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Web posted and Copyright © October 1, 1997, American Bankruptcy Institute.

Sen. Grassley Introduces Religious Liberty and Charitable Donation Protection Act of 1997

On Wednesday, October 1, 1997, Sen. Charles E. Grassley (R-Iowa) introduced the Religious Liberty and Charitable Donation Protection Act of 1997 (S. 1244) to amend both §548 and §544 to protect contributions made to religious, charitable or other non-profit groups from avoidance as fraudulent conveyances. The bill, which would shield from creditors any "tithed" donations to churches by individuals who subsequently file for bankruptcy, was introduced October 2 in the House by Rep. Ron Packard (R-Calif.) as H.R. 2604.

It creates a "safe harbor" which protects all such transfers up to an aggregate amount of 15 percent of the gross annual income of the debtor for the year in which the transfer is made. Transfers that exceed the 15 percent safe harbor would still be protected from avoidance if the transfer is reasonable in amount and consistent with the debtor's established practice regarding such contributions. What is "reasonable" and "established" will depend on the facts of each case.

Responding to suggestions made at a September 22 hearing before the Judiciary Subcommittee on Administrative Oversight and the Courts, Grassley narrowed some parts of the proposed legislation. In one change, the bill would apply only to individual donors, not corporations. At the hearing, the NBRC criticized the bill's availability for use by business entities, arguing that the defense for a true fraudulent transfer set out in the bill would result in excessive litigation. In other changes, the type of donations would be limited to cash and securities, and donations above the 15 percent threshold would be protected if the debtor could prove a "pattern of past practice" of tithing at that higher level.

Witnesses testifiying in support of the bill at the September 22 hearing argued that the long reach-back period of Section 548 creates a special hardship on religious organizations and can force them to return transfers long ago spent for which there are no funds to replace, resulting in a reduction of the religious and charitable work of these institutions.

The Act arises out of a perceived misapplication in the fraudulent conveyance laws as applied to the practice of tithing. In several cases, trustees have successfully argued that contributions to churches, even if made in the ordinary course of a long history of giving, are "in exchange for" reasonably equivalent value and thus are irrefutably presumed to be fraudulent. The one contrary opinion at the appellate level permitting tithing, In re Young, 82 F.3d 1407 (8th Cir. 1996) accpted, 117 S. Ct. 2502 (1997) has been called into doubt by the Supreme Court's decision in City of Boerne v. Flores, which declared the Religious Freedom Restoration Act unconstitutional.

The proposed bill also protects the right of individual debtors to continue to make charitable contributions even though they are in chapter 13. Although courts generally abstain from interfering with a debtor's lifestyle choices when considering how to allocate disposable income, many courts have disallowed charitable or religious contributions in chapter 13.

The National Bankruptcy Conference in testimony at the September hearing strongly criticized the bill for creating a "loophole" that would be abused by debtors, and that in any event, the 15 percent amount is excessive.

Final Rule for Trustee Suspension, Removal Goes into Effect November 1, 1997; Private Trustees Reform Act Introduced in House

The Private Trustees Reform Act of 1997 (H.R. 2592), introduced on October 1, 1997, by Rep. Bob Goodlatte (R-Va.), would provide private trustees with a right to seek judicial review of U.S. Trustee actions related to trustee expenses and removal.

The bill would provide chapter 7 and chapter 13 panel and standing trustees with a right to review in the bankruptcy court. The bankruptcy judge would have the authority to determine the actual, necessary expenses of the trustee and could reverse a decision to remove a trustee from the panel if the U.S. Trustee is found to have acted unreasonably or without cause.

The House Judiciary Committee Subcommittee on Commercial and Administrative Law has scheduled a hearing for October 9, 1997, on the bill. Also to be considered is the Final Rule, from the Executive Office of the U.S. Trustee, establishing procedures for the suspension and removal of panel and standing trustees, published on October 2 at 28 C.F. R. Part 58.6 of the Federal Register. The EOUST alternative to H.R. 2592 creates an internal review procedure that would result in final agency action subject to judicial review in the U.S. District Court under the Administrative Procedure Act.

Commission Mail Ballot Amends Consumer Exemption, Single-asset Recommendations

The results of the National Bankruptcy Review Commission's fourth mail ballot, released on September 24, amend some earlier recommendations made by the Commission and follow up on proposals considered at earlier meetings.

On May 16, the Commission, by a vote of 7-2, adopted the Consumer Bankruptcy Working Group proposal #1, dealing with uniform federal exemptions. That proposal set up a homestead exemption range of no less than $30,000 and no more than $100,000, notwithstanding any state law.

After the August Commission meeting, Commissioners Hartley and Ginsberg prepared modifications which were circulated by mail ballot to all Commissioners. The Hartley proposal would have created a uniform federal standard for homestead and all other property but did not propose a specific dollar amount. The proposal was defeated by a vote of 4-5. The Ginsberg proposal, which was approved 5-4, would reduce the floor on the range of permissible homestead exemptions listed above to $20,000. This amount now becomes the new floor for purposes of the October 20 final report. Voting in favor were Commissioners Williamson, Ginsberg, Alix, Butler and Ceccotti.

In the single asset real estate area, the Commission approved, 5-3 (Chairman Williamson not voting), proposal # 10, defining these cases witout reference to a dollar cap as in current law [currently $4 million]. Also by the same vote, the Commission approved proposal #11, which provides the terms for a "new value exception" for single asset real estate debtors as follows: (1) the new value contribution must pay down the secured portion of the claim on the effective date of the plan so that, giving effect to the confirmation of the plan, sufficient cash payments on the secured portion of the claim shall have been made so that the principal amount of debt secured by the property is no more than 80 percent of the court-determined fair market value of the property as of the confirmation date; (2) the payment terms for the secured portion of the claim must both (i) satisfy all applicable requirements of §1129 of the Code, and (ii) satisfy then-prevailing market terms in the same locality regarding maturity date, amortization, interest rate, fixed-charge coverage and loan documentation; and (3) the new value contribution must be treated as an equity interest that is not convertible to or exchangeable for debt.

Voting for both proposals were Commissioners Butler, Jones, Gose, Hartley and Shepard.

Status of Select NBRC Working Group Proposals

This is a reproduction of a table from the October issue of the ABI Journal, containing excerpts of the National Bankruptcy Review Commission's Progress Report as of September 25, 1997. The full text of each of the proposals listed below is available under the respective Working Group in the NBRC area at ABI World, and the Commission's final report, due October 20, 1997, will be accessible from the same part of ABI World: http://www.abiworld.org/legis/review/.

Chapter 11 Working Group

Status of Proposal

#1: Absolute Priority & Exclusivity

Adopted September 19, 1996

#2: Claims Classification

Adopted September 19, 1996;

#4: Review of Creditors’ Committee Appointments

Re-adopted August 12, 1997 upon reconsideration

#5: Exclusion of Payroll Deductions from Property of the Estate #6: Third-party Releases

Adopted October 19, 1996

#7: Clarification of §363(f)

Adopted by mail ballot July 14, 1997

#8: Post-confirmation Plan Modification

Adopted April 17, 1997

#9: Pre-bankruptcy Waivers

Adopted by mail ballot July 14, 1997

#10: Pre-packaged Plans of Reorganization:

Adopted May 14, 1997

Pre-petition Solicitation

Adopted by mail ballot July 14, 1997;

#11: Pre-packaged Plans of Reorganization:

Re-adopted August 12,1997 upon reconsideration with clarifying language

Post-petition Solicitation

Adopted by mail ballot August 5, 1997;

#12: Pre-packaged Plans of Reorganization:

Re-adopted August 12, 1997 upon reconsideration

Section 341 Meetings

Adopted by mail ballot August 5, 1997

#13: Impairment

Adopted by mail ballot August 5, 1997

#16: Elimination of Mandatory Appointment of Examiners

Parts (a) and (b) withdrawn; Part (c) not adopted

#18: Authorization for Local Mediation Programs

Adopted August 12, 1997

Consumer Bankruptcy Working Group

Adopted August 12, 1997

#1: Uniform Federal Exemptions

Status of Proposal

#2: Framework for Changes to Chapters 7 and 13

Adopted May 16, 1997;

#3: Dischargeability of Student Loans

Alternative proposal to be prepared by Commissioner Hartley and determined by mail ballot per August 12, 1997 Meeting

#4: Section 523 Exceptions to Discharge: (a) Scope of 11 U.S.C. §523(a)(4); (b) Exceptions to Discharge Relating Specifically to Failure of Financial Institutions; (c) Non-dischargeability of Debts for Support, Maintenance & Alimony; (d) Criminal Restitution Orders; (e) Debts Incurred to Pay Federal Taxes; and (f) Unpaid Court Fees and Costs

Adopted June 20, 1997;

#5: Procedural Issues in Exceptions to Discharge: (a) Authorization to Enter Money Judgments in Non-dischargeability Actions; (b) Issue Preclusion Effects of True Defaults; and (c) Vicarious Liability

Substitution proposed by Commissioner Butler adopted August 12, 1997

#6: Continued Evaluation of Bankruptcy Fee Waiver Program

Adopted June 19, 1997

#7: Dischargeability of Credit Card Debt

Component (a) not adopted by mail ballot September 5;

#8: Amendment of §548 to Except Certain Transfers Made to Charitable or Religious Organizations

component (b) not adopted; component (c) to be revised and determined by mail ballot; component (d) adopted; component (e) subsumed by Proposal No. 7; and component (f) not adopted August 12, 1997

Government Working Group

Adopted components 5(b) and 5(c) by mail ballot September 5, 1997; component 5(a) not adopted by mail ballot

#2: Amendment of §724(b)(2)

Not voted upon

#4: Improving Notice to Government Creditors Regarding Abandonment of Environmentally Contaminated Property under 11 U.S.C. §554.

Adopted by mail ballot September 5, 1997

#5: Section 105; Police & Regulatory Actions

Not adopted August 12, 1997

#7: Amendment of §362(b)(4)

Status of Proposal

#8: Burden of Proof on Tax Matters

Alternative 2 as modified and adopted June 19, 1997

#9: Repeal of §1231(b)

Not forwarded by Working Group

#10: Mandatory Filing of Tax Returns

Not forwarded by Working Group

#11: Non-dischargeability of Fraudulent Tax Claims in

Superseded by pending legislation

Chapter 13

Adopted June 19, 1997

Jurisdiction &Procedure Working Group

Adopted January 23, 1997

#1: Appellate Structure

Subsumed with Consumer Bankruptcy Working Group Proposal No. 2 and Tax Issue Track No. 441

#2: Venue

Subsumed with Consumer Bankruptcy Working Group Proposal No. 3

#8: Article I/III Status

Status of Proposal

#10: Affiliate Rule

Adopted July 18, 1996

#11: Article III Transition

Adopted December 18, 1996

#12: Preferences - Raise Minimum Avoidable Preference to $5,000 Aggregate Payment to Non-insiders

Adopted December 18, 1996

#13: Preferences - Require Preference Actions Under $10,000 to Be Tried in the District Where the Creditor Is Located

Adopted February 21, 1997

#14: Preferences - Amend §547(c)(2)(B)

Adopted February 21, 1997

Mass Future Claims Working Group

Adopted by mail ballot July 14, 1997

#1: Treatment of Mass Future Claims in Bankruptcy

Adopted by mail ballot July 14, 1997

Service, Ethics Working Group

Adopted by mail ballot July 14, 1997

#1: Disinterestedness

Status of Proposal

#3: National Admission to Practice

Adopted as modified on June 19, 1997

#5: Fee Examiners

Status of Proposal

#7: Personal Liability Standard for Bankruptcy Trustees

Adopted October 19, 1996;

Small Business, Partnership and Single Asset

Motion to reconsider adopted June 19, 1997;

Real Estate Working Group

Not adopted in favor of alternative language adopted by mail ballot August 5, 1997

#1: Small Business Proposal

Adopted April 17, 1997

#10: Single Asset Real Estate Proposals:

Adopted April 17, 1997

(a) Elimination of $4 Million Cap for Single Asset Real

Adopted by mail ballot September 5, 1997

Estate Cases, (b) Definition of Single Asset Real Estate, and (c) Applicability of the New Value Single Asset Real Estate Plans

Status of Proposal

Transnational Working Group

Adopted June 20, 1997

#1: Venue of Ancillary Proceedings

To be revised and determined by mail ballot

Section 365

Status of Proposal

#1: Contracts Subject to §365; Eliminating the "Executory" Requirement

Adopted October 19, 1996

Chapter 12

Status of Proposal

#1: Direct Payment Plans

Adopted April 17, 1997

Valuation

Status of Proposal

#1: Valuation of Collateral (personal & real property) under §506(a)

Adopted May 14, 1997

Tax Issues

Status of Proposal

Track Nos. 105, 106 & 109: Notice to Governmental Units

Adopted by mail ballot September 5, 1997

Track No. 214 (Part IV): Accrual of Interest at Stated Statutory Rate for Tax Claims

Status of Proposal

Track No. 315: Require Small Business Debtors to Create and Maintain Separate Bank Accounts for Trust Fund Taxes and Non-tax Deductions from Employee Paychecks

Adopted May 14, 1997

Track No. 422: Amend 11 U.S.C. &#167;&#167;502(a)(1) and 503(b)(1)(B) to Provide that Post-petition <I>Ad Valorem</I> Real Estate Taxes Be Characterized as Administrative Expenses

Adopted May 14, 1997

Track No. 424: Entitlement of Post-petition <I>Ad Valorem</I> Taxes to Administrative Expense Status

Adopted May 14, 1997

Track No. 701: Amendment of 11 U.S.C. &#167;1125(b) to Require Disclosure of the Tax Consequences of a Plan of Reorganization

Adopted May 14, 1997

Track No. 441: Conformity of chapter 13 plans with Bankruptcy Code: Requirement to File Returns

Adopted August 11, 1997

Track No. 713: IRC &#167;1001 Should Be Amended to Provide for Parallel Tax Treatment of Recourse and Non-recourse Debt Track No. 425: Clarify Tax Treatment of Property of the Estate That Is Abandoned to the Debtor

Adopted August 11, 1997

Track No. 425: Clarify Tax Treatment of Property of the Estate That Is Abandoned to the Debtor

Proposal No. 3 adopted as amended August 11, 1997

Track No. 212: Specify Debtor&#146;s Obligation to File Pre- petition and Post-petition Returns and to Pay Post-petition Taxes; Consequences for Failure to Comply

To be forwarded in Tax Advisory Committee Report - August 11, 1997

Track No. 213: Applicability of the chapter 13 Superdischarge to Tax Claims

Disposition pending

Track No. 321: Allocation of chapter 11 Plan Payments to Trust Fund Taxes and Collection Remedies Available to Taxing Authorities; Energy Resources

To be forwarded in Tax Advisory Committee Report - August 11, 1997

Summary of NBRC Report Recommendations

The nine Commissioners achieved unanimity on a broad series of recommendations—changing the bankruptcy appellate structure, the need for better compilation and dissemination of bankruptcy data, and improving bankruptcy procedure and jurisdiction. In other areas, such as small business cases, uniformity in exemptions, random audits, a national filing registry, consumer credit counseling and a bright line test to bar discharge of credit card debt, there was strong consensus. Where there has not been consensus, however, in a series of consumer bankruptcy proposals, the report sets forth comprehensive majority and minority views that fully address the issues.

This is a summary of the Commission's recommendations:

  • For consumer bankruptcy, a uniform approach to exemptions for debtors that, coupled with audits, national registration, and a limit on both repeat filings and reaffirmation of unsecured debt, should help slow or reverse the increase in consumer bankruptcies and enable the debtors to repay more of their obligations to more of their creditors.
  • For business bankruptcy, increased efficiency and cost savings through a new approach to how chapter 11 cases are processed, new proposals for treatment of partnerships in bankruptcy, contracts and preference payments, a recognition of the special challenges of transnational insolvency, and mass damage claims and, for small business reorganizations, accelerated procedures to help eliminate unproductive cases.
  • For family farm bankruptcy, the permanent establishment of chapter 12 and, for municipal bankruptcy, improved procedures suggested by the experience of the Orange County chapter 9 case.
  • For the entire system, a major savings of time and money through the elimination of a mandatory appeal to the federal district courts, improved compatibility between the bankruptcy law and the Internal Revenue Code, and renewed attention to the roles and responsibilities of bankruptcy judges, private trustees and the U.S. Trustee program.

The final report is available at http://www.nbrc.gov.

Analysis and Comment on the Consumer Bankruptcy Protection Bill, Introduced by Sen. Grassley

Prepared by:
Richardo I. Kilpatrick
Shermeta, Chimko & Kilpatrick P.C.

The following is a section-by section analysis of S. 1301, the Consumer Bankruptcy Reform Act of 1997, introduced in the Senate on Oct. 21, 1997 by Sen. Grassley (R-Iowa).

SEC. 101. CONVERSION.

This provision will delete the prohibition against the courts conversion of a case from a chapter 7 to chapter 13.

COMMENT: Previously, §706 prohibited the court from converting a case to chapter 12 or 13 unless it was at the debtors’ request. This will allow the conversion of a case to a chapter 13 by the court under 707(b) motions.

SEC. 102. DISMISSAL OR CONVERSION.

§707(b) is to be amended to delete the prohibition against creditors requesting or suggesting the conversion or dismissal of a chapter 7 case. The term "substantial abuse" has been replaced with simply "abuse" and a test is now provided for determining whether a chapter 7 filing is an abuse of the chapter.

The test will focus on whether granting the relief would be an abuse of the provisions given the totality of the circumstances.

(A) whether the debtor can repay 20% of unsecured claims as those claims would come due in the ordinary course;

(B) whether the petition was filed in bad faith;

(C) whether the debtor made good faith efforts to use alternative methods of dispute resolution including negotiations with creditors or a repayment through some type of credit counseling service.

The panel trustee is now empowered to bring a motion to dismiss or convert and will be awarded fees and expenses in the event that the court grants the motion.

In the event that the party in interest is not successful and the court finds that the position of the moving party was not substantially justified or if the motion is brought solely to coerce a debtor into waiving the right guaranteed under Title 11, the debtor is entitled to actual damages in an amount not less than $5,000.00.

COMMENT: Test is better, but sanctions will have a chilling effect on parties bringing motion.

TITLE II--ENHANCED PROCEDURAL PROTECTIONS FOR CONSUMERS

SEC. 201. ALLOWANCE OF CLAIMS OR INTERESTS.

The bill proposes an amendment to §502 of the Code to award the debtors reasonable attorneys’ fees and costs if the court disallows a claim or reduces that claim by 5% of the initial amount. The court is also to award punitive damages in the amount of $5,000.00 if the court finds that the claimants position was not substantially justified.

SEC. 202. EXCEPTIONS TO DISCHARGE.

§523(d) of the Code is proposed to be amended to require an award of attorneys’ fees and costs in the event that a creditor is not successful on an exception to discharge. In addition, if the position of the creditor was not substantially justified, the court is to award punitive damages in an amount of the actual damages multiplied by 3 or $5,000.00. It is my assumption that it will be the greater of the two alternatives.

SEC. 203. EFFECT OF DISCHARGE.

§524 of the Code would be amended to require a creditor to credit payments under a confirmed plan in conformity with the provisions of the confirmed plan and any failure to do so would be a violation of the discharge injunction under §524. Further, a creditor is prohibited from charging a debtor for attorneys’ fees or costs incurred in connection with handling a case under Title 11 which shall result in the imposition of punitive damages in the amount of the actual damages multiplied by 3 or $5,000.00 and costs and attorneys’ fees.

SEC. 204. THE AUTOMATIC STAY.

§204 will provide a statutory fee to the debtor for willful violation of the stay under §362(h) which will include the greater of actual damages multiplied by 3 or $5,000.00 plus attorneys’ fees and costs and in appropriate cases, punitive damages.

This provision is somewhat confusing because it has a new subsection (3) that uses the substantial justification language and provides for punitive damages in an amount of 3 times the actual damages or $5,000.00; however, this seems redundant with the additions to 362(h)(1) and (h)(2).

SEC. 205. WHO MAY BE A DEBTOR.

This provision would amend §109 to provide that any creditor who challenges the eligibility of a debtor and later withdraws or whose motion is not approved by the court will be responsible to pay the debtors’ attorneys’ fees and costs, and in the event that the parties position was not substantiallyjustified, the debtor is to receive an amount equal to the greater of actual damages multiplied by 3 or $5,000.00.

TITLE III--IMPROVED PROCEDURES FOR EFFICIENT ADMINISTRATION OF THE BANKRUPTCY SYSTEM

SEC. 301 NOTICE OF ALTERNATIVES.

This provision would amend §342 of the Code by requiring the U.S. Trustee to prescribe a written notice which will contain a description of chapter 7, 11, 12 and 13 and the benefits and costs of those proceedings and a description of non-profit debt counseling services that are available and the name, address and telephone numbers of such debt counseling services.

§521 requires that the attorney or petition preparer present the debtor with the notice prepared by the U.S. Trustee under §342. It further requires that if there is no attorney that the debtor obtain and read the notice.

Copies of federal tax returns for three (3) years preceding the case, 60 days verification of income, a statement of projected net monthly income and a statement indicating any anticipated increase in income or expenditures are required under the proposed amended §521. There is an additional requirement that the court make available, petition, schedules and statement of affairs and the debtor’s plan. Until the case is closed the debtor is required to file with the court copies of tax returns with attachments; and in a chapter 13 case an annual statement of income and expenses that shows how the amounts were calculated is also required. The provision further requires that the debtor disclose income received from any individual who contributes to the household.

§586 of Title 28 is amended to incorporate the requirements of §342 as set forth previously.

SEC. 302 FAIR TREATMENT OF SECURED CREDITORS UNDER CHAPTER 13.

§1325 is amended to provide that the lien of a creditor is retained until the claim is fully paid as provided for in the plan.

EDITORIAL: This provision will not reduce litigation as it is not clear in what is intended.

SEC. 303 DISCOURAGEMENT OF BAD FAITH REPEAT FILINGS.

This section amends 362(a) and creates a prohibition against refiling within 1 year by limiting the stay to 30 days unless the moving party is capable of showing that the case was filed in good faith with respect to the creditors to be stayed. Please note that the stay is limited to one or more creditors and a hearing must be completed before the expiration of the 30-day period. The provision furthergives some indicia as to how the court is to determine good faith: more than one previous case under the title within one year, failure to abide by a court order or to file or amend the petition or other documents, no change in financial circumstances.

The provision also provides for in rem relief against specific property for a definite or indefinite period.

COMMENT: The language is cumbersome and will be difficult to work with as currently drafted.

SEC. 304 TIMELY FILING AND CONFIRMATION OF PLANS UNDER CHAPTER 13.

§1321 is amended to provide that the plan must be filed within 90 days after the filing of the petition unless the time is extended by the court for cause.

§1324 requires that the court hold a confirmation hearing no later than 45 days after the plan is filed.

SEC. 305.APPLICATION OF THE CODEBTOR STAY ONLY WHEN THE STAY PROTECTS THE DEBTOR.

§1301 would be amended to remove the codebtor stay in cases where the debtor did not receive consideration for the claim held by a creditor and a creditor will be allowed to pursue the individual that received the consideration or the debtor is not in possession of the property that secures a claim.

There is also a provision to terminate the stay if the subject matter is a lease, which the debtor surrenders or abandons or fails to provide for treatment of the claim under the plan.

COMMENT: Lease treatment good, other portion will increase the litigation as fact intensive.

SEC. 306. EXTENSION OF PERIOD BETWEEN BANKRUPTCY DISCHARGES.

§727(a)(8) will be amended to increase the period between discharges from 6 to 10 years and to provide the modification to §1328 which will not allow a discharge if the debtor has previously received a discharge within 5 years preceding the filing of the instant case.

SEC. 307. IMPROVED BANKRUPTCY STATISTICS.

28 USC 159 will require that the clerk of each court compile statistics in a form prescribed by the administrative office itemized by chapter to include the following information: the total of assets and liabilities and each category as reported in the schedules, total monthly income, projected net income and average income and average expenses as reported in the debtor’s schedules, aggregate amountof debt discharged in the reporting period, average time between filing of the petition and closing of the case, the number of reaffirmations obtained in the individual case, the number of cases in which reaffirmations where obtained, the number of reaffirmations obtained from debtors not represented by counsel, the number of reaffirmations approved by the court, the number of cases in which a final order was entered determining value of a secured claim, the number of cases dismissed for failure to make payments, the number of cases in which the debtor filed another case within the 6 years previous to the incident filing.

SEC. 308. AUDIT PROCEDURES.

28 USA 586 would require the Attorney General to establish procedures for auditing the accuracy and completeness of petition schedules and other information. The actual audits are to be undertaken by accountants who will be under contract with the U.S. Trustee. The audits are to be random and the information obtained, which will include a review of income and expenses, is to be made available on an annual basis. The audits are to be paid for as an administrative expense from the debtors with sufficient available income or assets to contribute to the payment. Creditors are to be notified of misstatements as revealed in the audit, and criminal referrals are required in appropriate cases.

SEC. 309. CREDITOR REPRESENTATION AT FIRST MEETING OF CREDITORS.

An attorney, a creditor holding a consumer debt, or any representative of a creditor shall be permitted to appear and participate at meeting of creditors.

SEC. 310. FAIR NOTICE FOR CREDITORS IN CHAPTER 7 AND 13 CASES.

§342 of Title 11 will allow a creditor to specify an address for notice requiring the debtor to provide account numbers and the last communications forwarded to the debtor. If the debtor fails to give the requisite notice, punitive damages under §362(h) are barred.

SEC. 311.DISMISSAL FOR FAILURE TO FILE SCHEDULES TIMELY OR PROVIDE REQUIRED INFORMATION.

§707 of the Code will be amended to provide that the case is automatically dismissed on the 16th day after the filing of the petition if the schedules are not filed unless the debtor requests an additional period from the court.

SEC. 312.ADEQUATE TIME FOR PREPARATION FOR A HEARING ON CONFIRMATION OF THE PLAN.

Requires that the court give a minimum of 20 days between the first meeting of creditors and a hearing on confirmation if a creditor objects to the plan.



 

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