COMPARISON OF SELECTED CONSUMER PROVISIONS IN H.R. 833 AND S. 625, THE BANKRUPTCY REFORM ACTS OF 1999
CRS Report for Congress
Comparison of Selected Consumer Provisions in
H.R. 833 and S. 625,
the Bankruptcy Reform Acts of 1999
American Law Division
The Senate Judiciary committee reported S. 625 favorably on April 27, 1999 by a
vote of 14-4. Many of the controversial issues that were not addressed in committee are
likely to be addressed on the floor.
The House passed its version of bankruptcy reform, H.R. 833, on May 5, 1999 by
a vote of 313-108. The bill, a manager’s amendment to H.R. 833, is similar to H.R.
were adopted. The President has threatened to veto the Bankruptcy Reform Act if it is
enacted in a form comparable to H.R. 833 as passed by the House.
This report will be updated as legislative developments warrant.
The full Senate may soon consider S. 625, 106 Cong., 1 Sess. (1999), addressingthst1th
bankruptcy reform. In the meantime, the House recently passed H.R. 833, 106 Cong.,
the scope of nondischargeability of student loans to include all qualified loans rather than
just federally backed ones; an amendment to modify the Truth in Lending Act (TILA) to34
require credit card issuers to make disclosures regarding minimum monthly payments; and
an amendment imposing certain disclosure and notice requirements on debt relief
See S.Rept. 106-49 (1999). See also, S. 945, 106 Cong., 1 Sess. (1999), entitled the1thst
“Consumer Bankruptcy Reform Act of 1999,” introduced May 3, 1999 by Sen. Durbin.
H.R. 833 at § 2183
Id. at § 112.4
Congressional Research Service ˜ The Library of Congress
agencies. Among proposed amendments to the bill which did not pass was the Hyde-5
Conyers proposal to soften the means test by substituting Internal Revenue Service living
expense standards with cost-of-living guidelines based on a “reasonable and necessary”
standard that would be tailored to bankruptcy purposes.
The chart below provides a summary comparison of selected consumer provisions in
the Senate and House bills as they presently stand:
Selected ProvisionsS. 625 as reported by theH.R. 833 as passed by
Senate Judiciarythe House
ImplementationWould amend 11 U.S.C. § All parties may move for
707 to permit creditors, theconversion to chapter 13, but
trustee, or any party inthe standing trustee must
interest to challenge areview each filing and move
debtor’s eligibility to filefor conversion where abuse
under chapter 7. If indicated,is found. § 102.
the U.S. trustee must file a
statement indicating that the
debtor’s case would be a
presumed abuse of chapter
Presumed abuseIf challenged, the debtorAbuse exists if, by
would be presumed to becalculating monthly income
abusing chapter 7 if currentafter deducting charitable
monthly income, multipliedcontributions, administrative
by 60, would permit a debtorexpenses, private school
to pay the lesser of 25% oftuition of up to $10,000, and
nonpriority unsecured debtsecured debt payments, and
or $15,000. § 102.multiplying by 60 months,
there is a surplus of not less
than $6,000 (or $100 per
month). § 102
Id. at § 154.5
Calculation of monthlyExpenses to be calculated Expenses to be calculated as
living expenses“under standards issued byspecified under the National
the Internal Revenue ServiceStandards and Local
for the area in which theStandards, and the debtor’s
debtor resides.” §102.actual monthly expenses for
the categories specified as
Other 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. § 102.
To rebut the presumptionThe debtor must demonstrateThe debtor must demonstrate
“special circumstances.” §“extraordinary
ExemptionThe U.S. trustee orNo party may make a motion
bankruptcy administratorto convert the debtor to
may file a statement that achapter 13 if the debtor (and
conversion motion would spouse combined) have a
not be appropriate if themonthly income “equal to or
debtor’s current monthlyless than the regional median
income is less than thehousehold income calculated
highest national oron a semiannual basis.” §
applicable State median102.
family income. § 102.
Attorneys’ feesIf a trustee determines that aIf a panel trustee brings a
debtor’s case should besuccessful motion for
converted, the debtor mustdismissal or conversion,
reimburse costs, includingcounsel for the debtor will be
attorneys’ fees. § 102.liable to reimburse the
trustee for costs, attorneys’
fees, and payment of a civil
penalty. § 102.
Mandatory creditDebtor must undergo creditComparable provisions, but
counselingcounseling within 180 daysthe debtor must undergo
of filing, and may not obtaincredit counseling within 90
a chapter 13 discharge untildays of filing. Chapter 7
completion of a personaldebtors must also complete
financial managementan approved instructional
instructional course. Chaptercourse. § 302.
7 debtors must also complete
an approved instructional
course. § 105.
Promotion of alternativeCreditor’s allowable claimThe court may reduce a
dispute resolutionmay be reduced by 20% if acreditor’s claim by 20% if
court finds that the creditorthe debtor can prove by
“unreasonably refused to“clear and convincing”
negotiate a reasonableevidence that a creditor
alternative repaymentunreasonably refused to
schedule proposed by annegotiate alternative
approved credit counselingrepayment of at least 60% of
agency.” § 201.the debt. § 109.
Reaffirmation agreementsImposes enhancedImposes enhanced
requirements for approval ofrequirements for approval of
a reaffirmation agreementa reaffirmation agreement
when the debtor is notwhen the debtor is not
represented by counsel;represented by counsel. §
requires U.S. Attorney and108.
FBI to investigate abusive
reaffirmation practices;Allows a debtor to recover
authorizes states attorneyactual damages or $1000,
generals to bring classwhichever is greater, when a
actions to recover damagescreditor violates
for violations ofreaffirmation agreement
reaffirmation provisions. requirements, but prohibits
§ 204.class actions to enforce
practices by creditors.
Homestead exemptionNo monetary cap; imposesImposes lengthened
lengthened residencyresidency requirements.
requirements. §§ 307-308.§§ 124-125.
Imposes a $250,000 cap on
(except for family farmers).
Allows states to opt out of
the monetary cap; delays
effective date until the end of
the first regular session of
each state legislature
following enactment. § 147.
Exemption for saving forNo comparable provision.Allows a debtor, subject to
postsecondary educationcertain requirements, to
exempt up to $50,000 for
one child, or $100,000 per
family for postsecondary
education. § 113.
Domestic support owed toWould move domesticComparable provision at
individuals andsupport obligations to first§ 139.
government units madepriority, which is currently
first priorityallocated to administrative
expenses of the bankruptcy
estate. § 212.
Trustee notification of childWould direct the trustee toComparable provision at
support claim holdersnotify a priority child§ 149.
support recipient of the
existence of a state child
support enforcement agency,
and, upon discharge, the
reaffirmed debt. § 219.
Definition of “householdDefines household goodsDefines household goods
goods”narrowly to include only 1more broadly to include
radio; 1 television; 1 VCR;“personal property normally
and 1 personal computer butfound in or around a
only if used for the educationresidence,” excluding motor
or entertainment of a minorvehicles. § 145.
child. § 313.
Plan durationDebtors who have beenChapter 13 plans to have 5
converted to chapter 13 fromyear duration for families
chapter 7 will have 5 yearwhose monthly income is not
plans; other debtors willless than the highest national
have 3 year plans. § median family income.
318.Families below the highest
national median income
would have 3 year plans. §
Debts incurred to payDebts incurred with an intent Comparable provision, but
nondischargeable debts areto pay a nondischargeableall debts incurred within 90
nondischargeabledebt will becomedays of filing to pay
nondischargeable; debtsnondischargeable debts are
incurred within 70 days willnondischargeable without
be presumed to beregard to intent. § 146.
nondischargeable. § 314.
Lien stripping on securityChapter 13 debtors wouldConsumer debtors would not
interests in consumernot be permitted to bifurcatebe permitted to bifurcate
goodssecurity interests in ansecured claims for consumer
automobile purchased withingoods purchased within 5
5 years of the filing; or inyears of the bankruptcy
other consumer goodsfiling. A secured creditor’s
purchased within 6-monthsallowable claim would be the
of the filing. § 306.retail cost to replace the
item. §§ 122- 123.