claims are allowed, not withstanding §506(a). The Senate will likely pass a straight extension.