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TITLE
11. BANKRUPTCY · UNITED STATES CODE
Chapter 5. Creditors, the Debtor, and the Estate
Subchapter I. Creditors and Claims
§ 501. Filing of
proofs of claims or interests
§ 502. Allowance of
claims or interests
§ 503. Allowance of
administrative expenses
§ 504. Sharing of
compensation
§ 505. Determination
of tax liability
§ 506. Determination
of secured status
§ 507. Priorities
§ 508. Effect of
distribution other than under this title
§ 509. Claims of
codebtors
§ 510. Subordination
§ 511. Rate of
interest on tax claims
Subchapter II. Debtor's Duties and Benefits
§ 521. Debtor's
duties
§ 522. Exemptions
§ 523. Exceptions to
discharge
§ 524. Effect of
discharge
§ 525. Protection
against discriminatory treatment
§ 526. Restrictions
on debt relief agencies
§ 527. Disclosures
§ 528. Requirements
for debt relief agencies
Subchapter III. The Estate
§ 541. Property of
the estate
§ 542. Turnover of
property to the estate
§ 543. Turnover of
property by a custodian
§ 544. Trustee as
lien creditor and as successor to certain creditors and purchasers
§ 545. Statutory
liens
§ 546. Limitations on
avoiding powers
§ 547. Preferences
§ 548. Fraudulent
transfers and obligations
§ 549. Postpetition
transactions
§ 550. Liability of
transferee of avoided transfer
§ 551. Automatic
preservation of avoided transfer
§ 552. Postpetition
effect of security interest
§ 553. Setoff
§ 554. Abandonment of
property of the estate
§ 555. Contractual
right to liquidate, terminate, or accelerate a securities contract
§ 556. Contractual
right to liquidate, terminate, or accelerate a commodities contract or
forward contract
§ 557. Expedited
determination of interests in, and abandonment or other disposition of
grain assets
§ 558. Defenses of
the estate
§ 559. Contractual
right to liquidate, terminate, or accelerate a repurchase agreement
§ 560. Contractual
right to liquidate, terminate, or accelerate a swap agreement
§ 561. Contractual
right to terminate, liquidate, accelerate, or offset under a master
netting agreement and across contracts; proceedings under chapter 15
§ 562. Timing of
damage measurement in connection with swap agreements, securities
contracts, forward contracts, commodity contracts, repurchase
agreements, and master netting agreements
Chapter 5.
Creditors, the Debtor, and the Estate
Subchapter I. Creditors and Claims
11
USC § 501. Filing of proofs of claims or interests
(a) A creditor or an indenture trustee may file a
proof of claim. An equity security holder may file a proof of interest.
(b) If a creditor does not timely file a proof of such
creditor’s claim, an entity that is liable to such creditor with the debtor,
or that has secured such creditor, may file a proof of such claim.
(c) If a creditor does not timely file a proof of such
creditor’s claim, the debtor or the trustee may file a proof of such claim.
(d) A claim of a kind specified in section
502(e)(2), 502(f),
502(g),
502(h)
or 502(i)
of this title may be filed under subsection (a), (b), or (c) of this section
the same as if such claim were a claim against the debtor and had arisen
before the date of the filing of the petition.
(e) A claim arising from the liability
of a debtor for fuel use tax assessed consistent with the requirements of
section 31705 of title 49 may be filed by the base jurisdiction designated
pursuant to the International Fuel Tax Agreement (as defined in section 31701
of title 49) and, if so filed, shall be allowed as a single claim.
[Rev. 5-6-05]
11
USC § 502. Allowance of claims or interests
(a) A claim or interest, proof of which is filed under
section
501 of this title, is deemed allowed, unless a party in interest,
including a creditor of a general partner in a partnership that is a debtor in
a case under chapter 7
of this title, objects.
(b) Except as provided in subsections
(e)(2), (f),
(g),
(h)
and (i)
of this section, if such objection to a claim is made, the court, after notice
and a hearing, shall determine the amount of such claim in lawful currency of
the United States as of the date of the filing of the petition, and shall
allow such claim in such amount, except to the extent that--
(1) such claim is unenforceable against the
debtor and property of the debtor, under any agreement or applicable law for
a reason other than because such claim is contingent or unmatured;
(2) such claim is for unmatured interest;
(3) if such claim is for a tax assessed against
property of the estate, such claim exceeds the value of the interest of the
estate in such property;
(4) if such claim is for services of an insider
or attorney of the debtor, such claim exceeds the reasonable value of such
services;
(5) such claim is for a debt that is unmatured on
the date of the filing of the petition and that is excepted from discharge
under section
523(a)(5) of this title;
(6) if such claim is the claim of a lessor for
damages resulting from the termination of a lease of real property, such
claim exceeds--
(A) the rent reserved by such lease, without acceleration, for the
greater of one year, or 15 percent, not to exceed three years, of the
remaining term of such lease, following the earlier of--
(i) the date of the filing of the petition; and
(ii) the date on which such lessor repossessed, or the lessee
surrendered, the leased property; plus
(B) any unpaid rent due under such lease, without acceleration, on the
earlier of such dates;
(7) if such claim is the claim of an employee for
damages resulting from the termination of an employment contract, such claim
exceeds--
(A) the compensation provided by such contract, without acceleration,
for one year following the earlier of--
(i) the date of the filing of the petition; or
(ii) the date on which the employer directed the employee to
terminate, or such employee terminated, performance under such contract;
plus
(B) any unpaid compensation due under such contract, without
acceleration, on the earlier of such dates;
(8) such claim results from a reduction, due to
late payment, in the amount of an otherwise applicable credit available to
the debtor in connection with an employment tax on wages, salaries, or
commissions earned from the debtor; or
(9) proof of such claim is not timely filed,
except to the extent tardily filed as permitted under paragraph (1), (2), or
(3) of section
726(a) of this title or under the Federal Rules of Bankruptcy Procedure,
except that a claim of a governmental unit shall be timely filed if it is
filed before 180 days after the date of the order for relief or such later
time as the Federal Rules of Bankruptcy Procedure may provide,
and except that in a case under chapter
13, a claim of a governmental unit for a tax with respect to a return
filed under section
1308 shall be timely if the claim is filed on or before the date that is
60 days after the date on which such return was filed as required.
(c) There shall be estimated for purpose of allowance
under this section--
(1) any contingent or unliquidated claim, the fixing or liquidation of
which, as the case may be, would unduly delay the administration of the
case; or
(2) any right to payment arising from a right to an equitable remedy for
breach of performance.
(d) Notwithstanding subsections
(a) and (b)
of this section, the court shall disallow any claim of any entity from which
property is recoverable under section
542, 543,
550,
or 553 of
this title or that is a transferee of a transfer avoidable under section
522(f), 522(h),
544,
545,
547, 548,
549,
or 724(a)
of this title, unless such entity or transferee has paid the amount, or turned
over any such property, for which such entity or transferee is liable under section
522(i), 542,
543,
550,
or 553 of
this title.
(e)
(1) Notwithstanding subsections
(a), (b),
and (c)
of this section and paragraph (2) of this subsection, the court shall
disallow any claim for reimbursement or contribution of an entity that is
liable with the debtor on or has secured the claim of a creditor, to the
extent that--
(A) such creditor’s claim against the estate is disallowed;
(B) such claim for reimbursement or contribution is contingent as of
the time of allowance or disallowance of such claim for reimbursement or
contribution; or
(C) such entity asserts a right of subrogation to the rights of such
creditor under section
509 of this title.
(2) A claim for reimbursement or contribution of such an entity that
becomes fixed after the commencement of the case shall be determined, and
shall be allowed under subsection
(a), (b)
or (c)
of this section, or disallowed under subsection
(d) of this section, the same as if such claim had become fixed before
the date of the filing of the petition.
(f) In an involuntary case, a claim arising in the
ordinary course of the debtor’s business or financial affairs after the
commencement of the case but before the earlier of the appointment of a
trustee and the order for relief shall be determined as of the date such claim
arises, and shall be allowed under subsection
(a), (b)
or (c)
of this section or disallowed under subsection (d) or (e) of this section, the
same as if such claim had arisen before the date of the filing of the
petition.
(g)
(1) A claim arising from the rejection, under section
365 of this title or under a plan under chapter
9, 11, 12,
or 13
of this title, of an executory contract or unexpired lease of the debtor
that has not been assumed shall be determined, and shall be allowed under
subsection
(a), (b)
or (c)
of this section or disallowed under subsection (d) or (e) of this section,
the same as if such claim had arisen before the date of the filing of the
petition.
(2) A claim for damages calculated in accordance with
section 562 shall be allowed under subsection (a), (b), or (c), or
disallowed under subsection (d) or (e), as if such claim had arisen before
the date of the filing of the petition.
(h) A claim arising from the recovery of property
under section
522, 550,
or 553 of
this title shall be determined, and shall be allowed under subsection
(a), (b)
or (c)
of this section, or disallowed under subsection
(d) or (e)
of this section, the same as if such claim had arisen before the date of the
filing of the petition.
(i) A claim that does not arise until after the
commencement of the case for a tax entitled to priority under section
507(a)(8) of this title shall be determined, and shall be allowed under subsection
(a), (b)
or (c)
of this section, or disallowed under subsection
(d) or (e)
of this section, the same as if such claim had arisen before the date of the
filing of the petition.
(j) A claim that has been allowed or disallowed may be
reconsidered for cause. A reconsidered claim may be allowed or disallowed
according to the equities of the case. Reconsideration of a claim under this
subsection does not affect the validity of any payment or transfer from the
estate made to a holder of an allowed claim on account of such allowed claim
that is not reconsidered, but if a reconsidered claim is allowed and is of the
same class as such holder’s claim, such holder may not receive any
additional payment or transfer from the estate on account of such holder’s
allowed claim until the holder of such reconsidered and allowed claim receives
payment on account of such claim proportionate in value to that already
received by such other holder. This subsection does not alter or modify the
trustee’s right to recover from a creditor any excess payment or transfer
made to such creditor.
(k)
(1) The court, on the motion of the debtor and after a
hearing, may reduce a claim filed under this section based in whole on an
unsecured consumer debt by not more than 20 percent of the claim, if--
(A) the claim was filed by a creditor who unreasonably refused to
negotiate a reasonable alternative repayment schedule proposed on behalf
of the debtor by an approved nonprofit budget and credit counseling agency
described in section
111;
(B) the offer of the debtor under subparagraph (A)--
(i) was made at least 60 days before the date of the filing of the
petition; and
(ii) provided for payment of at least 60 percent of the amount of the
debt over a period not to exceed the repayment period of the loan, or a
reasonable extension thereof; and
(C) no part of the debt under the alternative repayment schedule is
nondischargeable.
(2) The debtor shall have the burden of proving, by clear and convincing
evidence, that--
(A) the creditor unreasonably refused to consider the debtor's
proposal; and
(B) the proposed alternative repayment schedule was made prior to
expiration of the 60-day period specified in paragraph (1)(B)(i).
[Rev. 5-6-05]
11
USC § 503. Allowance of administrative expenses
(a) An entity may timely file a request for payment of
an administrative expense, or may tardily file such request if permitted by
the court for cause.
(b) After notice and a hearing, there shall be allowed
administrative expenses, other than claims allowed under section
502(f) of this title, including--
(1)
(A) the actual, necessary costs and expenses of
preserving the estate including--
(i) wages, salaries, and commissions for services
rendered after the commencement of the case; and
(ii) wages and benefits awarded pursuant to a
judicial proceeding or a proceeding of the National Labor Relations
Board as back pay attributable to any period of time occurring after
commencement of the case under this title, as a result of a violation of
Federal or State law by the debtor, without regard to the time of the
occurrence of unlawful conduct on which such award is based or to
whether any services were rendered, if the court determines that payment
of wages and benefits by reason of the operation of this clause will not
substantially increase the probability of layoff or termination of
current employees, or of nonpayment of domestic support obligations,
during the case under this title;
(B) any tax--
(i) incurred by the estate, whether secured or
unsecured, including property taxes for which liability is in rem, in
personam, or both, except a tax of a kind specified in section
507(a)(8) of this title; or
(ii) attributable to an excessive allowance of a tentative carryback
adjustment that the estate received, whether the taxable year to which
such adjustment relates ended before or after the commencement of the
case;
(C) any fine, penalty, or reduction in credit relating to a tax of a
kind specified in subparagraph (B) of this paragraph; and
(D) notwithstanding the requirements of subsection (a),
a governmental unit shall not be required to file a request for the
payment of an expense described in subparagraph (B) or (C), as a condition
of its being an allowed administrative expense;
(2) compensation and reimbursement awarded under section
330(a) of this title;
(3) the actual, necessary expenses, other than
compensation and reimbursement specified in paragraph (4) of this
subsection, incurred by--
(A) a creditor that files a petition under section
303 of this title;
(B) a creditor that recovers, after the court’s approval, for the
benefit of the estate any property transferred or concealed by the debtor;
(C) a creditor in connection with the prosecution of a criminal offense
relating to the case or to the business or property of the debtor;
(D) a creditor, an indenture trustee, an equity security holder, or a
committee representing creditors or equity security holders other than a
committee appointed under section
1102 of this title, in making a substantial contribution in a case
under chapter
9 or 11
of this title;
(E) a custodian superseded under section
543 of this title, and compensation for the services of such
custodian; or
(F) a member of a committee appointed under section
1102 of this title, if such expenses are incurred in the performance
of the duties of such committee;
(4) reasonable compensation for professional
services rendered by an attorney or an accountant of an entity whose expense
is allowable under subparagraph (A), (B), (C), (D), or (E)
of paragraph (3) of this subsection, based on the time, the nature,
the extent, and the value of such services, and the cost of comparable
services other than in a case under this title, and reimbursement for
actual, necessary expenses incurred by such attorney or accountant;
(5) reasonable compensation for services rendered
by an indenture trustee in making a substantial contribution in a case under
chapter
9 or 11 of
this title, based on the time, the nature, the extent, and the value of such
services, and the cost of comparable services other than in a case under
this title;
(6) the fees and mileage payable under chapter
119 of title 28;
(7) with respect to a
nonresidential real property lease previously assumed under section
365, and subsequently rejected, a sum equal to all monetary obligations
due, excluding those arising from or relating to a failure to operate or a
penalty provision, for the period of 2 years following the later of the
rejection date or the date of actual turnover of the premises, without
reduction or setoff for any reason whatsoever except for sums actually
received or to be received from an entity other than the debtor, and the
claim for remaining sums due for the balance of the term of the lease shall
be a claim under section
502(b)(6);
(8) the actual, necessary costs and expenses of
closing a health care business incurred by a trustee or by a Federal agency
(as defined in section
551(1) of title 5) or a department or agency of a State or political
subdivision thereof, including any cost or expense incurred--
(A) in disposing of patient records in accordance with section
351; or
(B) in connection with transferring patients from the health care
business that is in the process of being closed to another health care
business; and
(9) the value of any goods received by the debtor
within 20 days before the date of commencement of a case under this title in
which the goods have been sold to the debtor in the ordinary course of such
debtor's business.
(c) Notwithstanding subsection (b), there shall
neither be allowed, nor paid--
(1) a transfer made to, or an obligation
incurred for the benefit of, an insider of the debtor for the purpose of
inducing such person to remain with the debtor's business, absent a
finding by the court based on evidence in the record that--
(A) the transfer or obligation is essential to retention of the
person because the individual has a bona fide job offer from another
business at the same or greater rate of compensation;
(B) the services provided by the person are essential to the survival
of the business; and
(C) either--
(i) the amount of the transfer made to, or obligation incurred for
the benefit of, the person is not greater than an amount equal to 10
times the amount of the mean transfer or obligation of a similar kind
given to nonmanagement employees for any purpose during the calendar
year in which the transfer is made or the obligation is incurred; or
(ii) if no such similar transfers were made to, or obligations were
incurred for the benefit of, such nonmanagement employees during such
calendar year, the amount of the transfer or obligation is not greater
than an amount equal to 25 percent of the amount of any similar
transfer or obligation made to or incurred for the benefit of such
insider for any purpose during the calendar year before the year in
which such transfer is made or obligation is incurred;
(2) a severance payment to an insider of the
debtor, unless--
(A) the payment is part of a program that is generally applicable to
all full-time employees; and
(B) the amount of the payment is not greater than 10 times the amount
of the mean severance pay given to nonmanagement employees during the
calendar year in which the payment is made; or
(3) other transfers or obligations that are
outside the ordinary course of business and not justified by the facts and
circumstances of the case, including transfers made to, or obligations
incurred for the benefit of, officers, managers, or consultants hired
after the date of the filing of the petition.
[Rev. 5-6-05]
11
USC § 504. Sharing of compensation
(a) Except as provided in subsection (b) of this
section, a person receiving compensation or reimbursement under section
503(b)(2) or 503(b)(4)
of this title may not share or agree to share--
(1) any such compensation or reimbursement with another person; or
(2) any compensation or reimbursement received by another person under
such sections.
(b)
(1) A member, partner, or regular associate in a professional
association, corporation, or partnership may share compensation or
reimbursement received under section
503(b)(2) or of this title with another member, partner, or regular
associate in such association, corporation, or partnership, and may share in
any compensation or reimbursement received under such sections by another
member, partner, or regular associate in such association, corporation, or
partnership.
(2) An attorney for a creditor that files a petition under section
303 of this title may share compensation and reimbursement received
under section
503(b)(4) of this title with any other attorney contributing to the
services rendered or expenses incurred by such creditor’s attorney.
(c) This section shall not apply with
respect to sharing, or agreeing to share, compensation with a bona fide public
service attorney referral program that operates in accordance with non-Federal
law regulating attorney referral services and with rules of professional
responsibility applicable to attorney acceptance of referrals.
[Rev. 5-6-05]
11
USC § 505. Determination of tax liability
(a)
(1) Except as provided in paragraph (2) of this subsection, the court may
determine the amount or legality of any tax, any fine or penalty relating to
a tax, or any addition to tax, whether or not previously assessed, whether
or not paid, and whether or not contested before and adjudicated by a
judicial or administrative tribunal of competent jurisdiction.
(2) The court may not so determine--
(A) the amount or legality of a tax, fine, penalty, or addition to tax
if such amount or legality was contested before and adjudicated by a
judicial or administrative tribunal of competent jurisdiction before the
commencement of the case under this title;
(B) any right of the estate to a tax refund, before the earlier of--
(i) 120 days after the trustee properly requests such refund from the
governmental unit from which such refund is claimed; or
(ii) a determination by such governmental unit of such request
(C) the amount or legality of any amount arising in
connection with an ad valorem tax on real or personal property of the
estate, if the applicable period for contesting or redetermining that
amount under any law (other than a bankruptcy law) has expired.
(b)
(1)
(A) The clerk shall maintain a list under which a Federal, State, or
local governmental unit responsible for the collection of taxes within the
district may--
(i) designate an address for service of requests under this
subsection; and
(ii) describe where further information concerning additional
requirements for filing such requests may be found.
(B) If such governmental unit does not designate an address and provide
such address to the clerk under subparagraph (A), any request made under
this subsection may be served at the address for the filing of a tax
return or protest with the appropriate taxing authority of such
governmental unit.
(2)
A trustee may request a determination of any unpaid liability of the estate
for any tax incurred during the administration of the case by submitting a tax
return for such tax and a request for such a determination to the governmental
unit charged with responsibility for collection or determination of such tax at
the address and in the manner designated in paragraph (1). Unless such
return is fraudulent, or contains a material misrepresentation, the
estate, the trustee, the debtor, and any successor to the debtor are
discharged from any liability for such tax--
(A)
upon payment of the tax shown on such return, if--
(i)
such governmental unit does not notify the trustee, within 60 days after
such request, that such return has been selected for examination; or
(ii)
such governmental unit does not complete such an examination and notify
the trustee of any tax due, within 180 days after such request or within
such additional time as the court, for cause, permits;
(B)
upon payment of the tax determined by the court, after notice and a hearing,
after completion by such governmental unit of such examination; or
(C)
upon payment of the tax determined by such governmental unit to be due.
(c) Notwithstanding section 362 of this title, after
determination by the court of a tax under this section, the governmental unit
charged with responsibility for collection of such tax may assess such tax
against the estate, the debtor, or a successor to the debtor, as the case may
be, subject to any otherwise applicable law.
[Rev. 5-7-05]
11
USC § 506. Determination of secured status
(a)
(1) An allowed claim of a creditor secured by a
lien on property in which the estate has an interest, or that is subject to
setoff under section
553 of this title, is a secured claim to the extent of the value of such
creditor’s interest in the estate’s interest in such property, or to the
extent of the amount subject to setoff, as the case may be, and is an
unsecured claim to the extent that the value of such creditor’s interest
or the amount so subject to setoff is less than the amount of such allowed
claim. Such value shall be determined in light of the purpose of the
valuation and of the proposed disposition or use of such property, and in
conjunction with any hearing on such disposition or use or on a plan
affecting such creditor’s interest.
(2) If the debtor is an individual in a case under chapter
7 or 13,
such value with respect to personal property securing an allowed claim shall
be determined based on the replacement value of such property as of the date
of the filing of the petition without deduction for costs of sale or
marketing. With respect to property acquired for personal, family, or
household purposes, replacement value shall mean the price a retail merchant
would charge for property of that kind considering the age and condition of
the property at the time value is determined.
(b) To the extent that an allowed secured claim is
secured by property the value of which, after any recovery under subsection
(c) of this section, is greater than the amount of such claim, there shall be
allowed to the holder of such claim, interest on such claim, and any
reasonable fees, costs, or charges provided for under the agreement or
State statute under which such claim arose.
(c) The trustee may recover from property securing an
allowed secured claim the reasonable, necessary costs and expenses of
preserving, or disposing of, such property to the extent of any benefit to the
holder of such claim, including the payment of all ad valorem
property taxes with respect to the property.
(d) To the extent that a lien secures a claim against
the debtor that is not an allowed secured claim, such lien is void, unless--
(1) such claim was disallowed only under section
502(b)(5) or 502(e)
of this title; or
(2) such claim is not an allowed secured claim due only to the failure of
any entity to file a proof of such claim under section
501 of this title.
[Rev. 5-7-05]
11
USC § 507. Priorities
(a) The following expenses and claims have priority in
the following order:
(1) First:
(A) Allowed unsecured claims for domestic support
obligations that, as of the date of the filing of the petition in a case
under this title, are owed to or recoverable by a spouse, former spouse,
or child of the debtor, or such child's parent, legal guardian, or
responsible relative, without regard to whether the claim is filed by such
person or is filed by a governmental unit on behalf of such person, on the
condition that funds received under this paragraph by a governmental unit
under this title after the date of the filing of the petition shall be
applied and distributed in accordance with applicable nonbankruptcy law.
(B) Subject to claims under subparagraph (A), allowed
unsecured claims for domestic support obligations that, as of the date of
the filing of the petition, are assigned by a spouse, former spouse, child
of the debtor, or such child's parent, legal guardian, or responsible
relative to a governmental unit (unless such obligation is assigned
voluntarily by the spouse, former spouse, child, parent, legal guardian,
or responsible relative of the child for the purpose of collecting the
debt) or are owed directly to or recoverable by a governmental unit under
applicable nonbankruptcy law, on the condition that funds received under
this paragraph by a governmental unit under this title after the date of
the filing of the petition be applied and distributed in accordance with
applicable nonbankruptcy law.
(C) If a trustee is appointed or elected under section
701, 702,
703,
1104,
1202,
or 1302,
the administrative expenses of the trustee allowed under paragraphs
(1)(A), (2),
and (6)
of section
503(b) shall be paid before payment of claims under subparagraphs (A)
and (B), to the extent that the trustee administers assets that are
otherwise available for the payment of such claims.
(2)
Second, administrative expenses allowed under section
503(b) of this title, and any fees and charges assessed against the
estate under chapter
123 of title 28.
(3)
Third, unsecured claims allowed under section
502(f) of this title.
(4)
Fourth, allowed unsecured claims, but only to the extent of $10,000
[
Adjusted every 3 years by section
104.] for each individual or corporation, as the case may be,
earned within 180
days before the date of the filing of the petition or the date of the
cessation of the debtor's business, whichever occurs first, for--
(A) wages, salaries, or commissions, including vacation, severance, and
sick leave pay earned by an individual; or
(B) sales commissions earned by an individual or by a corporation with
only 1 employee, acting as an independent contractor in the sale of goods
or services for the debtor in the ordinary course of the debtor's business
if, and only if, during the 12 months preceding that date, at least 75
percent of the amount that the individual or corporation earned by acting
as an independent contractor in the sale of goods or services was earned
from the debtor.
(5)
Fifth, allowed unsecured claims for contributions to an employee
benefit plan--
(A) arising from services rendered within 180 days before the date of
the filing of the petition or the date of the cessation of the debtor’s
business, whichever occurs first; but only
(B) for each such plan, to the extent of--
(i) the number of employees covered by each such plan multiplied by $10,000[
Adjusted every 3 years by section
104.]; less
(ii) the aggregate amount paid to such employees under paragraph (4)
of this subsection, plus the aggregate amount paid by the estate on
behalf of such employees to any other employee benefit plan.
(6)
Sixth, allowed unsecured claims of persons--
(A) engaged in the production or raising of grain, as defined in section
557(b) of this title, against a debtor who owns or operates a grain
storage facility, as defined in section
557(b) of this title, for grain or the proceeds of grain, or
(B) engaged as a United States fisherman against a debtor who has
acquired fish or fish produce from a fisherman through a sale or
conversion, and who is engaged in operating a fish produce storage or
processing facility--
but only to the extent of $4,000 [
Adjusted every 3 years by section
104.] for each such individual.
(7)
Seventh, allowed unsecured claims of individuals, to the extent of
$1,800 [
Adjusted every 3 years by section
104.] for each such individual, arising from the deposit, before
the commencement of the case, of money in connection with the purchase,
lease, or rental of property, or the purchase of services, for the personal,
family, or household use of such individuals, that were not delivered or
provided.
(8) Eighth, allowed unsecured claims of
governmental units, only to the extent that such claims are for--
(A) a tax on or measured by income or gross receipts for
a taxable year ending on or before the date of the filing of the petition--
(i) for
which a return, if required, is last due, including extensions, after
three years before the date of the filing of the petition;
(ii) assessed within 240 days before the date of the
filing of the petition, exclusive of--
(I) any time during which an offer in compromise
with respect to that tax was pending or in effect during that 240-day
period, plus 30 days; and
(II) any time during which a stay of proceedings
against collections was in effect in a prior case under this title
during that 240-day period, plus 90 days.
(iii) other than a tax of a kind specified in section
523(a)(1)(B) or 523(a)(1)(C)
of this title, not assessed before, but assessable, under applicable law
or by agreement, after, the commencement of the case;
(B) a property tax incurred
before the commencement of the case and last payable without penalty after
one year before the date of the filing of the petition;
(C) a tax required to be collected or withheld and for which the debtor
is liable in whatever capacity;
(D) an employment tax on a wage, salary, or commission of a kind
specified in paragraph (4)
of this subsection earned from the debtor before the date of the filing of
the petition, whether or not actually paid before such date, for which a
return is last due, under applicable law or under any extension, after
three years before the date of the filing of the petition;
(E) an excise tax on--
(i) a transaction occurring before the date of the filing of the
petition for which a return, if required, is last due, under applicable
law or under any extension, after three years before the date of the
filing of the petition; or
(ii) if a return is not required, a transaction occurring during the
three years immediately preceding the date of the filing of the
petition;
(F) a customs duty arising out of the importation of merchandise--
(i) entered for consumption within one year before the date of the
filing of the petition;
(ii) covered by an entry liquidated or reliquidated within one year
before the date of the filing of the petition; or
(iii) entered for consumption within four years before the date of
the filing of the petition but unliquidated on such date, if the
Secretary of the Treasury certifies that failure to liquidate such entry
was due to an investigation pending on such date into assessment of
antidumping or countervailing duties or fraud, or if information needed
for the proper appraisement or classification of such merchandise was
not available to the appropriate customs officer before such date; or
(G) a penalty related to a claim of a kind specified in this paragraph
and in compensation for actual pecuniary loss.
An otherwise applicable time period specified in this
paragraph shall be suspended for any period during which a governmental unit
is prohibited under applicable nonbankruptcy law from collecting a tax as a
result of a request by the debtor for a hearing and an appeal of any
collection action taken or proposed against the debtor, plus 90 days; plus
any time during which the stay of proceedings was in effect in a prior case
under this title or during which collection was precluded by the existence
of 1 or more confirmed plans under this title, plus 90 days.
(9) Ninth, allowed unsecured claims based upon
any commitment by the debtor to a Federal depository institutions regulatory
agency (or predecessor to such agency) to maintain the capital of an insured
depository institution.
(10) Tenth, allowed claims for
death or personal injury resulting from the operation of a motor vehicle or
vessel if such operation was unlawful because the debtor was intoxicated
from using alcohol, a drug, or another substance.
(b) If the trustee, under section
362, 363,
or 364
of this title, provides adequate protection of the interest of a holder of a
claim secured by a lien on property of the debtor and if, notwithstanding such
protection, such creditor has a claim allowable under subsection
(a)(2) of this section arising from the stay of action against such
property under section
362 of this title, from the use, sale, or lease of such property under section
363 of this title, or from the granting of a lien under section
364(d) of this title, then such creditor's claim under such subsection
shall have priority over every other claim allowable under such subsection.
(c) For the purpose of subsection
(a) of this section, a claim of a governmental unit arising from an
erroneous refund or credit of a tax has the same priority as a claim for the
tax to which such refund or credit relates.
(d) An entity that is subrogated to the rights of a holder of a claim of a
kind specified in subsection
(a)(1),
(a)(4),
(a)(5),
(a)(6),
(a)(7),
(a)(8),
or (a)(9)
of this section is not subrogated to the right of the holder of such claim to
priority under such subsection.
[Rev. 5-7-05]
11
USC § 508. Effect of distribution other than under this title
If a creditor of a partnership debtor receives, from a general partner that
is not a debtor in a case under chapter
7 of this title, payment of, or a transfer of property on account of, a
claim that is allowed under this title and that is not secured by a lien on
property of such partner, such creditor may not receive any payment under this
title on account of such claim until each of the other holders of claims on
account of which such holders are entitled to share equally with such creditor
under this title has received payment under this title equal in value to the
consideration received by such creditor from such general partner.
[Rev. 5-7-05]
11
USC § 509. Claims of codebtors
(a) Except as provided in subsection (b) or (c) of
this section, an entity that is liable with the debtor on, or that has
secured, a claim of a creditor against the debtor, and that pays such claim,
is subrogated to the rights of such creditor to the extent of such payment.
(b) Such entity is not subrogated to the rights of
such creditor to the extent that--
(1) a claim of such entity for reimbursement or contribution on account
of such payment of such creditor’s claim is--
(A) allowed under section 502 of this title;
(B) disallowed other than under section 502(e) of this title; or
(C) subordinated under section 510 of this title; or
(2) as between the debtor and such entity, such entity received the
consideration for the claim held by such creditor.
(c) The court shall subordinate to the claim of a
creditor and for the benefit of such creditor an allowed claim, by way of
subrogation under this section, or for reimbursement or contribution, of an
entity that is liable with the debtor on, or that has secured, such
creditor’s claim, until such creditor’s claim is paid in full, either
through payments under this title or otherwise.
[Rev. 5-7-05]
11
USC § 510. Subordination
(a) A subordination agreement is enforceable in a case under this title to
the same extent that such agreement is enforceable under applicable
nonbankruptcy law.
(b) For the purpose of distribution under this title, a claim arising from
rescission of a purchase or sale of a security of the debtor or of an
affiliate of the debtor, for damages arising from the purchase or sale of such
a security, or for reimbursement or contribution allowed under section
502 on account of such a claim, shall be subordinated to all claims or
interests that are senior to or equal the claim or interest represented by
such security, except that if such security is common stock, such claim has
the same priority as common stock.
(c) Notwithstanding subsections (a) and (b) of this section, after notice
and a hearing, the court may--
(1) under principles of equitable subordination, subordinate for purposes
of distribution all or part of an allowed claim to all or part of another
allowed claim or all or part of an allowed interest to all or part of
another allowed interest; or
(2) order that any lien securing such a subordinated claim be transferred
to the estate.
[Rev. 5-7-05]
11
USC § 511. Rate of interest on tax claims
(a) If any provision of this title requires the payment of
interest on a tax claim or on an administrative expense tax, or the payment of
interest to enable a creditor to receive the present value of the allowed
amount of a tax claim, the rate of interest shall be the rate determined under
applicable nonbankruptcy law.
(b) In the case of taxes paid under a confirmed plan under this title, the
rate of interest shall be determined as of the calendar month in which the
plan is confirmed.
[Rev. 5-7-05]
Subchapter II. Debtor's Duties and
Benefits
11
USC § 521. Debtor’s duties
(a)The debtor shall--
(1) file--
(A) a list of creditors; and
(B) unless the court orders otherwise--
(i) a schedule of assets and liabilities;
(ii) a schedule of current income and current
expenditures;
(iii) a statement of the debtor's financial affairs
and, if section
342(b) applies, a certificate--
(I) of an attorney whose name is indicated on the
petition as the attorney for the debtor, or a bankruptcy petition
preparer signing the petition under section
110(b)(1), indicating that such attorney or the bankruptcy
petition preparer delivered to the debtor the notice required by section
342(b); or
(II) if no attorney is so indicated, and no
bankruptcy petition preparer signed the petition, of the debtor that
such notice was received and read by the debtor;
(iv) copies of all payment advices or other evidence
of payment received within 60 days before the date of the filing of the
petition, by the debtor from any employer of the debtor;
(v) a statement of the amount of monthly net income,
itemized to show how the amount is calculated; and
(vi) a statement disclosing any reasonably
anticipated increase in income or expenditures over the 12-month period
following the date of the filing of the petition;
(2) if an individual debtor's schedule of assets
and liabilities includes
debts
which are secured by property of the estate--
(A) within thirty days after the date of the filing of a petition under
chapter 7 of
this title or on or before the date of the meeting of creditors, whichever
is earlier, or within such additional time as the court, for cause, within
such period fixes, the debtor shall file with the clerk a statement of his
intention with respect to the retention or surrender of such property and,
if applicable, specifying that such property is claimed as exempt, that
the debtor intends to redeem such property, or that the debtor intends to
reaffirm debts secured by such property;
(B) within 30
days after the first date set for the meeting of creditors under section
341(a), or within such additional time as the court, for cause,
within such 30-day
period fixes, the debtor shall perform his intention with respect to such
property, as specified by subparagraph (A) of this paragraph; and
(C) nothing in subparagraphs (A) and (B) of this paragraph shall alter
the debtor's or the trustee's rights with regard to such property under
this title, except as provided in section
362(h);
(3) if a trustee is serving in the case or
an auditor serving under section
586(f) of title 28, cooperate with the trustee as necessary to
enable the trustee to perform the trustee's duties under this title;
(4) if a trustee is serving in the case or
an auditor serving under section
586(f) of title 28, surrender to the trustee all property of the
estate and any recorded information, including books, documents, records,
and papers, relating to property of the estate, whether or not immunity is
granted under section
344 of this title;
(5) appear at the hearing required under section
524(d) of this title;
(6) in a case under chapter
7 of this title in which the debtor is an individual, not retain
possession of personal property as to which a creditor has an allowed claim
for the purchase price secured in whole or in part by an interest in such
personal property unless the debtor, not later than 45 days after the first
meeting of creditors under section
341(a), either--
(A) enters into an agreement with the creditor pursuant
to section
524(c) with respect to the claim secured by such property; or
(B) redeems such property from the security interest
pursuant to section
722.
(7) unless a trustee is serving
in the case, continue to perform the obligations required of the
administrator (as defined in section 3 of the Employee Retirement Income
Security Act of 1974) of an employee benefit plan if at the time of the
commencement of the case the debtor (or any entity designated by the debtor)
served as such administrator.
If the debtor fails to so act within the 45-day period
referred to in paragraph (6), the stay under section
362(a) is terminated with respect to the personal property of the estate
or of the debtor which is affected, such property shall no longer be property
of the estate, and the creditor may take whatever action as to such property
as is permitted by applicable nonbankruptcy law, unless the court determines
on the motion of the trustee filed before the expiration of such 45-day
period, and after notice and a hearing, that such property is of consequential
value or benefit to the estate, orders appropriate adequate protection of the
creditor's interest, and orders the debtor to deliver any collateral in the
debtor's possession to the trustee.
(b) In addition to the requirements
under subsection
(a), a debtor who is an individual shall file with the court--
(1) a certificate from the
approved nonprofit budget and credit counseling agency that provided the
debtor services under section
109(h) describing the services provided to the debtor; and
(2) a copy of the debt repayment
plan, if any, developed under section
109(h) through the approved nonprofit budget and credit counseling
agency referred to in paragraph (1).
(c) In addition to meeting the
requirements under subsection
(a), a debtor shall file with the court a record of any interest that a
debtor has in an education individual retirement account (as defined in
section 530(b)(1) of the Internal Revenue Code of 1986) or under a qualified
State tuition program (as defined in section 529(b)(1) of such Code).
(d) If the debtor fails timely to take
the action specified in subsection
(a)(6) of this section, or in paragraphs (1) and (2) of section
362(h), with respect to property which a lessor or bailor owns and has
leased, rented, or bailed to the debtor or as to which a creditor holds a
security interest not otherwise voidable under section
522(f), 544,
545,
547, 548,
or 549,
nothing in this title shall prevent or limit the operation of a provision in
the underlying lease or agreement that has the effect of placing the debtor in
default under such lease or agreement by reason of the occurrence, pendency,
or existence of a proceeding under this title or the insolvency of the debtor.
Nothing in this subsection shall be deemed to justify limiting such a
provision in any other circumstance.
(e)
(1) If the debtor in a case under
chapter 7 or 13
is an individual and if a creditor files with the court at any time a
request to receive a copy of the petition, schedules, and statement of
financial affairs filed by the debtor, then the court shall make such
petition, such schedules, and such statement available to such creditor.
(2)
(A) The debtor shall provide--
(i) not later than 7 days before the date first set
for the first meeting of creditors, to the trustee a copy of the Federal
income tax return required under applicable law (or at the election of
the debtor, a transcript of such return) for the most recent tax year
ending immediately before the commencement of the case and for which a
Federal income tax return was filed; and
(ii) at the same time the debtor complies with clause
(i), a copy of such return (or if elected under clause (i), such
transcript) to any creditor that timely requests such copy.
(B) If the debtor fails to comply with clause (i) or
(ii) of subparagraph (A), the court shall dismiss the case unless the
debtor demonstrates that the failure to so comply is due to circumstances
beyond the control of the debtor.
(C) If a creditor requests a copy of such tax return or
such transcript and if the debtor fails to provide a copy of such tax
return or such transcript to such creditor at the time the debtor provides
such tax return or such transcript to the trustee, then the court shall
dismiss the case unless the debtor demonstrates that the failure to
provide a copy of such tax return or such transcript is due to
circumstances beyond the control of the debtor.
(3) If a creditor in a case under
chapter
13 files with the court at any time a request to receive a copy of the
plan filed by the debtor, then the court shall make available to such
creditor a copy of the plan--
(A) at a reasonable cost; and
(B) not later than 5 days after such request is filed.
(f) At the request of the court, the
United States trustee, or any party in interest in a case under chapter
7, 11, or 13,
a debtor who is an individual shall file with the court--
(1) at the same time filed with
the taxing authority, a copy of each Federal income tax return required
under applicable law (or at the election of the debtor, a transcript of such
tax return) with respect to each tax year of the debtor ending while the
case is pending under such chapter;
(2) at the same time filed with
the taxing authority, each Federal income tax return required under
applicable law (or at the election of the debtor, a transcript of such tax
return) that had not been filed with such authority as of the date of the
commencement of the case and that was subsequently filed for any tax year of
the debtor ending in the 3-year period ending on the date of the
commencement of the case;
(3) a copy of each amendment to
any Federal income tax return or transcript filed with the court under
paragraph (1) or (2); and
(4) in a case under chapter
13--
(A) on the date that is either 90 days after the end of
such tax year or 1 year after the date of the commencement of the case,
whichever is later, if a plan is not confirmed before such later date; and
(B) annually after the plan is confirmed and until the
case is closed, not later than the date that is 45 days before the
anniversary of the confirmation of the plan;
a statement, under penalty of perjury, of the income and
expenditures of the debtor during the tax year of the debtor most recently
concluded before such statement is filed under this paragraph, and of the
monthly income of the debtor, that shows how income, expenditures, and monthly
income are calculated.
(g)
(1) A statement referred to in subsection
(f)(4) shall disclose--
(A) the amount and sources of the income of the debtor;
(B) the identity of any person responsible with the
debtor for the support of any dependent of the debtor; and
(C) the identity of any person who contributed, and the
amount contributed, to the household in which the debtor resides.
(2) The tax returns, amendments,
and statement of income and expenditures described in subsections
(e)(2)(A) and (f)
shall be available to the United States trustee (or the bankruptcy
administrator, if any), the trustee, and any party in interest for
inspection and copying, subject to the requirements of section
315(c) of the Bankruptcy Abuse Prevention and Consumer Protection Act of
2005.
(h) If requested by the United States
trustee or by the trustee, the debtor shall provide--
(1) a document that establishes
the identity of the debtor, including a driver's license, passport, or other
document that contains a photograph of the debtor; or
(2) such other personal
identifying information relating to the debtor that establishes the identity
of the debtor.
(i)
(1) Subject to paragraphs (2) and
(4) and notwithstanding section
707(a), if an individual debtor in a voluntary case under chapter
7 or 13
fails to file all of the information required under subsection
(a)(1) within 45 days after the date of the filing of the petition, the
case shall be automatically dismissed effective on the 46th day after the
date of the filing of the petition.
(2) Subject to paragraph (4) and
with respect to a case described in paragraph (1), any party in interest may
request the court to enter an order dismissing the case. If requested, the
court shall enter an order of dismissal not later than 5 days after such
request.
(3) Subject to paragraph (4) and
upon request of the debtor made within 45 days after the date of the filing
of the petition described in paragraph (1), the court may allow the debtor
an additional period of not to exceed 45 days to file the information
required under subsection (a)(1) if the court finds justification for
extending the period for the filing.
(4) Notwithstanding any other
provision of this subsection, on the motion of the trustee filed before the
expiration of the applicable period of time specified in paragraph (1), (2),
or (3), and after notice and a hearing, the court may decline to dismiss the
case if the court finds that the debtor attempted in good faith to file all
the information required by subsection (a)(1)(B)(iv) and that the best
interests of creditors would be served by administration of the case.
(j)
(1) Notwithstanding any other
provision of this title, if the debtor fails to file a tax return that
becomes due after the commencement of the case or to properly obtain an
extension of the due date for filing such return, the taxing authority may
request that the court enter an order converting or dismissing the case.
(2) If the debtor does not file
the required return or obtain the extension referred to in paragraph (1)
within 90 days after a request is filed by the taxing authority under that
paragraph, the court shall convert or dismiss the case, whichever is in the
best interests of creditors and the estate.
[Rev. 5-8-05]
11
USC § 522. Exemptions
(a) In this section--
(1) "dependent" includes spouse,
whether or not actually dependent; and
(2) "value" means fair market value as
of the date of the filing of the petition or, with respect to property that
becomes property of the estate after such date, as of the date such property
becomes property of the estate.
(b)
(1) Notwithstanding section
541 of this title, an individual debtor may exempt from property of the
estate the property listed in either paragraph (2)
or, in the alternative, paragraph (3)
of this subsection. In joint cases filed under section
302 of this title and individual cases filed under section
301 or 303
of this title by or against debtors who are husband and wife, and whose
estates are ordered to be jointly administered under Rule
1015(b) of the Federal Rules of Bankruptcy Procedure, one debtor may not
elect to exempt property listed in paragraph
(2)
and the other debtor elect to exempt property listed in paragraph
(3)
of this subsection. If the parties cannot agree on the alternative to be
elected, they shall be deemed to elect paragraph
(2),
where such election is permitted under the law of the jurisdiction where the
case is filed.
(2) Property listed in this
paragraph is property that is specified under subsection
(d), unless the State law that is applicable to the debtor under
paragraph (3)(A) specifically does not so authorize.
(3)
Property listed in this paragraph is--
(A) subject to subsections
(o) and (p),
any property that is exempt under Federal law, other than subsection
(d) of this section, or State or local law that is applicable on the
date of the filing of the petition at the place in which the debtor's
domicile has been located for the
730
days immediately preceding the date of the filing of the
petition
or if the debtor's domicile has not been located at a
single State for such 730-day period, the place in which the debtor's
domicile was located for 180
days immediately preceding the 730-day period or for a longer portion
of such 180-day period than in any other place;
(B) any interest in property in which the
debtor had, immediately before the commencement of the case, an interest as
a tenant by the entirety or joint tenant to the extent that such interest as
a tenant by the entirety or joint tenant is exempt from process under
applicable nonbankruptcy law;
and
(C) retirement funds to the
extent that those funds are in a fund or account that is exempt from
taxation under section 401,
403, 408,
408A,
414, 457, or 501(a)
of the Internal Revenue Code of 1986.
If the effect of the domiciliary requirement under
subparagraph (A) is to render the debtor ineligible for any exemption, the
debtor may elect to exempt property that is specified under subsection (d).
(4) For purposes of paragraph
(3)(C) and subsection
(d)(12), the following shall apply:
(A) If the retirement funds
are in a retirement fund that has received a favorable determination under
section
7805 of the Internal Revenue Code of 1986, and that determination is
in effect as of the date of the filing of the petition in a case under
this title, those funds shall be presumed to be exempt from the estate.
(B) If the retirement funds
are in a retirement fund that has not received a favorable determination
under such section
7805, those funds are exempt from the estate if the debtor
demonstrates that--
(i) no prior determination to the contrary has been
made by a court or the Internal Revenue Service; and
(ii)
(I) the retirement fund is in substantial
compliance with the applicable requirements of the Internal Revenue
Code of 1986; or
(II) the retirement fund fails to be in substantial
compliance with the applicable requirements of the Internal Revenue
Code of 1986 and the debtor is not materially responsible for that
failure.
(C) A direct transfer of
retirement funds from 1 fund or account that is exempt from taxation under
section 401,
403,
408,
408A,
414,
457, or 501(a)of
the Internal Revenue Code of 1986, under section 401(a)(31) of the
Internal Revenue Code of 1986, or otherwise, shall not cease to qualify
for exemption under paragraph (3)(C) or subsection
(d)(12) by reason of such direct transfer.
(D)
(i) Any distribution that qualifies as an eligible
rollover distribution within the meaning of section
402(c) of the Internal Revenue Code of 1986 or that is described in
clause (ii) shall not cease to qualify for exemption under paragraph
(3)(C) or subsection
(d)(12) by reason of such distribution.
(ii) A distribution described in this clause is an
amount that--
(I) has been distributed from a fund or account
that is exempt from taxation under section 401,
403,
408,
408A,
414,
457, or 501(a)
of the Internal Revenue Code of 1986; and
(II) to the extent allowed by law, is deposited in
such a fund or account not later than 60 days after the distribution
of such amount.
(c) Unless the case is dismissed,
property exempted under this section is not liable during or after the case
for any debt of the debtor that arose, or that is determined under section
502 of this title as if such debt had arisen, before the commencement of
the case, except--
(1) a debt of a kind specified in
paragraph
(1) or (5)
of section
523(a) (in which case, notwithstanding any provision of applicable
nonbankruptcy law to the contrary, such property shall be liable for a debt
of a kind specified in section
523(a)(5));
(2) a debt secured by a lien that is--
(A)
(i) not avoided under subsection
(f) or (g)
of this section or under section 544,
545,
547,
548,
549,
or 724(a)
of this title; and
(ii) not void under section 506(d)
of this title;
(B) a tax lien, notice of which is properly
filed; or
(3) a debt of a kind specified in section
523(a)(4) or 523(a)(6)
of this title owed by an institution-affiliated party of an insured
depository institution to a Federal depository institutions regulatory
agency acting in its capacity as conservator, receiver, or liquidating agent
for such institution; or
(4) a debt in connection with fraud in the
obtaining or providing of any scholarship, grant, loan, tuition, discount,
award, or other financial assistance for purposes of financing an education
at an institution of higher education (as that term is defined in section
101 of the Higher Education Act of 1965 (20 U.S.C. 1001)).
(d) The following property may be exempted under
subsection
(b)(2)
of this section:
(1) The debtor's aggregate interest, not to
exceed $15,000 [Adjusted
every 3 years by section
104.] in value, in real property or personal property that the
debtor or a dependent of the debtor uses as a residence, in a cooperative
that owns property that the debtor or a dependent of the debtor uses as a
residence, or in a burial plot for the debtor or a dependent of the debtor.
(2) The debtor's interest, not to exceed $2,400 [Adjusted
every 3 years by section
104.] in value, in one motor vehicle.
(3) The debtor's interest, not to exceed $400 [Adjusted
every 3 years by section
104.] in value in any particular item or $8,000 [Adjusted
every 3 years by section
104.] in aggregate value, in household furnishings, household
goods, wearing apparel, appliances, books, animals, crops, or musical
instruments, that are held primarily for the personal, family, or household
use of the debtor or a dependent of the debtor.
(4) The debtor's aggregate interest, not to
exceed $1,000 [Adjusted
every 3 years by section
104.] in value, in jewelry held primarily for the personal,
family, or household use of the debtor or a dependent of the debtor.
(5) The debtor's aggregate interest in any
property, not to exceed in value $800 [Adjusted
every 3 years by section
104.] plus up to $7,500 [Adjusted
every 3 years by section
104.] of any unused amount of the exemption provided under
paragraph (1) of this subsection.
(6) The debtor's aggregate interest, not to
exceed $1,500 [Adjusted
every 3 years by section
104.] in value, in any implements, professional books, or tools,
of the trade of the debtor or the trade of a dependent of the debtor.
(7) Any unmatured life insurance contract owned
by the debtor, other than a credit life insurance contract.
(8) The debtor's aggregate interest, not to
exceed in value $8,000 [Adjusted
every 3 years by section
104.] less any amount of property of the estate transferred in
the manner specified in section
542(d) of this title, in any accrued dividend or interest under, or loan
value of, any unmatured life insurance contract owned by the debtor under
which the insured is the debtor or an individual of whom the debtor is a
dependent.
(9) Professionally prescribed health aids for the
debtor or a dependent of the debtor.
(10) The debtor's right to receive--
(A) a social security benefit, unemployment
compensation, or a local public assistance benefit;
(B) a veterans' benefit;
(C) a disability, illness, or unemployment
benefit;
(D) alimony, support, or separate
maintenance, to the extent reasonably necessary for the support of the
debtor and any dependent of the debtor;
(E) a payment under a stock bonus, pension,
profitsharing, annuity, or similar plan or contract on account of illness,
disability, death, age, or length of service, to the extent reasonably
necessary for the support of the debtor and any dependent of the debtor,
unless--
(i) such plan or contract was established by or under the auspices of
an insider that employed the debtor at the time the debtor's rights
under such plan or contract arose;
(ii) such payment is on account of age or length of service; and
(iii) such plan or contract does not qualify under section 401(a),
403(a),
403(b),
or 408
of the Internal Revenue Code of 1986.
(11) The debtor's right to receive, or property
that is traceable to--
(A) an award under a crime victim's
reparation law;
(B) a payment on account of the wrongful
death of an individual of whom the debtor was a dependent, to the extent
reasonably necessary for the support of the debtor and any dependent of
the debtor;
(C) a payment under a life insurance
contract that insured the life of an individual of whom the debtor was a
dependent on the date of such individual's death, to the extent reasonably
necessary for the support of the debtor and any dependent of the debtor;
(D) a payment, not to exceed $15,000 [Adjusted
every 3 years by section
104.] on account of personal bodily injury, not including pain
and suffering or compensation for actual pecuniary loss, of the debtor or
an individual of whom the debtor is a dependent; or
(E) a payment in compensation of loss of
future earnings of the debtor or an individual of whom the debtor is or
was a dependent, to the extent reasonably necessary for the support of the
debtor and any dependent of the debtor.
(12) Retirement funds to the
extent that those funds are in a fund or account that is exempt from
taxation under section 401,
403, 408,
408A,
414, 457, or 501(a)
of the Internal Revenue Code of 1986.
(e) A waiver of an exemption executed in favor of a
creditor that holds an unsecured claim against the debtor is unenforceable in
a case under this title with respect to such claim against property that the
debtor may exempt under subsection
(b) of this section. A waiver by the debtor of a power under subsection
(f) or (h)
of this section to avoid a transfer, under subsection
(g) or (i)
of this section to exempt property, or under subsection
(i) of this section to recover property or to preserve a transfer, is
unenforceable in a case under this title.
(f)
(1) Notwithstanding any waiver of exemptions but
subject to paragraph (3), the debtor may avoid the fixing of a lien on an
interest of the debtor in property to the extent that such lien impairs an
exemption to which the debtor would have been entitled under subsection
(b) of this section, if such lien is--
(A) a judicial lien, other than a judicial
lien that secures a debt
of a kind that is specified in section
523(a)(5); or
(B) a nonpossessory, nonpurchase-money
security interest in any--
(i) household furnishings, household goods, wearing apparel,
appliances, books, animals, crops, musical instruments, or jewelry that
are held primarily for the personal, family, or household use of the
debtor or a dependent of the debtor;
(ii) implements, professional books, or tools, of the trade of the
debtor or the trade of a dependent of the debtor; or
(iii) professionally prescribed health aids for the debtor or a
dependent of the debtor.
(2)
(A) For the purposes of this subsection, a
lien shall be considered to impair an exemption to the extent that the sum
of--
(i) the lien;
(ii) all other liens on the property; and
(iii) the amount of the exemption that the debtor could claim if
there were no liens on the property;
exceeds the value that the debtor's interest in the property would
have in the absence of any liens.
(B) In the case of a property subject to
more than 1 lien, a lien that has been avoided shall not be considered in
making the calculation under subparagraph (A) with respect to other liens.
(C) This paragraph shall not apply with
respect to a judgment arising out of a mortgage foreclosure.
(3) In a case in which State law that is
applicable to the debtor--
(A) permits a person to voluntarily waive a
right to claim exemptions under subsection
(d) or prohibits a debtor from claiming exemptions under subsection
(d); and
(B) either permits the debtor to claim
exemptions under State law without limitation in amount, except to the
extent that the debtor has permitted the fixing of a consensual lien on
any property or prohibits avoidance of a consensual lien on property
otherwise eligible to be claimed as exempt property;
the debtor may not avoid the fixing of a lien on an interest of the
debtor or a dependent of the debtor in property if the lien is a
nonpossessory, nonpurchase-money security interest in implements,
professional books, or tools of the trade of the debtor or a dependent of
the debtor or farm animals or crops of the debtor or a dependent of the
debtor to the extent the value of such implements, professional books, tools
of the trade, animals, and crops exceeds $5,000 [Adjusted
every 3 years by section
104.].
(4)
(A) Subject to subparagraph
(B), for purposes of paragraph
(1)(B), the term "household goods" means--
(i) clothing;
(ii) furniture;
(iii) appliances;
(iv) 1 radio;
(v) 1 television;
(vi) 1 VCR;
(vii) linens;
(viii) china;
(ix) crockery;
(x) kitchenware;
(xi) educational materials and educational equipment
primarily for the use of minor dependent children of the debtor;
(xii) medical equipment and supplies;
(xiii) furniture exclusively for the use of minor
children, or elderly or disabled dependents of the debtor;
(xiv) personal effects (including the toys and hobby
equipment of minor dependent children and wedding rings) of the debtor
and the dependents of the debtor; and
(xv) 1 personal computer and related equipment.
(B) The term "household
goods" does not include--
(i) works of art (unless by or of the debtor, or any
relative of the debtor);
(ii) electronic entertainment equipment with a fair
market value of more than $500 [Adjusted
every 3 years by section
104.] in the aggregate (except 1 television, 1 radio, and 1
VCR);
(iii) items acquired as antiques with a fair market
value of more than $500 [Adjusted
every 3 years by section
104.] in the aggregate;
(iv) jewelry with a fair market value of more than
$500 in the aggregate (except wedding rings); and
(v) a computer (except as otherwise provided for in
this section), motor vehicle (including a tractor or lawn tractor),
boat, or a motorized recreational device, conveyance, vehicle,
watercraft, or aircraft.
(g) Notwithstanding sections
550 and 551
of this title, the debtor may exempt under subsection
(b) of this section property that the trustee recovers under section 510(c)(2),
542,
543,
550,
551,
or 553 of
this title, to the extent that the debtor could have exempted such property
under subsection
(b) of this section if such property had not been transferred, if--
(1)
(A) such transfer was not a voluntary
transfer of such property by the debtor; and
(B) the debtor did not conceal such
property; or
(2) the debtor could have avoided such transfer
under
subsection (f)(1)(B)
of this section.
(h) The debtor may avoid a transfer of property of the
debtor or recover a setoff to the extent that the debtor could have exempted
such property under subsection
(g)(1) of this section if the trustee had avoided such transfer, if--
(1) such transfer is avoidable by the trustee
under section
544, 545,
547, 548,
549,
or 724(a)
of this title or recoverable by the trustee under section
553 of this title; and
(2) the trustee does not attempt to avoid such
transfer.
(i)
(1) If the debtor avoids a transfer or recovers a
setoff under subsection
(f) or (h)
of this section, the debtor may recover in the manner prescribed by, and
subject to the limitations of, section
550 of this title, the same as if the trustee had avoided such transfer,
and may exempt any property so recovered under subsection
(b) of this section.
(2) Notwithstanding section
551 of this title, a transfer avoided under section
544, 545,
547, 548,
549,
or 724(a)
of this title, under subsection
(f) or (h)
of this section, or property recovered under section 553 of this title, may
be preserved for the benefit of the debtor to the extent that the debtor may
exempt such property under subsection
(g) of this section or paragraph (1) of this subsection.
(j) Notwithstanding subsections
(g) and (i)
of this section, the debtor may exempt a particular kind of property under subsections
(g) and (i)
of this section only to the extent that the debtor has exempted less property
in value of such kind than that to which the debtor is entitled under subsection
(b) of this section.
(k) Property that the debtor exempts under this
section is not liable for payment of any administrative expense except--
(1) the aliquot share of the costs and expenses
of avoiding a transfer of property that the debtor exempts under subsection
(g) of this section, or of recovery of such property, that is
attributable to the value of the portion of such property exempted in
relation to the value of the property recovered; and
(2) any costs and expenses of avoiding a transfer
under subsection
(f) or (h)
of this section, or of recovery of property under subsection
(i)(1) of this section, that the debtor has not paid.
(l) The debtor shall file a list of property that the
debtor claims as exempt under subsection
(b) of this section. If the debtor does not file such a list, a dependent
of the debtor may file such a list, or may claim property as exempt from
property of the estate on behalf of the debtor. Unless a party in interest
objects, the property claimed as exempt on such list is exempt.
(m) Subject to the limitation in subsection
(b), this section shall apply separately with respect to each debtor in a
joint case.
(n) For assets in individual
retirement accounts described in section 408
or 408A
of the Internal Revenue Code of 1986, other than a simplified employee pension
under section
408(k) of such Code or a simple retirement account under section
408(p) of such Code, the aggregate value of such assets exempted under
this section, without regard to amounts attributable to rollover contributions
under section
402(c), 402(e)(6),
403(a)(4),
403(a)(5),
and 403(b)(8)
of the Internal Revenue Code of 1986, and earnings thereon, shall not exceed
$1,000,000 [Adjusted
every 3 years by section
104.] in a case filed by a debtor who is an individual, except that
such amount may be increased if the interests of justice so require.
(o) For purposes of subsection
(b)(3)(A), and notwithstanding subsection
(a), the value of an interest in--
(1) real or personal property
that the debtor or a dependent of the debtor uses as a residence;
(2) a cooperative that owns
property that the debtor or a dependent of the debtor uses as a residence;
(3) a burial plot for the debtor
or a dependent of the debtor; or
(4) real or personal property
that the debtor or a dependent of the debtor claims as a homestead;
shall be reduced to the extent that such value is
attributable to any portion of any property that the debtor disposed of in the
10-year period ending on the date of the filing of the petition with the
intent to hinder, delay, or defraud a creditor and that the debtor could not
exempt, or that portion that the debtor could not exempt, under subsection
(b), if on such date the debtor had held the property so disposed of.
(p)
(1) Except as provided in
paragraph (2) of this subsection and sections
544 and 548,
as a result of electing under subsection
(b)(3)(A) to exempt property under State or local law, a debtor may not
exempt any amount of interest that was acquired by the debtor during the 1215-day
period preceding the date of the filing of the petition that exceeds in
the aggregate $125,000 [Adjusted
every 3 years by section
104.] in value in--
(A) real or personal
property that the debtor or a dependent of the debtor uses as a residence;
(B) a cooperative that owns
property that the debtor or a dependent of the debtor uses as a residence;
(C) a burial plot for the
debtor or a dependent of the debtor; or
(D) real or personal
property that the debtor or dependent of the debtor claims as a homestead.
(2)
(A) The limitation under
paragraph (1) shall not apply to an exemption claimed under subsection
(b)(3)(A) by a family farmer for the principal residence of such
farmer.
(B) For purposes of
paragraph (1), any amount of such interest does not include any interest
transferred from a debtor's previous principal residence (which was
acquired prior to the beginning of such 1215-day period) into the debtor's
current principal residence, if the debtor's previous and current
residences are located in the same State.
(q)
(1) As a result of electing under
subsection
(b)(3)(A) to exempt property under State or local law, a debtor may not
exempt any amount of an interest in property described in subparagraphs (A),
(B), (C), and (D) of subsection (p)(1) which exceeds in the aggregate
$125,000 [Adjusted
every 3 years by section
104.] if--
(A) the court determines,
after notice and a hearing, that the debtor has been convicted of a felony
(as defined in section
3156 of title 18), which under the circumstances, demonstrates that
the filing of the case was an abuse of the provisions of this title; or
(B) the debtor owes a debt
arising from--
(i) any violation of the Federal securities laws (as
defined in section 3(a)(47) of the Securities Exchange Act of 1934), any
State securities laws, or any regulation or order issued under Federal
securities laws or State securities laws;
(ii) fraud, deceit, or manipulation in a fiduciary
capacity or in connection with the purchase or sale of any security
registered under section 12 or 15(d) of the Securities Exchange Act of
1934 or under section 6 of the Securities Act of 1933;
(iii) any civil remedy under section
1964 of title 18; or
(iv) any criminal act, intentional tort, or willful
or reckless misconduct that caused serious physical injury or death to
another individual in the preceding 5 years.
(2) Paragraph (1) shall not apply
to the extent the amount of an interest in property described in
subparagraphs (A), (B), (C), and (D) of subsection (p)(1) is reasonably
necessary for the support of the debtor and any dependent of the debtor.
[Rev. 4-29-05]
11
USC § 523. Exceptions to discharge
(a) A discharge under section
727, 1141,
1228(a),
1228(b),
or 1328(b)
of this title does not discharge an individual debtor from any debt--
(1) for a tax or a customs duty--
(A) of the kind and for the periods
specified in section 507(a)(3)
or 507(a)(8)
of this title, whether or not a claim for such tax was filed or allowed;
(B) with respect to which a return, or
equivalent report or notice, if required--
(i) was not filed or given; or
(ii) was filed or given after the date on
which such return, report, or notice was last
due, under applicable law or under any extension, and after two years
before the date of the filing of the petition; or
(C) with respect to which the debtor made a
fraudulent return or willfully attempted in any manner to evade or defeat
such tax;
(2) for money, property, services, or an
extension, renewal, or refinancing of credit, to the extent obtained by--
(A) false pretenses, a false representation,
or actual fraud, other than a statement respecting the debtor’s or an
insider’s financial condition;
(B) use of a statement in writing--
(i) that is materially false;
(ii) respecting the debtor’s or an insider’s financial condition;
(iii) on which the creditor to whom the debtor is liable for such
money, property, services, or credit reasonably relied; and
(iv) that the debtor caused to be made or published with intent to
deceive; or
(C)
(i) for purposes of subparagraph (A)--
(I) consumer debts owed to a single creditor and
aggregating more than $500 []
for luxury goods or services incurred by an individual debtor on or
within 90 days before the order for relief under this title are presumed
to be nondischargeable; and
(II) cash advances aggregating more than $750 []
that are extensions of consumer credit under an open end credit plan
obtained by an individual debtor on or within 70 days before the order
for relief under this title, are presumed to be nondischargeable; and
[Dollar amounts in subsections 523(a)(2)(C)(i) and (ii)
are adjusted on April 1 every 3 years by section
104. Adjusted amounts effective
are in brackets.]
(ii) for purposes of this subparagraph--
(I) the terms "consumer",
"credit", and "open end credit plan" have the same
meanings as in section 103 of the Truth in Lending Act; and
(II) the term "luxury goods or services"
does not include goods or services reasonably necessary for the support
or maintenance of the debtor or a dependent of the debtor.
(3) neither listed nor scheduled under section
521(1) of this title, with the name, if known to the debtor, of the
creditor to whom such debt is owed, in time to permit--
(A) if such debt is not of a kind specified
in paragraph
(2), (4),
or (6)
of this subsection, timely filing of a proof of claim, unless such
creditor had notice or actual knowledge of the case in time for such
timely filing; or
(B) if such debt is of a kind specified in paragraph
(2), (4),
or (6)
of this subsection, timely filing of a proof of claim and timely request
for a determination of dischargeability of such debt under one of such
paragraphs, unless such creditor had notice or actual knowledge of the
case in time for such timely filing and request;
(4) for fraud or defalcation while acting in a
fiduciary capacity, embezzlement, or larceny;
(5) for a domestic support
obligation;
(6) for willful and malicious injury by the
debtor to another entity or to the property of another entity;
(7) to the extent such debt is for a fine,
penalty, or forfeiture payable to and for the benefit of a governmental
unit, and is not compensation for actual pecuniary loss, other than a tax
penalty--
(A) relating to a tax of a kind not
specified in paragraph
(1) of this subsection; or
(B) imposed with respect to a transaction or
event that occurred before three years before the date of the filing of
the petition;
(8) unless excepting such debt
from discharge under this paragraph would impose an undue hardship on the
debtor and the debtor's dependents, for--
(A)
(i) an educational benefit overpayment or loan made,
insured, or guaranteed by a governmental unit, or made under any program
funded in whole or in part by a governmental unit or nonprofit
institution; or
(ii) an obligation to repay funds received as an
educational benefit, scholarship, or stipend; or
(B) any other educational
loan that is a qualified education loan, as defined in section 221(d)(1)
of the Internal Revenue Code of 1986, incurred by a debtor who is an
individual;
(9) for death or personal injury caused by the
debtor's operation of a
motor
vehicle, vessel, or aircraft if such operation was unlawful because
the debtor was intoxicated from using alcohol, a drug, or another substance;
(10) that was or could have been listed or
scheduled by the debtor in a prior case concerning the debtor under this
title or under the Bankruptcy Act in which the debtor waived discharge, or
was denied a discharge under section
727(a)(2), (3),
(4),
(5),
(6),
or (7)
of this title, or under section 14c(1), (2), (3), (4), (6), or (7) of such
Act;
(11) provided in any final judgment,
unreviewable order, or consent order or decree entered in any court of the
United States or of any State, issued by a Federal depository institutions
regulatory agency, or contained in any settlement agreement entered into by
the debtor, arising from any act of fraud or defalcation while acting in a
fiduciary capacity committed with respect to any depository institution or
insured credit union;
(12) for malicious or reckless failure to
fulfill any commitment by the debtor to a Federal depository institutions
regulatory agency to maintain the capital of an insured depository
institution, except that this paragraph shall not extend any such commitment
which would otherwise be terminated due to any act of such agency;
(13) for any payment of an order of restitution
issued under title 18, United States Code;
(14) incurred to pay a tax to the United States
that would be nondischargeable pursuant to paragraph
(1);
(14A) incurred to pay a tax to
a governmental unit, other than the United States, that would be
nondischargeable under paragraph
(1);
(14B) incurred to pay fines or
penalties imposed under Federal election law;
(15) to a spouse, former spouse,
or child of the debtor and not of the kind described in paragraph
(5) that is incurred by the debtor in the course of a divorce or
separation or in connection with a separation agreement, divorce decree or
other order of a court of record, or a determination
made in accordance with State or territorial law by a governmental unit;
(16) for a fee or assessment that becomes due
and payable after the order for relief to a membership association with
respect to the debtor's interest in a unit
that has condominium ownership ,
in a share of a cooperative corporation,
or a lot in a homeowners association, for as long as
the debtor or the trustee has a legal, equitable, or possessory ownership
interest in such unit, such corporation, or such lot, but nothing in
this paragraph shall except from discharge the debt of a debtor for a
membership association fee or assessment for a period arising before entry
of the order for relief in a pending or subsequent bankruptcy case;
(17) for a fee imposed
on
a prisoner by any court for the filing of a case, motion, complaint,
or appeal, or for other costs and expenses assessed with respect to such
filing, regardless of an assertion of poverty by the debtor under subsection
(b)
or (f)(2)
of section
1915 of title
28 (or a similar non-Federal law), or the
debtor's status as a prisoner, as defined in section
1915(h) of title 28 (or a similar non-Federal law);
(18) owed to a pension,
profit-sharing, stock bonus, or other plan established under section
401, 403,
408,
408A, 414,
457,
or 501(c)
of the Internal Revenue Code of 1986, under--
(A) a loan permitted under
section 408(b)(1) of the Employee Retirement Income Security Act of 1974,
or subject to section
72(p) of the Internal Revenue Code of 1986; or
(B) a loan from a thrift
savings plan permitted under subchapter III of chapter 84 of title 5, that
satisfies the requirements of section 8433(g) of such title;
but nothing in this paragraph may be construed to provide
that any loan made under a governmental plan under section
414(d), or a contract or account under section
403(b), of the Internal Revenue Code of 1986 constitutes a claim or a
debt under this title; or
(19) that--
(A) is for--
(i) the violation of any of the Federal securities laws (as that term
is defined in section 3(a)(47) of the Securities Exchange Act of 1934),
any of the State securities laws, or any regulation or order issued
under such Federal or State securities laws; or
(ii) common law fraud, deceit, or manipulation in connection with the
purchase or sale of any security; and
(B) results, before, on, or
after the date on which the petition was filed, from--
(i) any judgment, order, consent order, or decree entered in any
Federal or State judicial or administrative proceeding;
(ii) any settlement agreement entered into by the debtor; or
(iii) any court or administrative order for any damages, fine,
penalty, citation, restitutionary payment, disgorgement payment,
attorney fee, cost, or other payment owed by the debtor.
For purposes of this subsection, the term
"return" means a return that satisfies the requirements of
applicable nonbankruptcy law (including applicable filing requirements).
Such term includes a return prepared pursuant to section
6020(a) of the Internal Revenue Code of 1986, or similar State or local
law, or a written stipulation to a judgment or a final order entered by a
nonbankruptcy tribunal, but does not include a return made pursuant to section
6020(b) of the Internal Revenue Code of 1986, or a similar State or
local law.
(b) Notwithstanding subsection
(a) of this section, a debt that was excepted from discharge under subsection
(a)(1), (a)(3),
or (a)(8)
of this section, under section 17a(1), 17a(3), or 17a(5) of the Bankruptcy
Act, under section 439A of the Higher Education Act of 1965, or under section
733(g) of the Public Health Service Act in a prior case concerning the debtor
under this title, or under the Bankruptcy Act, is dischargeable in a case
under this title unless, by the terms of subsection
(a) of this section, such debt is not dischargeable in the case under this
title.
(c)
(1) Except as provided in subsection
(a)(3)(B) of this section, the debtor shall be discharged from a debt of
a kind specified in paragraph
(2), (4),
or
(6) of
subsection
(a) of this section, unless, on request of the creditor to whom such
debt is owed, and after notice and a hearing, the court determines such debt
to be excepted from discharge under paragraph
(2), (4),
or
(6) ,
as the case may be, of subsection
(a) of this section.
(2) Paragraph (1) shall not apply in the case of
a Federal depository institutions regulatory agency seeking, in its capacity
as conservator, receiver, or liquidating agent for an insured depository
institution, to recover a debt described in subsection
(a)(2), (a)(4),
(a)(6),
or (a)(11)
owed to such institution by an institution-affiliated party unless the
receiver, conservator, or liquidating agent was appointed in time to
reasonably comply, or for a Federal depository institutions regulatory
agency acting in its corporate capacity as a successor to such receiver,
conservator, or liquidating agent to reasonably comply, with subsection
(a)(3)(B) as a creditor of such institution-affiliated party with
respect to such debt.
(d) If a creditor requests a determination of
dischargeability of a consumer debt under subsection
(a)(2) of this section, and such debt is discharged, the court shall grant
judgment in favor of the debtor for the costs of, and a reasonable
attorney’s fee for, the proceeding if the court finds that the position of
the creditor was not substantially justified, except that the court shall not
award such costs and fees if special circumstances would make the award
unjust.
(e) Any institution-affiliated party of
an
insured depository institution shall be considered to be acting in a
fiduciary capacity with respect to the purposes of subsection
(a)(4) or (11).
[Rev. 5-8-05]
11
USC § 524. Effect of discharge
(a) A discharge in a case under this title--
(1) voids any judgment at any time obtained, to
the extent that such judgment is a determination of the personal liability
of the debtor with respect to any debt discharged under section
727, 944,
1141,
1228,
or 1328
of this title, whether or not discharge of such debt is waived;
(2) operates as an injunction against the
commencement or continuation of an action, the employment of process, or an
act, to collect, recover or offset any such debt as a personal liability of
the debtor, whether or not discharge of such debt is waived; and
(3) operates as an injunction against the
commencement or continuation of an action, the employment of process, or an
act, to collect or recover from, or offset against, property of the debtor
of the kind specified in section
541(a)(2) of this title that is acquired after the commencement of the
case, on account of any allowable community claim, except a community claim
that is excepted from discharge under
section 523, 1228(a)(1),
or 1328(a)(1),
or that would be so excepted, determined in accordance with the
provisions of sections
523(c) and 523(d)
of this title, in a case concerning the debtor's spouse commenced on the
date of the filing of the petition in the case concerning the debtor,
whether or not discharge of the debt based on such community claim is
waived.
(b) Subsection
(a)(3) of this section does not apply if--
(1)
(A) the debtor’s spouse is a debtor in a
case under this title, or a bankrupt or a debtor in a case under the
Bankruptcy Act, commenced within six years of the date of the filing of
the petition in the case concerning the debtor; and
(B) the court does not grant the debtor’s
spouse a discharge in such case concerning the debtor’s spouse; or
(2)
(A) the court would not grant the debtor’s
spouse a discharge in a case under chapter
7 of this title concerning such spouse commenced on the date of the
filing of the petition in the case concerning the debtor; and
(B) a determination that the court would not
so grant such discharge is made by the bankruptcy court within the time
and in the manner provided for a determination under section
727 of this title of whether a debtor is granted a discharge.
(c) An agreement between a holder of a claim and the
debtor, the consideration for which, in whole or in part, is based on a debt
that is dischargeable in a case under this title is enforceable only to any
extent enforceable under applicable nonbankruptcy law, whether or not
discharge of such debt is waived, only if--
(1) such agreement was made before the granting
of the discharge under section
727, 1141,
1228,
or 1328
of this title;
(2) the debtor received the
disclosures described in subsection
(k) at or before the time at which the debtor signed the agreement;
(3) such agreement has been filed with the court and, if applicable,
accompanied by a declaration or an affidavit of the attorney that
represented the debtor during the course of negotiating an agreement under
this subsection, which states that--
(A) such agreement represents a fully
informed and voluntary agreement by the debtor;
(B) such agreement does not impose an undue
hardship on the debtor or a dependent of the debtor; and
(C) the attorney fully advised the debtor of
the legal effect and consequences of--
(i) an agreement of the kind specified in this subsection; and
(ii) any default under such an agreement;
(4) the debtor has not rescinded such agreement
at any time prior to discharge or within sixty days after such agreement is
filed with the court, whichever occurs later, by giving notice of rescission
to the holder of such claim;
(5) the provisions of subsection
(d) of this section have been complied with; and
(6)
(A) in a case concerning an individual who
was not represented by an attorney during the course of negotiating an
agreement under this subsection, the court approves such agreement as--
(i) not imposing an undue hardship on the debtor or a dependent of
the debtor; and
(ii) in the best interest of the debtor.
(B) Subparagraph (A) shall not apply to the
extent that such debt is a consumer debt secured by real property.
(d) In a case concerning an individual, when the court
has determined whether to grant or not to grant a discharge under section
727, 1141,
1228,
or 1328
of this title, the court may hold a hearing at which the debtor shall appear
in person. At any such hearing, the court shall inform the debtor that a
discharge has been granted or the reason why a discharge has not been granted.
If a discharge has been granted and if the debtor desires to make an agreement
of the kind specified in subsection
(c) of this section and was not represented by an attorney during the
course of negotiating such agreement, then the court shall hold a hearing at
which the debtor shall appear in person and at such hearing the court shall--
(1) inform the debtor--
(A) that such an agreement is not required
under this title, under nonbankruptcy law, or under any agreement not made
in accordance with the provisions of subsection
(c) of this section; and
(B) of the legal effect and consequences
of--
(i) an agreement of the kind specified in subsection
(c) of this section; and
(ii) a default under such an agreement; and
(2) determine whether the agreement that the
debtor desires to make complies with the requirements of subsection (c)(6)
of this section, if the consideration for such agreement is based in whole
or in part on a consumer debt that is not secured by real property of the
debtor.
(e) Except as provided in subsection
(a)(3) of this section, discharge of a debt of the debtor does not affect
the liability of any other entity on, or the property of any other entity for,
such debt.
(f) Nothing contained in subsection
(c) or (d)
of this section prevents a debtor from voluntarily repaying any debt.
(g)
(1)
(A) After notice and hearing, a court that
enters an order confirming a plan of reorganization under chapter 11 may
issue, in connection with such order, an injunction in accordance with
this subsection to supplement the injunctive effect of a discharge under
this section.
(B) An injunction may be issued under
subparagraph (A) to enjoin entities from taking legal action for the
purpose of directly or indirectly collecting, recovering, or receiving
payment or recovery with respect to any claim or demand that, under a plan
of reorganization, is to be paid in whole or in part by a trust described
in paragraph (2)(B)(i), except such legal actions as are expressly allowed
by the injunction, the confirmation order, or the plan of reorganization.
(2)
(A) Subject to subsection
(h), if the requirements of subparagraph (B) are met at the time an
injunction described in paragraph (1) is entered, then after entry of such
injunction, any proceeding that involves the validity, application,
construction, or modification of such injunction, or of this subsection
with respect to such injunction, may be commenced only in the district
court in which such injunction was entered, and such court shall have
exclusive jurisdiction over any such proceeding without regard to the
amount in controversy.
(B) The requirements of this subparagraph
are that--
(i) the injunction is to be implemented
in connection with a trust that, pursuant to the plan of
reorganization--
(I) is to assume the liabilities of a debtor which at the time of
entry of the order for relief has been named as a defendant in
personal injury, wrongful death, or property-damage actions seeking
recovery for damages allegedly caused by the presence of, or exposure
to, asbestos or asbestos-containing products;
(II) is to be funded in whole or in part by the securities of 1 or
more debtors involved in such plan and by the obligation of such
debtor or debtors to make future payments, including dividends;
(III) is to own, or by the exercise of rights granted under such
plan would be entitled to own if specified contingencies occur, a
majority of the voting shares of--
(aa) each such debtor;
(bb) the parent corporation of each such debtor; or
(cc) a subsidiary of each such debtor that is also a debtor; and
(IV) is to use its assets or income to pay claims and demands; and
(ii) subject to subsection
(h), the court determines that--
(I) the debtor is likely to be subject to substantial future
demands for payment arising out of the same or similar conduct or
events that gave rise to the claims that are addressed by the
injunction;
(II) the actual amounts, numbers, and timing of such future demands
cannot be determined;
(III) pursuit of such demands outside the procedures prescribed by
such plan is likely to threaten the plan’s purpose to deal equitably
with claims and future demands;
(IV) as part of the process of seeking confirmation of such plan--
(aa) the terms of the injunction proposed to be issued under
paragraph (1)(A), including any provisions barring actions against
third parties pursuant to paragraph (4)(A), are set out in such plan
and in any disclosure statement supporting the plan; and
(bb) a separate class or classes of the claimants whose claims
are to be addressed by a trust described in clause (i) is
established and votes, by at least 75 percent of those voting, in
favor of the plan; and
(V) subject to subsection
(h), pursuant to court orders or otherwise, the trust will operate
through mechanisms such as structured, periodic, or supplemental
payments, pro rata distributions, matrices, or periodic review of
estimates of the numbers and values of present claims and future
demands, or other comparable mechanisms, that provide reasonable
assurance that the trust will value, and be in a financial position to
pay, present claims and future demands that involve similar claims in
substantially the same manner.
(3)
(A) If the requirements of paragraph (2)(B)
are met and the order confirming the plan of reorganization was issued or
affirmed by the district court that has jurisdiction over the
reorganization case, then after the time for appeal of the order that
issues or affirms the plan—
(i) the injunction shall be valid and
enforceable and may not be revoked or modified by any court except
through appeal in accordance with paragraph (6);
(ii) no entity that pursuant to such
plan or thereafter becomes a direct or indirect transferee of, or
successor to any assets of, a debtor or trust that is the subject of the
injunction shall be liable with respect to any claim or demand made
against such entity by reason of its becoming such a transferee or
successor; and
(iii) no entity that pursuant to such
plan or thereafter makes a loan to such a debtor or trust or to such a
successor or transferee shall, by reason of making the loan, be liable
with respect to any claim or demand made against such entity, nor shall
any pledge of assets made in connection with such a loan be upset or
impaired for that reason;
(B) Subparagraph (A) shall not be construed
to--
(i) imply that an entity described in
subparagraph (A)(ii) or (iii) would, if this paragraph were not
applicable, necessarily be liable to any entity by reason of any of the
acts described in subparagraph (A);
(ii) relieve any such entity of the
duty to comply with, or of liability under, any Federal or State law
regarding the making of a fraudulent conveyance in a transaction
described in subparagraph (A)(ii) or (iii); or
(iii) relieve a debtor of the
debtor’s obligation to comply with the terms of the plan of
reorganization, or affect the power of the court to exercise its
authority under sections
1141 and 1142
to compel the debtor to do so.
(4)
(A)
(i) Subject to subparagraph (B), an
injunction described in paragraph (1) shall be valid and enforceable
against all entities that it addresses.
(ii) Notwithstanding the provisions of
section
524(e), such an injunction may bar any action directed against a
third party who is identifiable from the terms of such injunction (by
name or as part of an identifiable group) and is alleged to be directly
or indirectly liable for the conduct of, claims against, or demands on
the debtor to the extent such alleged liability of such third party
arises by reason of--
(I) the third party’s ownership of a financial interest in the
debtor, a past or present affiliate of the debtor, or a predecessor in
interest of the debtor;
(II) the third party’s involvement in the management of the
debtor or a predecessor in interest of the debtor, or service as an
officer, director or employee of the debtor or a related party;
(III) the third party’s provision of insurance to the debtor or a
related party; or
(IV) the third party’s involvement in a transaction changing the
corporate structure, or in a loan or other financial transaction
affecting the financial condition, of the debtor or a related party,
including but not limited to--
(aa) involvement in providing financing (debt or equity), or
advice to an entity involved in such a transaction; or
(bb) acquiring or selling a financial interest in an entity as
part of such a transaction.
(iii) As used in this subparagraph,
the term “related party” means--
(I) a past or present affiliate of the debtor;
(II) a predecessor in interest of the debtor; or
(III) any entity that owned a financial interest in--
(aa) the debtor;
(bb) a past or present affiliate of the debtor; or
(cc) a predecessor in interest of the debtor.
(B) Subject to subsection
(h), if, under a plan of reorganization, a kind of demand described in
such plan is to be paid in whole or in part by a trust described in
paragraph (2)(B)(i) in connection with which an injunction described in
paragraph (1) is to be implemented, then such injunction shall be valid
and enforceable with respect to a demand of such kind made, after such
plan is confirmed, against the debtor or debtors involved, or against a
third party described in subparagraph (A)(ii), if--
(i) as part of the proceedings leading
to issuance of such injunction, the court appoints a legal
representative for the purpose of protecting the rights of persons that
might subsequently assert demands of such kind, and
(ii) the court determines, before
entering the order confirming such plan, that identifying such debtor or
debtors, or such third party (by name or as part of an identifiable
group), in such injunction with respect to such demands for purposes of
this subparagraph is fair and equitable with respect to the persons that
might subsequently assert such demands, in light of the benefits
provided, or to be provided, to such trust on behalf of such debtor or
debtors or such third party.
(5) In this subsection, the term “demand”
means a demand for payment, present or future, that--
(A) was not a claim during the proceedings
leading to the confirmation of a plan of reorganization;
(B) arises out of the same or similar
conduct or events that gave rise to the claims addressed by the injunction
issued under paragraph (1); and
(C) pursuant to the plan, is to be paid by a
trust described in paragraph (2)(B)(i).
(6) Paragraph (3)(A)(i) does not bar an action
taken by or at the direction of an appellate court on appeal of an
injunction issued under paragraph (1) or of the order of confirmation that
relates to the injunction.
(7) This subsection does not affect the operation
of section
1144 or the power of the district court to refer a proceeding under section
157 of title 28 or any reference of a proceeding made prior to the date
of the enactment of this subsection.
(h) Application to Existing Injunctions.-- For
purposes of subsection
(g)--
(1) subject to paragraph (2), if an injunction of
the kind described in subsection (g)(1)(B) was issued before the date of the
enactment of this Act, as part of a plan of reorganization confirmed by an
order entered before such date, then the injunction shall be considered to
meet the requirements of subsection (g)(2)(B) for purposes of subsection
(g)(2)(A), and to satisfy subsection (g)(4)(A)(ii), if--
(A) the court determined at the time the
plan was confirmed that the plan was fair and equitable in accordance with
the requirements of section 1129 (b);
(B) as part of the proceedings leading to
issuance of such injunction and confirmation of such plan, the court had
appointed a legal representative for the purpose of protecting the rights
of persons that might subsequently assert demands described in subsection
(g)(4)(B) with respect to such plan; and
(C) such legal representative did not object
to confirmation of such plan or issuance of such injunction; and
(2) for purposes of paragraph (1), if a trust
described in subsection (g)(2)(B)(i) is subject to a court order on the date
of the enactment of this Act staying such trust from settling or paying
further claims--
(A) the requirements of subsection (g)(2)(B)(ii)(V)
shall not apply with respect to such trust until such stay is lifted or
dissolved; and
(B) if such trust meets such requirements on
the date such stay is lifted or dissolved, such trust shall be considered
to have met such requirements continuously from the date of the enactment
of this Act.
(i) The willful failure of a creditor to credit
payments received under a plan confirmed under this title, unless the order
confirming the plan is revoked, the plan is in default, or the creditor has
not received payments required to be made under the plan 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)
if the act of the creditor to collect and failure to credit payments in the
manner required by the plan caused material injury to the debtor.
(j) Subsection
(a)(2) does not operate as an injunction against an act by a creditor that
is the holder of a secured claim, if--
(1) such creditor retains a security interest in
real property that is the principal residence of the debtor;
(2) such act is in the ordinary course of
business between the creditor and the debtor; and
(3) such act is limited to seeking or obtaining
periodic payments associated with a valid security interest in lieu of
pursuit of in rem relief to enforce the lien.
(k)
(1) The disclosures required under subsection
(c)(2) shall consist of the disclosure statement described in paragraph
(3), completed as required in that paragraph, together with the agreement
specified in subsection (c), statement, declaration, motion and order
described, respectively, in paragraphs (4) through (8), and shall be the
only disclosures required in connection with entering into such agreement.
(2) Disclosures made under paragraph (1) shall be
made clearly and conspicuously and in writing. The terms "Amount
Reaffirmed" and "Annual Percentage Rate" shall be disclosed
more conspicuously than other terms, data or information provided in
connection with this disclosure, except that the phrases "Before
agreeing to reaffirm a debt, review these important disclosures" and
"Summary of Reaffirmation Agreement" may be equally conspicuous.
Disclosures may be made in a different order and may use terminology
different from that set forth in paragraphs (2) through (8), except that the
terms "Amount Reaffirmed" and "Annual Percentage Rate"
must be used where indicated.
(3) The disclosure statement required under this
paragraph shall consist of the following:
(A) The statement: "Part A: Before
agreeing to reaffirm a debt, review these important disclosures:";
(B) Under the heading "Summary of
Reaffirmation Agreement", the statement: "This Summary is made
pursuant to the requirements of the Bankruptcy Code";
(C) The "Amount Reaffirmed", using
that term, which shall be--
(i) the total amount of debt that the
debtor agrees to reaffirm by entering into an agreement of the kind
specified in subsection
(c), and
(ii) the total of any fees and costs
accrued as of the date of the disclosure statement, related to such
total amount.
(D) In conjunction with the disclosure of
the "Amount Reaffirmed", the statements--
(i) "The amount of debt you have
agreed to reaffirm"; and
(ii) "Your credit agreement may
obligate you to pay additional amounts which may come due after the date
of this disclosure. Consult your credit agreement.".
(E) The "Annual Percentage Rate",
using that term, which shall be disclosed as--
(i) if, at the time the petition is
filed, the debt is an extension of credit under an open end credit plan,
as the terms "credit" and "open end credit plan" are
defined in section 103 of the Truth
in Lending Act, then--
(I) the annual percentage rate determined under paragraphs (5) and
(6) of section 127(b) of the Truth in Lending Act, as applicable, as
disclosed to the debtor in the most recent periodic statement prior to
entering into an agreement of the kind specified in subsection
(c) or, if no such periodic statement has been given to the debtor
during the prior 6 months, the annual percentage rate as it would have
been so disclosed at the time the disclosure statement is given to the
debtor, or to the extent this annual percentage rate is not readily
available or not applicable, then
(II) the simple interest rate applicable to the amount reaffirmed
as of the date the disclosure statement is given to the debtor, or if
different simple interest rates apply to different balances, the
simple interest rate applicable to each such balance, identifying the
amount of each such balance included in the amount reaffirmed, or
(III) if the entity making the disclosure elects, to disclose the
annual percentage rate under subclause (I) and the simple interest
rate under subclause (II); or
(ii) if, at the time the petition is
filed, the debt is an extension of credit other than under an open end
credit plan, as the terms "credit" and "open end credit
plan" are defined in section 103 of the Truth in Lending Act,
then--
(I) the annual percentage rate under section 128(a)(4) of the Truth
in Lending Act, as disclosed to the debtor in the most recent
disclosure statement given to the debtor prior to the entering into an
agreement of the kind specified in subsection (c) with respect to the
debt, or, if no such disclosure statement was given to the debtor, the
annual percentage rate as it would have been so disclosed at the time
the disclosure statement is given to the debtor, or to the extent this
annual percentage rate is not readily available or not applicable,
then
(II) the simple interest rate applicable to the amount reaffirmed
as of the date the disclosure statement is given to the debtor, or if
different simple interest rates apply to different balances, the
simple interest rate applicable to each such balance, identifying the
amount of such balance included in the amount reaffirmed, or
(III) if the entity making the disclosure elects, to disclose the
annual percentage rate under (I) and the simple interest rate under
(II).
(F) If the underlying debt transaction was
disclosed as a variable rate transaction on the most recent disclosure
given under the Truth in Lending Act, by stating "The interest rate
on your loan may be a variable interest rate which changes from time to
time, so that the annual percentage rate disclosed here may be higher or
lower.".
(G) If the debt is secured by a security
interest which has not been waived in whole or in part or determined to be
void by a final order of the court at the time of the disclosure, by
disclosing that a security interest or lien in goods or property is
asserted over some or all of the debts the debtor is reaffirming and
listing the items and their original purchase price that are subject to
the asserted security interest, or if not a purchase-money security
interest then listing by items or types and the original amount of the
loan.
(H) At the election of the creditor, a
statement of the repayment schedule using 1 or a combination of the
following--
(i) by making the statement: "Your
first payment in the amount of $XXX is due on XXX but the future payment
amount may be different. Consult your reaffirmation agreement or credit
agreement, as applicable.", and stating the amount of the first
payment and the due date of that payment in the places provided;
(ii) by making the statement:
"Your payment schedule will be:", and describing the repayment
schedule with the number, amount, and due dates or period of payments
scheduled to repay the debts reaffirmed to the extent then known by the
disclosing party; or
(iii) by describing the debtor's
repayment obligations with reasonable specificity to the extent then
known by the disclosing party.
(I) The following statement: "Note:
When this disclosure refers to what a creditor 'may' do, it does not use
the word 'may' to give the creditor specific permission. The word 'may' is
used to tell you what might occur if the law permits the creditor to take
the action. If you have questions about your reaffirming a debt or what
the law requires, consult with the attorney who helped you negotiate this
agreement reaffirming a debt. If you don't have an attorney helping you,
the judge will explain the effect of your reaffirming a debt when the
hearing on the reaffirmation agreement is held.".
(J)
(i) The following additional
statements:
"Reaffirming a debt is a serious financial decision. The law
requires you to take certain steps to make sure the decision is in
your best interest. If these steps are not completed, the
reaffirmation agreement is not effective, even though you have signed
it.
"1. Read the disclosures in this Part A carefully. Consider
the decision to reaffirm carefully. Then, if you want to reaffirm,
sign the reaffirmation agreement in Part B (or you may use a separate
agreement you and your creditor agree on).
"2. Complete and sign Part D and be sure you can afford to
make the payments you are agreeing to make and have received a copy of
the disclosure statement and a completed and signed reaffirmation
agreement.
"3. If you were represented by an attorney during the
negotiation of your reaffirmation agreement, the attorney must have
signed the certification in Part C.
"4. If you were not represented by an attorney during the
negotiation of your reaffirmation agreement, you must have completed
and signed Part E.
"5. The original of this disclosure must be filed with the
court by you or your creditor. If a separate reaffirmation agreement
(other than the one in Part B) has been signed, it must be attached.
"6. If you were represented by an attorney during the
negotiation of your reaffirmation agreement, your reaffirmation
agreement becomes effective upon filing with the court unless the
reaffirmation is presumed to be an undue hardship as explained in Part
D.
"7. If you were not represented by an attorney during the
negotiation of your reaffirmation agreement, it will not be effective
unless the court approves it. The court will notify you of the hearing
on your reaffirmation agreement. You must attend this hearing in
bankruptcy court where the judge will review your reaffirmation
agreement. The bankruptcy court must approve your reaffirmation
agreement as consistent with your best interests, except that no court
approval is required if your reaffirmation agreement is for a consumer
debt secured by a mortgage, deed of trust, security deed, or other
lien on your real property, like your home.
"Your right to rescind (cancel) your reaffirmation agreement.
You may rescind (cancel) your reaffirmation agreement at any time
before the bankruptcy court enters a discharge order, or before the
expiration of the 60-day period that begins on the date your
reaffirmation agreement is filed with the court, whichever occurs
later. To rescind (cancel) your reaffirmation agreement, you must
notify the creditor that your reaffirmation agreement is rescinded (or
canceled).
"What are your obligations if you reaffirm the debt? A
reaffirmed debt remains your personal legal obligation. It is not
discharged in your bankruptcy case. That means that if you default on
your reaffirmed debt after your bankruptcy case is over, your creditor
may be able to take your property or your wages. Otherwise, your
obligations will be determined by the reaffirmation agreement which
may have changed the terms of the original agreement. For example, if
you are reaffirming an open end credit agreement, the creditor may be
permitted by that agreement or applicable law to change the terms of
that agreement in the future under certain conditions.
"Are you required to enter into a reaffirmation agreement by
any law? No, you are not required to reaffirm a debt by any law. Only
agree to reaffirm a debt if it is in your best interest. Be sure you
can afford the payments you agree to make.
"What if your creditor has a security interest or lien? Your
bankruptcy discharge does not eliminate any lien on your property. A
"lien" is often referred to as a security interest, deed of
trust, mortgage or security deed. Even if you do not reaffirm and your
personal liability on the debt is discharged, because of the lien your
creditor may still have the right to take the security property if you
do not pay the debt or default on it. If the lien is on an item of
personal property that is exempt under your State's law or that the
trustee has abandoned, you may be able to redeem the item rather than
reaffirm the debt. To redeem, you make a single payment to the
creditor equal to the current value of the security property, as
agreed by the parties or determined by the court.".
(ii) In the case of a reaffirmation
under subsection (m)(2), numbered paragraph 6 in the disclosures
required by clause (i) of this subparagraph shall read as follows:
"6. If you were represented by an attorney during the
negotiation of your reaffirmation agreement, your reaffirmation
agreement becomes effective upon filing with the court.".
(4) The form of such agreement required under
this paragraph shall consist of the following:
"Part B: Reaffirmation Agreement. I (we) agree to reaffirm the
debts arising under the credit agreement described below.
"Brief description of credit agreement:
"Description of any changes to the credit agreement made as part
of this reaffirmation agreement:
"Signature: Date:
"Borrower:
"Co-borrower, if also reaffirming these debts:
"Accepted by creditor:
"Date of creditor acceptance:".
(5) The declaration shall consist of the
following:
(A) The following certification:
"Part C: Certification by Debtor's Attorney (If Any).
"I hereby certify that (1) this agreement represents a fully
informed and voluntary agreement by the debtor; (2) this agreement does
not impose an undue hardship on the debtor or any dependent of the
debtor; and (3) I have fully advised the debtor of the legal effect and
consequences of this agreement and any default under this agreement.
"Signature of Debtor's Attorney: Date:".
(B) If a presumption of undue hardship has
been established with respect to such agreement, such certification shall
state that in the opinion of the attorney, the debtor is able to make the
payment.
(C) In the case of a reaffirmation agreement
under subsection (m)(2), subparagraph (B) is not applicable.
(6)
(A) The statement in support of such
agreement, which the debtor shall sign and date prior to filing with the
court, shall consist of the following:
"Part D: Debtor's Statement in Support of Reaffirmation
Agreement.
"1. I believe this reaffirmation agreement will not impose an
undue hardship on my dependents or me. I can afford to make the payments
on the reaffirmed debt because my monthly income (take home pay plus any
other income received) is $XXX, and my actual current monthly expenses
including monthly payments on post-bankruptcy debt and other
reaffirmation agreements total $XXX, leaving $XXX to make the required
payments on this reaffirmed debt. I understand that if my income less my
monthly expenses does not leave enough to make the payments, this
reaffirmation agreement is presumed to be an undue hardship on me and
must be reviewed by the court. However, this presumption may be overcome
if I explain to the satisfaction of the court how I can afford to make
the payments here: XXX.
"2. I received a copy of the Reaffirmation Disclosure Statement
in Part A and a completed and signed reaffirmation agreement.".
(B) Where the debtor is represented by an
attorney and is reaffirming a debt owed to a creditor defined in section
19(b)(1)(A)(iv) of the Federal Reserve Act, the statement of support of
the reaffirmation agreement, which the debtor shall sign and date prior to
filing with the court, shall consist of the following:
"I believe this reaffirmation agreement is in my financial
interest. I can afford to make the payments on the reaffirmed debt. I
received a copy of the Reaffirmation Disclosure Statement in Part A and
a completed and signed reaffirmation agreement.".
(7) The motion that may be used if approval of
such agreement by the court is required in order for it to be effective,
shall be signed and dated by the movant and shall consist of the following:
"Part E: Motion for Court Approval (To be completed only if the
debtor is not represented by an attorney.). I (we), the debtor(s), affirm
the following to be true and correct:
"I am not represented by an attorney in connection with this
reaffirmation agreement.
"I believe this reaffirmation agreement is in my best interest
based on the income and expenses I have disclosed in my Statement in
Support of this reaffirmation agreement, and because (provide any
additional relevant reasons the court should consider):
"Therefore, I ask the court for an order approving this
reaffirmation agreement.".
(8) The court order, which may be used to approve
such agreement, shall consist of the following:
"Court Order: The court grants the debtor's motion and approves
the reaffirmation agreement described above.".
(l) Notwithstanding any other provision of this title
the following shall apply:
(1) A creditor may accept payments from a debtor
before and after the filing of an agreement of the kind specified in subsection
(c) with the court.
(2) A creditor may accept payments from a debtor
under such agreement that the creditor believes in good faith to be
effective.
(3) The requirements of subsections
(c)(2) and (k)
shall be satisfied if disclosures required under those subsections are given
in good faith.
(m)
(1) Until 60 days after an agreement of the kind
specified in subsection
(c) is filed with the court (or such additional period as the court,
after notice and a hearing and for cause, orders before the expiration of
such period), it shall be presumed that such agreement is an undue hardship
on the debtor if the debtor's monthly income less the debtor's monthly
expenses as shown on the debtor's completed and signed statement in support
of such agreement required under subsection
(k)(6)(A) is less than the scheduled payments on the reaffirmed debt.
This presumption shall be reviewed by the court. The presumption may be
rebutted in writing by the debtor if the statement includes an explanation
that identifies additional sources of funds to make the payments as agreed
upon under the terms of such agreement. If the presumption is not rebutted
to the satisfaction of the court, the court may disapprove such agreement.
No agreement shall be disapproved without notice and a hearing to the debtor
and creditor, and such hearing shall be concluded before the entry of the
debtor's discharge.
(2) This subsection does not apply to
reaffirmation agreements where the creditor is a credit union, as defined in
section 19(b)(1)(A)(iv) of the Federal Reserve Act.
[Rev. 5-10-05]
11
USC § 525. Protection against discriminatory treatment
(a) Except as provided in the Perishable Agricultural Commodities Act,
1930, the Packers and Stockyards Act, 1921, and section 1 of the Act entitled
“An Act making appropriations for the Department of Agriculture for the
fiscal year ending June 30, 1944, and for other purposes,” approved July 12,
1943, a governmental unit may not deny, revoke, suspend, or refuse to renew a
license, permit, charter, franchise, or other similar grant to, condition such
a grant to, discriminate with respect to such a grant against, deny employment
to, terminate the employment of, or discriminate with respect to employment
against, a person that is or has been a debtor under this title or a bankrupt
or a debtor under the Bankruptcy Act, or another person with whom such
bankrupt or debtor has been associated, solely because such bankrupt or debtor
is or has been a debtor under this title or a bankrupt or debtor under the
Bankruptcy Act, has been insolvent before the commencement of the case under
this title, or during the case but before the debtor is granted or denied a
discharge, or has not paid a debt that is dischargeable in the case under this
title or that was discharged under the Bankruptcy Act.
(b) No private employer may terminate the employment of, or discriminate
with respect to employment against, an individual who is or has been a debtor
under this title, a debtor or bankrupt under the Bankruptcy Act, or an
individual associated with such debtor or bankrupt, solely because such debtor
or bankrupt--
(1) is or has been a debtor under this title or a debtor or bankrupt
under the Bankruptcy Act;
(2) has been insolvent before the commencement of a case under this title
or during the case but before the grant or denial of a discharge; or
(3) has not paid a debt that is dischargeable in a case under this title
or that was discharged under the Bankruptcy Act.
(c)
(1) A governmental unit that operates a student grant or loan program and
a person engaged in a business that includes the making of loans guaranteed
or insured under a student loan program may not deny a grant, loan, loan
guarantee, or loan insurance to a person that is or has been a debtor under
this title or a bankrupt or debtor under the Bankruptcy Act, or another
person with whom the debtor or bankrupt has been associated, because the
debtor or bankrupt is or has been a debtor under this title or a bankrupt or
debtor under the Bankruptcy Act, has been insolvent before the commencement
of a case under this title or during the pendency of the case but before the
debtor is granted or denied a discharge, or has not paid a debt that is
dischargeable in the case under this title or that was discharged under the
Bankruptcy Act.
(2) In this section, "student loan program" means
any
program operated under title IV of the Higher Education Act of 1965
or a similar program operated under State or local law.
[Rev. 5-12-05]
11
USC § 526. Restrictions on debt relief agencies
(a) A debt relief agency shall not--
(1) fail to perform any service that such agency
informed an assisted person or prospective assisted person it would provide
in connection with a case or proceeding under this title;
(2) make any statement, or counsel or advise any
assisted person or prospective assisted person to make a statement in a
document filed in a case or proceeding under this title, that is untrue and
misleading, or that upon the exercise of reasonable care, should have been
known by such agency to be untrue or misleading;
(3) misrepresent to any assisted person or
prospective assisted person, directly or indirectly, affirmatively or by
material omission, with respect to--
(A) the services that such agency will provide to such person; or
(B) the benefits and risks that may result if such person becomes a
debtor in a case under this title; or
(4) advise an assisted person or prospective
assisted person to incur more debt in contemplation of such person filing a
case under this title or to pay an attorney or bankruptcy petition preparer
fee or charge for services performed as part of preparing for or
representing a debtor in a case under this title.
(b) Any waiver by any assisted person of any
protection or right provided under this section shall not be enforceable
against the debtor by any Federal or State court or any other person, but may
be enforced against a debt relief agency.
(c)
(1) Any contract for bankruptcy assistance
between a debt relief agency and an assisted person that does not comply
with the material requirements of this section, section
527, or section
528 shall be void and may not be enforced by any Federal or State court
or by any other person, other than such assisted person.
(2) Any debt relief agency shall be liable to an
assisted person in the amount of any fees or charges in connection with
providing bankruptcy assistance to such person that such debt relief agency
has received, for actual damages, and for reasonable attorneys' fees and
costs if such agency is found, after notice and a hearing, to have--
(A) intentionally or negligently failed to
comply with any provision of this section, section
527, or section
528 with respect to a case or proceeding under this title for such
assisted person;
(B) provided bankruptcy assistance to an
assisted person in a case or proceeding under this title that is dismissed
or converted to a case under another chapter of this title because of such
agency's intentional or negligent failure to file any required document
including those specified in section
521; or
(C) intentionally or negligently disregarded
the material requirements of this title or the Federal Rules of Bankruptcy
Procedure applicable to such agency.
(3) In addition to such other remedies as are
provided under State law, whenever the chief law enforcement officer of a
State, or an official or agency designated by a State, has reason to believe
that any person has violated or is violating this section, the State--
(A) may bring an action to enjoin such
violation;
(B) may bring an action on behalf of its
residents to recover the actual damages of assisted persons arising from
such violation, including any liability under paragraph (2); and
(C) in the case of any successful action
under subparagraph (A) or (B), shall be awarded the costs of the action
and reasonable attorneys' fees as determined by the court.
(4) The district courts of the United States for
districts located in the State shall have concurrent jurisdiction of any
action under subparagraph (A) or (B) of paragraph (3).
(5) Notwithstanding any other provision of
Federal law and in addition to any other remedy provided under Federal or
State law, if the court, on its own motion or on the motion of the United
States trustee or the debtor, finds that a person intentionally violated
this section, or engaged in a clear and consistent pattern or practice of
violating this section, the court may--
(A) enjoin the violation of such section; or
(B) impose an appropriate civil penalty
against such person.
(d) No provision of this section, section
527, or section
528 shall--
(1) annul, alter, affect, or exempt any person
subject to such sections from complying with any law of any State except to
the extent that such law is inconsistent with those sections, and then only
to the extent of the inconsistency; or
(2) be deemed to limit or curtail the authority
or ability--
(A) of a State or subdivision or
instrumentality thereof, to determine and enforce qualifications for the
practice of law under the laws of that State; or
(B) of a Federal court to determine and
enforce the qualifications for the practice of law before that court.
[Rev. 5-12-05]
11
USC § 527. Disclosures
(a) A debt relief agency providing bankruptcy
assistance to an assisted person shall provide--
(1) the written notice required under section
342(b)(1); and
(2) to the extent not covered in the written
notice described in paragraph (1), and not later than 3 business days after
the first date on which a debt relief agency first offers to provide any
bankruptcy assistance services to an assisted person, a clear and
conspicuous written notice advising assisted persons that--
(A) all information that the assisted person
is required to provide with a petition and thereafter during a case under
this title is required to be complete, accurate, and truthful;
(B) all assets and all liabilities are
required to be completely and accurately disclosed in the documents filed
to commence the case, and the replacement value of each asset as defined
in section
506 must be stated in those documents where requested after reasonable
inquiry to establish such value;
(C) current monthly income, the amounts
specified in section
707(b)(2), and, in a case under chapter
13 of this title, disposable income (determined in accordance with section
707(b)(2)), are required to be stated after reasonable inquiry; and
(D) information that an assisted person
provides during their case may be audited pursuant to this title, and that
failure to provide such information may result in dismissal of the case
under this title or other sanction, including a criminal sanction.
(b) A debt relief agency providing bankruptcy
assistance to an assisted person shall provide each assisted person at the
same time as the notices required under subsection (a)(1) the following
statement, to the extent applicable, or one substantially similar. The
statement shall be clear and conspicuous and shall be in a single document
separate from other documents or notices provided to the assisted person:
"IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES FROM AN
ATTORNEY OR BANKRUPTCY PETITION PREPARER.
"If you decide to seek bankruptcy relief, you can represent
yourself, you can hire an attorney to represent you, or you can get help in
some localities from a bankruptcy petition preparer who is not an attorney.
THE LAW REQUIRES AN ATTORNEY OR BANKRUPTCY PETITION PREPARER TO GIVE YOU A
WRITTEN CONTRACT SPECIFYING WHAT THE ATTORNEY OR BANKRUPTCY PETITION
PREPARER WILL DO FOR YOU AND HOW MUCH IT WILL COST. Ask to see the contract
before you hire anyone.
"The following information helps you understand what must be done in
a routine bankruptcy case to help you evaluate how much service you need.
Although bankruptcy can be complex, many cases are routine.
"Before filing a bankruptcy case, either you or your attorney should
analyze your eligibility for different forms of debt relief available under
the Bankruptcy Code and which form of relief is most likely to be beneficial
for you. Be sure you understand the relief you can obtain and its
limitations. To file a bankruptcy case, documents called a Petition,
Schedules and Statement of Financial Affairs, as well as in some cases a
Statement of Intention need to be prepared correctly and filed with the
bankruptcy court. You will have to pay a filing fee to the bankruptcy court.
Once your case starts, you will have to attend the required first meeting of
creditors where you may be questioned by a court official called a 'trustee'
and by creditors.
"If you choose to file a chapter 7 case, you may be asked by a
creditor to reaffirm a debt. You may want help deciding whether to do so. A
creditor is not permitted to coerce you into reaffirming your debts.
"If you choose to file a chapter 13 case in which you repay your
creditors what you can afford over 3 to 5 years, you may also want help with
preparing your chapter 13 plan and with the confirmation hearing on your
plan which will be before a bankruptcy judge.
"If you select another type of relief under the Bankruptcy Code
other than chapter 7 or chapter 13, you will want to find out what should be
done from someone familiar with that type of relief.
"Your bankruptcy case may also involve litigation. You are generally
permitted to represent yourself in litigation in bankruptcy court, but only
attorneys, not bankruptcy petition preparers, can give you legal
advice.".
[Printable 527(b) statement.]
(c) Except to the extent the debt relief agency
provides the required information itself after reasonably diligent inquiry of
the assisted person or others so as to obtain such information reasonably
accurately for inclusion on the petition, schedules or statement of financial
affairs, a debt relief agency providing bankruptcy assistance to an assisted
person, to the extent permitted by nonbankruptcy law, shall provide each
assisted person at the time required for the notice required under subsection
(a)(1) reasonably sufficient information (which shall be provided in a clear
and conspicuous writing) to the assisted person on how to provide all the
information the assisted person is required to provide under this title
pursuant to section
521, including--
(1) how to value assets at replacement value,
determine current monthly income, the amounts specified in section
707(b)(2) and, in a chapter 13 case, how to determine disposable income
in accordance with section
707(b)(2) and related calculations;
(2) how to complete the list of creditors,
including how to determine what amount is owed and what address for the
creditor should be shown; and
(3) how to determine what property is exempt and
how to value exempt property at replacement value as defined in section
506.
(d) A debt relief agency shall maintain a copy of the
notices required under subsection (a) of this section for 2 years after the
date on which the notice is given the assisted person.
[Rev. 5-12-05]
11
USC § 528. Requirements for debt relief agencies
(a) A debt relief agency shall--
(1) not later than 5 business days after the first date on which such
agency provides any bankruptcy assistance services to an assisted person,
but prior to such assisted person's petition under this title being filed,
execute a written contract with such assisted person that explains clearly
and conspicuously--
(A) the services such agency will provide to such assisted person; and
(B) the fees or charges for such services, and the terms of payment;
(2) provide the assisted person with a copy of the fully executed and
completed contract;
(3) clearly and conspicuously disclose in any advertisement of bankruptcy
assistance services or of the benefits of bankruptcy directed to the general
public (whether in general media, seminars or specific mailings, telephonic
or electronic messages, or otherwise) that the services or benefits are with
respect to bankruptcy relief under this title; and
(4) clearly and conspicuously use the following statement in such
advertisement: "We are a debt relief agency. We help people file for
bankruptcy relief under the Bankruptcy Code." or a substantially
similar statement.
(b)
(1) An advertisement of bankruptcy assistance services or of the benefits
of bankruptcy directed to the general public includes--
(A) descriptions of bankruptcy assistance in connection with a chapter
13 plan whether or not chapter
13 is specifically mentioned in such advertisement; and
(B) statements such as "federally supervised repayment plan"
or "Federal debt restructuring help" or other similar statements
that could lead a reasonable consumer to believe that debt counseling was
being offered when in fact the services were directed to providing
bankruptcy assistance with a chapter
13 plan or other form of bankruptcy relief under this title.
(2) An advertisement, directed to the general public, indicating that the
debt relief agency provides assistance with respect to credit defaults,
mortgage foreclosures, eviction proceedings, excessive debt, debt collection
pressure, or inability to pay any consumer debt shall--
(A) disclose clearly and conspicuously in such advertisement that the
assistance may involve bankruptcy relief under this title; and
(B) include the following statement: "We are a debt relief agency.
We help people file for bankruptcy relief under the Bankruptcy Code."
or a substantially similar statement.
[Rev. 5-12-05]
Subchapter III. The Estate
11
USC § 541. Property of the estate
(a) The commencement of a case under section
301, 302,
303
of this title creates an estate. Such estate is comprised of all the following
property, wherever located and by whomever held:
(1) Except as provided in subsections
(b) and (c)(2)
of this section, all legal or equitable interests of the debtor in property
as of the commencement of the case.
(2) All interests of the debtor and the
debtor’s spouse in community property as of the commencement of the case
that is--
(A) under the sole, equal, or joint management and control of the
debtor; or
(B) liable for an allowable claim against the debtor, or for both an
allowable claim against the debtor and an allowable claim against the
debtor’s spouse, to the extent that such interest is so liable.
(3) Any interest in property that the trustee
recovers under section
329(b), 363(n),
543,
550,
553,
or 723
of this title.
(4) Any interest in property preserved for the
benefit of or ordered transferred to the estate under section
510(c) or 551 of this
title.
(5) Any interest in property that would have been
property of the estate if such interest had been an interest of the debtor
on the date of the filing of the petition, and that the debtor acquires or
becomes entitled to acquire within 180 days after such date--
(A) by bequest, devise, or inheritance;
(B) as a result of a property settlement agreement with the debtor’s
spouse, or of an interlocutory or final divorce decree; or
(C) as a beneficiary of a life insurance policy or of a death benefit
plan.
(6) Proceeds, product, offspring, rents, or
profits of or from property of the estate, except such as are earnings from
services performed by an individual debtor after the commencement of the
case.
(7) Any interest in property that the estate
acquires after the commencement of the case.
(b) Property of the estate does not include--
(1) any power that the debtor may exercise solely
for the benefit of an entity other than the debtor;
(2) any interest of the debtor as a lessee under
a lease of nonresidential real property that has terminated at the
expiration of the stated term of such lease before the commencement of the
case under this title, and ceases to include any interest of the debtor as a
lessee under a lease of nonresidential real property that has terminated at
the expiration of the stated term of such lease during the case;
(3) any eligibility of the debtor to participate
in programs authorized under the Higher Education Act of 1965 (20
U.S.C. 1001 et seq.; 42
U.S.C. 2751 et seq.), or any accreditation status or State licensure of
the debtor as an educational institution;
(4) any interest of the debtor in liquid or
gaseous hydrocarbons to the extent that--
(A)
(i) the debtor has transferred or has agreed to transfer such
interest pursuant to a farmout agreement or any written agreement
directly related to a farmout agreement; and
(ii) but for the operation of this paragraph, the estate could
include the interest referred to in clause (i) only by virtue of section
365 or 544(a)(3)
of this title; or
(B)
(i) the debtor has transferred such interest pursuant to a written
conveyance of a production payment to an entity that does not
participate in the operation of the property from which such production
payment is transferred; and
(ii) but for the operation of this paragraph, the estate could
include the interest referred to in clause (i) only by virtue of section
365
or 542
of this title;
(5) funds placed in an education
individual retirement account (as defined in section
530(b)(1) of the Internal Revenue Code of 1986) not later than 365 days
before the date of the filing of the petition in a case under this title, but--
(A) only if the designated beneficiary of such account
was a child, stepchild, grandchild, or stepgrandchild of the debtor for
the taxable year for which funds were placed in such account;
(B) only to the extent that such funds--
(i) are not pledged or promised to any entity in
connection with any extension of credit; and
(ii) are not excess contributions (as described in section
4973(e) of the Internal Revenue Code of 1986); and
(C) in the case of funds placed in all such accounts
having the same designated beneficiary not earlier than 720 days nor later
than 365 days before such date, only so much of such funds as does not
exceed $5,000 [Adjusted
every 3 years by section
104.];
(6) funds used to purchase a
tuition credit or certificate or contributed to an account in accordance
with section
529(b)(1)(A) of the Internal Revenue Code of 1986 under a qualified
State tuition program (as defined in section
529(b)(1) of such Code) not later than 365 days before the date of the
filing of the petition in a case under this title, but--
(A) only if the designated beneficiary of the amounts
paid or contributed to such tuition program was a child, stepchild,
grandchild, or stepgrandchild of the debtor for the taxable year for which
funds were paid or contributed;
(B) with respect to the aggregate amount paid or
contributed to such program having the same designated beneficiary, only
so much of such amount as does not exceed the total contributions
permitted under section
529(b)(7) of such Code with respect to such beneficiary, as adjusted
beginning on the date of the filing of the petition in a case under this
title by the annual increase or decrease (rounded to the nearest tenth of
1 percent) in the education expenditure category of the Consumer Price
Index prepared by the Department of Labor; and
(C) in the case of funds paid or contributed to such
program having the same designated beneficiary not earlier than 720 days
nor later than 365 days before such date, only so much of such funds as
does not exceed $5,000 [Adjusted
every 3 years by section
104.];
(7) any amount--
(A) withheld by an employer from the wages of employees
for payment as contributions--
(i) to--
(I) an employee benefit plan that is subject to
title I of the Employee Retirement Income Security Act of 1974 or
under an employee benefit plan which is a governmental plan under section
414(d) of the Internal Revenue Code of 1986;
(II) a deferred compensation plan under section
457 of the Internal Revenue Code of 1986; or
(III) a tax-deferred annuity under section
403(b) of the Internal Revenue Code of 1986;
except that such amount under this subparagraph shall
not constitute disposable income as defined in section
1325(b)(2); or
(ii) to a health insurance plan regulated by State
law whether or not subject to such title; or
(B) received by an employer from employees for payment
as contributions--
(i) to--
(I) an employee benefit plan that is subject to
title I of the Employee Retirement Income Security Act of 1974 or
under an employee benefit plan which is a governmental plan under section
414(d) of the Internal Revenue Code of 1986;
(II) a deferred compensation plan under section
457 of the Internal Revenue Code of 1986; or
(III) a tax-deferred annuity under section
403(b) of the Internal Revenue Code of 1986;
except that such amount under this subparagraph shall
not constitute disposable income, as defined in section
1325(b)(2); or
(ii) to a health insurance plan regulated by State
law whether or not subject to such title;
(8) subject to subchapter
III of chapter
5, any interest of the debtor in property where the debtor pledged or
sold tangible personal property (other than securities or written or printed
evidences of indebtedness or title) as collateral for a loan or advance of
money given by a person licensed under law to make such loans or advances, where--
(A) the tangible personal property is in the possession
of the pledgee or transferee;
(B) the debtor has no obligation to repay the money,
redeem the collateral, or buy back the property at a stipulated price; and
(C) neither the debtor nor the trustee have exercised
any right to redeem provided under the contract or State law, in a timely
manner as provided under State law and section
108(b); or
(9)
any interest in cash or cash equivalents that constitute proceeds of a sale
by the debtor of a money order that is made--
(A) on or after the date that is 14 days prior to the date on which the
petition is filed; and
(B) under an agreement with a money order issuer that prohibits the
commingling of such proceeds with property of the debtor (notwithstanding
that, contrary to the agreement, the proceeds may have been commingled
with property of the debtor), unless the money order issuer had not taken
action, prior to the filing of the petition, to require compliance with
the prohibition.
Paragraph (4) shall not be construed to exclude from the estate any
consideration the debtor retains, receives, or is entitled to receive for
transferring an interest in liquid or gaseous hydrocarbons pursuant to a
farmout agreement.
(c)
(1) Except as provided in paragraph (2) of this
subsection, an interest of the debtor in property becomes property of the
estate under subsection
(a)(1), (a)(2),
or (a)(5)
of this section notwithstanding any provision in an agreement, transfer
instrument, or applicable nonbankruptcy law--
(A) that restricts or conditions transfer of such interest by the
debtor; or
(B) that is conditioned on the insolvency or financial condition of the
debtor, on the commencement of a case under this title, or on the
appointment of or taking possession by a trustee in a case under this
title or a custodian before such commencement, and that effects or gives
an option to effect a forfeiture, modification, or termination of the
debtor’s interest in property.
(2) A restriction on the transfer of a beneficial
interest of the debtor in a trust that is enforceable under applicable
nonbankruptcy law is enforceable in a case under this title.
(d) Property in which the debtor holds, as of the
commencement of the case, only legal title and not an equitable interest, such
as a mortgage secured by real property, or an interest in such a mortgage,
sold by the debtor but as to which the debtor retains legal title to service
or supervise the servicing of such mortgage or interest, becomes property of
the estate under subsection
(a)(1) or (2)
of this section only to the extent of the debtor’s legal title to such
property, but not to the extent of any equitable interest in such property
that the debtor does not hold.
(e) In determining whether any of the
relationships specified in paragraph
(5)(A) or (6)(A)
of subsection
(b) exists, a legally adopted child of an individual (and a child who is a
member of an individual's household, if placed with such individual by an
authorized placement agency for legal adoption by such individual), or a
foster child of an individual (if such child has as the child's principal
place of abode the home of the debtor and is a member of the debtor's
household) shall be treated as a child of such individual by blood.
(f) Notwithstanding any other provision of this title,
property that is held by a debtor that is a corporation described in section
501(c)(3) of the Internal Revenue Code of 1986 and exempt from tax under section
501(a) of such Code may be transferred to an entity that is not such a
corporation, but only under the same conditions as would apply if the debtor
had not filed a case under this title.
[Rev. 5-16-05]
11
USC § 542. Turnover of property to the estate
(a) Except as provided in subsection
(c) or (d)
of this section, an entity, other than a custodian, in possession, custody, or
control, during the case, of property that the trustee may use, sell, or lease
under section
363 of this title, or that the debtor may exempt under section
522 of this title, shall deliver to the trustee, and account for, such
property or the value of such property, unless such property is of
inconsequential value or benefit to the estate.
(b) Except as provided in subsection
(c) or (d)
of this section, an entity that owes a debt that is property of the estate and
that is matured, payable on demand, or payable on order, shall pay such debt
to, or on the order of, the trustee, except to the extent that such debt may
be offset under section
553 of this title against a claim against the debtor.
(c) Except as provided in section
362(a)(7) of this title, an entity that has neither actual notice nor
actual knowledge of the commencement of the case concerning the debtor may
transfer property of the estate, or pay a debt owing to the debtor, in good
faith and other than in the manner specified in subsection
(d) of this section, to an entity other than the trustee, with the same
effect as to the entity making such transfer or payment as if the case under
this title concerning the debtor had not been commenced.
(d) A life insurance company may transfer property of
the estate or property of the debtor to such company in good faith, with the
same effect with respect to such company as if the case under this title
concerning the debtor had not been commenced, if such transfer is to pay a
premium or to carry out a nonforfeiture insurance option, and is required to
be made automatically, under a life insurance contract with such company that
was entered into before the date of the filing of the petition and that is
property of the estate.
(e) Subject to any applicable privilege, after notice
and a hearing, the court may order an attorney, accountant, or other person
that holds recorded information, including books, documents, records, and
papers, relating to the debtor’s property or financial affairs, to turn over
or disclose such recorded information to the trustee.
[Rev. 5-17-05]
11
USC § 543. Turnover of property by a custodian
(a) A custodian with knowledge of the commencement of
a case under this title concerning the debtor may not make any disbursement
from, or take any action in the administration of, property of the debtor,
proceeds, product, offspring, rents, or profits of such property, or property
of the estate, in the possession, custody, or control of such custodian,
except such action as is necessary to preserve such property.
(b) A custodian shall--
(1) deliver to the trustee any property of the
debtor held by or transferred to such custodian, or proceeds, product,
offspring, rents, or profits of such property, that is in such custodian’s
possession, custody, or control on the date that such custodian acquires
knowledge of the commencement of the case; and
(2) file an accounting of any property of the
debtor, or proceeds, product, offspring, rents, or profits of such property,
that, at any time, came into the possession, custody, or control of such
custodian.
(c) The court, after notice and a hearing, shall--
(1) protect all entities to which a custodian has
become obligated with respect to such property or proceeds, product,
offspring, rents, or profits of such property;
(2) provide for the payment of reasonable
compensation for services rendered and costs and expenses incurred by such
custodian; and
(3) surcharge such custodian, other than an
assignee for the benefit of the debtor’s creditors that was appointed or
took possession more than 120 days before the date of the filing of the
petition, for any improper or excessive disbursement, other than a
disbursement that has been made in accordance with applicable law or that
has been approved, after notice and a hearing, by a court of competent
jurisdiction before the commencement of the case under this title.
(d) After notice and hearing, the bankruptcy court--
(1) may excuse compliance with subsection (a),
(b), or (c) of this section if the interests of creditors and, if the debtor
is not insolvent, of equity security holders would be better served by
permitting a custodian to continue in possession, custody, or control of
such property, and
(2) shall excuse compliance with subsections (a)
and (b)(1) of this section if the custodian is an assignee for the benefit
of the debtor’s creditors that was appointed or took possession more than
120 days before the date of the filing of the petition, unless compliance
with such subsections is necessary to prevent fraud or injustice.
[Rev. 5-17-05]
11
USC § 544. Trustee as lien creditor and as successor to certain
creditors and purchasers
(a) The trustee shall have, as of the commencement of the case, and without
regard to any knowledge of the trustee or of any creditor, the rights and
powers of, or may avoid any transfer of property of the debtor or any
obligation incurred by the debtor that is voidable by--
(1) a creditor that extends credit to the debtor at the time of the
commencement of the case, and that obtains, at such time and with respect to
such credit, a judicial lien on all property on which a creditor on a simple
contract could have obtained such a judicial lien, whether or not such a
creditor exists;
(2) a creditor that extends credit to the debtor at the time of the
commencement of the case, and obtains, at such time and with respect to such
credit, an execution against the debtor that is returned unsatisfied at such
time, whether or not such a creditor exists; or
(3) a bona fide purchaser of real property, other than fixtures, from the
debtor, against whom applicable law permits such transfer to be perfected,
that obtains the status of a bona fide purchaser and has perfected such
transfer at the time of the commencement of the case, whether or not such a
purchaser exists.
(b)
(1) Except as provided in paragraph (2), the trustee may avoid any
transfer of an interest of the debtor in property or any obligation incurred
by the debtor that is voidable under applicable law by a creditor holding an
unsecured claim that is allowable under section
502 of this title or that is not allowable only under section
502(e) of this title.
(2) Paragraph (1) shall not apply to a transfer of a charitable
contribution (as that term is defined in section
548(d)(3)) that is not covered under section
548(a)(1)(B), by reason of section
548(a)(2). Any claim by any person to recover a transferred contribution
described in the preceding sentence under Federal or State law in a Federal
or State court shall be preempted by the commencement of the case.
[Rev. 5-17-05]
11
USC § 545. Statutory liens
The trustee may avoid the fixing of a statutory lien on property of the
debtor to the extent that such lien--
(1) first becomes effective against the debtor--
(A) when a case under this title concerning the debtor is commenced;
(B) when an insolvency proceeding other than under this title
concerning the debtor is commenced;
(C) when a custodian is appointed or authorized to take or takes
possession;
(D) when the debtor becomes insolvent;
(E) when the debtor’s financial condition fails to meet a specified
standard; or
(F) at the time of an execution against property of the debtor levied
at the instance of an entity other than the holder of such statutory lien;
(2) is not perfected or enforceable at the time of the commencement of
the case against a bona fide purchaser that purchases such property at the
time of the commencement of the case, whether or not such a purchaser exists,
except in any case in which a purchaser is a purchaser described in section
6323 of the Internal Revenue Code of 1986, or in any other similar
provision of State or local law;
(3) is for rent; or
(4) is a lien of distress for rent.
[Rev. 5-17-05]
11
USC § 546. Limitations on avoiding powers
(a) An action or proceeding under section
544, 545,
547, 548,
or 553 of
this title may not be commenced after the earlier of--
(1) the later of--
(A) 2 years after the entry of the order for relief; or
(B) 1 year after the appointment or election of the first trustee under
section
702, 1104,
1163,
1202,
or 1302
of this title if such appointment or such election occurs before the
expiration of the period specified in subparagraph (A); or
(2) the time the case is closed or dismissed.
(b)
(1) The rights and powers of a trustee under section
544, 545,
and 549
of this title are subject to any generally applicable law that--
(A) permits perfection of an interest in property to be effective
against an entity that acquires rights in such property before the date of
perfection; or
(B) provides for the maintenance or continuation of perfection of an
interest in property to be effective against an entity that acquires
rights in such property before the date on which action is taken to effect
such maintenance or continuation.
(2) If--
(A) a law described in paragraph (1) requires seizure of such property
or commencement of an action to accomplish such perfection, or maintenance
or continuation of perfection of an interest in property; and
(B) such property has not been seized or such an action has not been
commenced before the date of the filing of the petition;
such interest in such property shall be perfected, or perfection of such
interest shall be maintained or continued, by giving notice within the time
fixed by such law for such seizure or such commencement.
(c)
(1) Except as provided in subsection
(d) of this section and in section
507(c), and subject to the prior rights of a holder of a security
interest in such goods or the proceeds thereof, the rights and powers of the
trustee under sections
544(a), 545,
547,
and 549
are subject to the right of a seller of goods that has sold goods to the
debtor, in the ordinary course of such seller's business, to reclaim such
goods if the debtor has received such goods while insolvent, within 45 days
before the date of the commencement of a case under this title, but such
seller may not reclaim such goods unless such seller demands in writing
reclamation of such goods--
(A) not later than 45 days after the date of receipt of
such goods by the debtor; or
(B) not later than 20 days after the date of
commencement of the case, if the 45-day period expires after the
commencement of the case.
(2) If a seller of goods fails to provide notice in the
manner described in paragraph (1), the seller still may assert the rights
contained in section
503(b)(9).
(d) In the case of a seller who is a producer of grain sold to a grain
storage facility, owned or operated by the debtor, in the ordinary course of
such seller’s business (as such terms are defined in section
557 of this title) or in the case of a United States fisherman who has
caught fish sold to a fish processing facility owned or operated by the debtor
in the ordinary course of such fisherman’s business, the rights and powers
of the trustee under sections
544(a), 545,
547, and
549
of this title are subject to any statutory or common law right of such
producer or fisherman to reclaim such grain or fish if the debtor has received
such grain or fish while insolvent, but--
(1) such producer or fisherman may not reclaim any grain or fish unless
such producer or fisherman demands, in writing, reclamation of such grain or
fish before ten days after receipt thereof by the debtor; and
(2) the court may deny reclamation to such a producer or fisherman with a
right of reclamation that has made such a demand only if the court secures
such claim by a lien.
(e) Notwithstanding section
544, 545,
547, 548(a)(1)(B),
and 548(b)
of this title, the trustee may not avoid a transfer that is a margin payment,
as defined in section
101, 741,
or 761
of this title, or settlement payment, as defined in section
101 or 741
of this title, made by or to a commodity broker, forward contract merchant,
stockbroker, financial institution, financial participant,
or securities clearing agency, that is made before the commencement of the
case, except under section
548(a)(1)(A) of this title.
(f) Notwithstanding section
544, 545,
547, 548(a)(1)(B),
and 548(b)
of this title, the trustee may not avoid a transfer that is a margin payment,
as defined in section
741 or 761
of this title, or settlement payment, as defined in section
741 of this title, made by or to a repo participant or
financial participant, in connection with a repurchase agreement and
that is made before the commencement of the case, except under section
548(a)(1)(A) of this title.
(g) Notwithstanding section
544, 545,
547, 548(a)(1)(B)
and 548(b)
of this title, the trustee may not avoid a transfer
or financial participant,
under
or in connection with any swap agreement and that is made before the
commencement of the case, except under section
548(a)(1)(A) of this title.
(h)
Notwithstanding the rights and powers of a trustee under sections
544(a), 545,
547, 549,
and 553, if
the court determines on a motion by the trustee made not later than 120 days
after the date of the order for relief in a case under chapter 11 of this
title and after notice and a hearing, that a return is in the best interests
of the estate, the debtor, with the consent of a creditor and
subject to the prior rights of holders of security interests in such goods or
the proceeds of such goods, may return goods shipped to the debtor by
the creditor before the commencement of the case, and the creditor may offset
the purchase price of such goods against any claim of the creditor against the
debtor that arose before the commencement of the case.
(i)
(1) Notwithstanding paragraphs (2) and (3) of section
545, the trustee may not avoid a warehouseman's lien for storage,
transportation, or other costs incidental to the storage and handling of
goods.
(2) The prohibition under paragraph (1) shall be applied
in a manner consistent with any State statute applicable to such lien that
is similar to section 7-209 of the Uniform Commercial Code, as in effect on
the date of enactment of the Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005, or any successor to such section 7-209.
(j) Notwithstanding sections
544, 545,
547, 548(a)(1)(B)
and 548(b)
the trustee may not avoid a transfer made by or to a master netting agreement
participant under or in connection with any master netting agreement or any
individual contract covered thereby that is made before the commencement of
the case, except under section
548(a)(1)(A) and except to the extent that the trustee could otherwise
avoid such a transfer made under an individual contract covered by such master
netting agreement.
[Rev. 5-17-05]
11
USC § 547. Preferences
(a) In this section--
(1) "inventory" means personal property
leased or furnished, held for sale or lease, or to be furnished under a
contract for service, raw materials, work in process, or materials used or
consumed in a business, including farm products such as crops or livestock,
held for sale or lease;
(2) "new value" means money or
money’s worth in goods, services, or new credit, or release by a
transferee of property previously transferred to such transferee in a
transaction that is neither void nor voidable by the debtor or the trustee
under any applicable law, including proceeds of such property, but does not
include an obligation substituted for an existing obligation;
(3) "receivable" means right to
payment, whether or not such right has been earned by performance; and
(4) a debt for a tax is incurred on the day when
such tax is last payable without penalty, including any extension.
(b) Except as provided in subsections
(c) and (i)
of this section, the trustee may avoid any transfer of an interest of the
debtor in property--
(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt owed
by the debtor before such transfer was made;
(3) made while the debtor was insolvent;
(4) made--
(A) on or within 90 days before the date of the filing of the petition;
or
(B) between ninety days and one year before the date of the filing of
the petition, if such creditor at the time of such transfer was an
insider; and
(5) that enables such creditor to receive more
than such creditor would receive if--
(A) the case were a case under chapter 7 of this title;
(B) the transfer had not been made; and
(C) such creditor received payment of such debt to the extent provided
by the provisions of this title.
(c) The trustee may not avoid under this section a
transfer--
(1) to the extent that such transfer was--
(A) intended by the debtor and the creditor to or for whose benefit
such transfer was made to be a contemporaneous exchange for new value
given to the debtor; and
(B) in fact a substantially contemporaneous exchange;
(2) to the extent that such
transfer was in payment of a debt incurred by the debtor in the ordinary
course of business or financial affairs of the debtor and the transferee,
and such transfer was--
(A) made in the ordinary course of business or
financial affairs of the debtor and the transferee; or
(B) made according to ordinary business terms;
(3) that creates a security interest in property
acquired by the debtor--
(A) to the extent such security interest secures new value that was--
(i) given at or after the signing of a security agreement that
contains a description of such property as collateral;
(ii) given by or on behalf of the secured party under such agreement;
(iii) given to enable the debtor to acquire such property; and
(iv) in fact used by the debtor to acquire such property; and
(B) that is perfected on or before 30
days after the debtor receives possession of such property;
(4) to or for the benefit of a creditor, to the
extent that, after such transfer, such creditor gave new value to or for the
benefit of the debtor--
(A) not secured by an otherwise unavoidable security interest; and
(B) on account of which new value the debtor did not make an otherwise
unavoidable transfer to or for the benefit of such creditor;
(5) that creates a perfected security interest in
inventory or a receivable or the proceeds of either, except to the extent
that the aggregate of all such transfers to the transferee caused a
reduction, as of the date of the filing of the petition and to the prejudice
of other creditors holding unsecured claims, of any amount by which the debt
secured by such security interest exceeded the value of all security
interests for such debt on the later of--
(A)
(i) with respect to a transfer to which subsection
(b)(4)(A) of this section applies, 90 days before the date of the
filing of the petition; or
(ii) with respect to a transfer to which subsection
(b)(4)(B) of this section applies, one year before the date of the
filing of the petition; or
(B) the date on which new value was first given under the security
agreement creating such security interest;
(6) that is the fixing of a statutory lien that
is not avoidable under section
545 of this title;
(7) to the extent such transfer
was a bona fide payment of a debt for a domestic support obligation;
(8) if, in a case filed by an individual debtor
whose debts are primarily consumer debts, the aggregate value of all
property that constitutes or is affected by such transfer is less than $600
; or
(9) if, in a case filed by a
debtor whose debts are not primarily consumer debts, the aggregate value of
all property that constitutes or is affected by such transfer is less than
$5,000 [Adjusted
every 3 years by section
104.].
(d) The trustee may avoid a transfer of an interest in
property of the debtor transferred to or for the benefit of a surety to secure
reimbursement of such a surety that furnished a bond or other obligation to
dissolve a judicial lien that would have been avoidable by the trustee under subsection
(b) of this section. The liability of such surety under such bond or
obligation shall be discharged to the extent of the value of such property
recovered by the trustee or the amount paid to the trustee.
(e)
(1) For the purposes of this section--
(A) a transfer of real property other than fixtures, but including the
interest of a seller or purchaser under a contract for the sale of real
property, is perfected when a bona fide purchaser of such property from
the debtor against whom applicable law permits such transfer to be
perfected cannot acquire an interest that is superior to the interest of
the transferee; and
(B) a transfer of a fixture or property other than real property is
perfected when a creditor on a simple contract cannot acquire a judicial
lien that is superior to the interest of the transferee.
(2) For the purposes of this section, except as
provided in paragraph (3) of this subsection, a transfer is made--
(A) at the time such transfer takes effect between the transferor and
the transferee, if such transfer is perfected at, or within
30
days after, such time, except as provided in subsection
(c)(3)(B);
(B) at the time such transfer is perfected, if such transfer is
perfected after such 30
days; or
(C) immediately before the date of the filing of the petition, if such
transfer is not perfected at the later of--
(i) the commencement of the case; or
(ii) 30
days after such transfer takes effect between the transferor and the
transferee.
(3) For the purposes of this section, a transfer
is not made until the debtor has acquired rights in the property
transferred.
(f) For the purposes of this section, the debtor is
presumed to have been insolvent on and during the 90 days immediately
preceding the date of the filing of the petition.
(g) For the purposes of this section, the trustee has
the burden of proving the avoidability of a transfer under subsection
(b) of this section, and the creditor or party in interest against whom
recovery or avoidance is sought has the burden of proving the nonavoidability
of a transfer under subsection
(c) of this section.
(h) The trustee may not avoid a
transfer if such transfer was made as a part of an alternative repayment
schedule between the debtor and any creditor of the debtor created by an
approved nonprofit budget and credit counseling agency.
(i) If the trustee avoids under subsection
(b) a transfer made between 90 days and 1 year before the date of the
filing of the petition, by the debtor to an entity that is not an insider for
the benefit of a creditor that is an insider, such transfer shall be
considered to be avoided under this section only with respect to the creditor
that is an insider.
[Rev. 5-17-05]
11
USC § 548. Fraudulent transfers and obligations
(a)
(1) The trustee may avoid any transfer (including
any transfer to or for the benefit of an insider under an employment
contract) of an interest of the debtor in property, or any obligation
(including any obligation to or for the benefit of an
insider under an employment contract) incurred by the debtor, that
was made or incurred on or within
2
years before the date of the filing of the petition, if the debtor
voluntarily or involuntarily--
(A) made such transfer or incurred such obligation with actual intent
to hinder, delay, or defraud any entity to which the debtor was or became,
on or after the date that such transfer was made or such obligation was
incurred, indebted; or
(B)
(i) received less than a reasonably equivalent value in exchange for
such transfer or obligation; and
(ii)
(I) was insolvent on the date that such transfer was made or such
obligation was incurred, or became insolvent as a result of such
transfer or obligation;
(II) was engaged in business or a transaction, or was about to
engage in business or a transaction, for which any property remaining
with the debtor was an unreasonably small capital;
(III) intended to incur, or believed that the debtor would incur,
debts that would be beyond the debtor's ability to pay as such debts
matured ;
or
(IV) made such transfer to or for the benefit of an
insider, or incurred such obligation to or for the benefit of an
insider, under an employment contract and not in the ordinary course
of business.
(2) A transfer of a charitable contribution to a
qualified religious or charitable entity or organization shall not be
considered to be a transfer covered under paragraph (1)(B) in any case in which--
(A) the amount of that contribution does not exceed 15 percent of the
gross annual income of the debtor for the year in which the transfer of the
contribution is made; or
(B) the contribution made by a debtor exceeded the percentage amount of
gross annual income specified in subparagraph (A), if the transfer was
consistent with the practices of the debtor in making charitable
contributions.
(b) The trustee of a partnership debtor may avoid any
transfer of an interest of the debtor in property, or any obligation incurred
by the debtor, that was made or incurred on or within 2
years before the date of the filing of the petition, to a general
partner in the debtor, if the debtor was insolvent on the date such transfer
was made or such obligation was incurred, or became insolvent as a result of
such transfer or obligation.
(c) Except to the extent that a transfer or obligation
voidable under this section is voidable under section
544, 545,
or 547
of this title, a transferee or obligee of such a transfer or obligation that
takes for value and in good faith has a lien on or may retain any interest
transferred or may enforce any obligation incurred, as the case may be, to the
extent that such transferee or obligee gave value to the debtor in exchange
for such transfer or obligation.
(d)
(1) For the purposes of this section, a transfer
is made when such transfer is so perfected that a bona fide purchaser from
the debtor against whom applicable law permits such transfer to be perfected
cannot acquire an interest in the property transferred that is superior to
the interest in such property of the transferee, but if such transfer is not
so perfected before the commencement of the case, such transfer is made
immediately before the date of the filing of the petition.
(2) In this section--
(A) "value" means property, or satisfaction or securing of a
present or antecedent debt of the debtor, but does not include an
unperformed promise to furnish support to the debtor or to a relative of
the debtor;
(B) a commodity broker, forward contract merchant, stockbroker,
financial institution, financial participant, or
securities clearing agency that receives a margin payment, as defined in section
101, 741,
or 761
of this title, or settlement payment, as defined in section
101 or 741 of this
title, takes for value to the extent of such payment;
(C) a repo participant or financial participant
that receives a margin payment, as defined in section
741 or 761
of this title, or settlement payment, as defined in section
741 of this title, in connection with a repurchase agreement, takes
for value to the extent of such payment;
(D) a swap participant or financial participant
that receives a transfer in connection with a swap agreement takes for
value to the extent of such transfer;
and
(E) a master netting agreement participant that
receives a transfer in connection with a master netting agreement or any
individual contract covered thereby takes for value to the extent of such
transfer, except that, with respect to a transfer under any individual
contract covered thereby, to the extent that such master netting agreement
participant otherwise did not take (or is otherwise not deemed to have
taken) such transfer for value.
(3) In this section, the term "charitable
contribution" means a charitable contribution, as that term is defined
in section
170(c) of the Internal Revenue Code of 1986, if that contribution--
(A) is made by a natural person; and
(B) consists of--
(i) a financial instrument (as that term is defined in section
731(c)(2)(C) of the Internal Revenue Code of 1986); or
(ii) cash.
(4) In this section, the term "qualified
religious or charitable entity or organization" means--
(A) an entity described in section
170(c)(1) of the Internal Revenue Code of 1986; or
(B) an entity or organization described in section
170(c)(2) of the Internal Revenue Code of 1986.
(e)
(1) In addition to any transfer
that the trustee may otherwise avoid, the trustee may avoid any transfer of
an interest of the debtor in property that was made on or within 10 years
before the date of the filing of the petition, if--
(A) such transfer was made to a self-settled trust or
similar device;
(B) such transfer was by the debtor;
(C) the debtor is a beneficiary of such trust or
similar device; and
(D) the debtor made such transfer with actual intent to
hinder, delay, or defraud any entity to which the debtor was or became, on
or after the date that such transfer was made, indebted.
(2) For the purposes of this
subsection, a transfer includes a transfer made in anticipation of any money
judgment, settlement, civil penalty, equitable order, or criminal fine
incurred by, or which the debtor believed would be incurred by--
(A) any violation of the securities laws (as defined in
section 3(a)(47) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(47))), any State securities laws, or any regulation or order issued
under Federal securities laws or State securities laws; or
(B) fraud, deceit, or manipulation in a fiduciary
capacity or in connection with the purchase or sale of any security
registered under section 12 or 15(d) of the Securities Exchange Act of
1934 (15 U.S.C. 78l and 78o(d)) or under section 6 of the Securities Act
of 1933 (15 U.S.C. 77f).
[Rev. 5-18-05]
11
USC § 549. Postpetition transactions
(a) Except as provided in subsection
(b) or (c)
of this section, the trustee may avoid a transfer of property of the estate--
(1) that occurs after the commencement of the
case; and
(2)
(A) that is authorized only under section
303(f) or 542(c)
of this title; or
(B) that is not authorized under this title or by the court.
(b) In an involuntary case, the trustee may not avoid
under subsection
(a) of this section a transfer made after the commencement of such case
but before the order for relief to the extent any value, including services,
but not including satisfaction or securing of a debt that arose before the
commencement of the case, is given after the commencement of the case in
exchange for such transfer, notwithstanding any notice or knowledge of the
case that the transferee has.
(c) The trustee may not avoid under subsection
(a) of this section a transfer of an interest in
real property to a good faith purchaser without knowledge of the commencement
of the case and for present fair equivalent value unless a copy or notice of
the petition was filed, where a transfer of an interest in
such real property may be recorded to perfect such transfer, before such
transfer is so perfected that a bona fide purchaser of
such
real property, against whom applicable law permits such transfer to be
perfected, could not acquire an interest that is superior to
such
interest of such good faith purchaser. A good faith purchaser without
knowledge of the commencement of the case and for less than present fair
equivalent value has a lien on the property transferred to the extent of any
present value given, unless a copy or notice of the petition was so filed
before such transfer was so perfected.
(d) An action or proceeding under this section may not
be commenced after the earlier of--
(1) two years after the date of the transfer
sought to be avoided; or
(2) the time the case is closed or dismissed.
[Rev. 5-18-05]
11
USC § 550. Liability of transferee of avoided transfer
(a) Except as otherwise provided in this section, to the extent that a
transfer is avoided under section
544, 545,
547, 548,
549,
553(b),
or 724(a)
of this title, the trustee may recover, for the benefit of the estate, the
property transferred, or, if the court so orders, the value of such property, from--
(1) the initial transferee of such transfer or the entity for whose
benefit such transfer was made; or
(2) any immediate or mediate transferee of such initial transferee.
(b) The trustee may not recover under section (a)(2) of this section from--
(1) a transferee that takes for value, including satisfaction or securing
of a present or antecedent debt, in good faith, and without knowledge of the
voidability of the transfer avoided; or
(2) any immediate or mediate good faith transferee of such transferee.
(c) If a transfer made between 90 days and one year before the filing of
the petition--
(1) is avoided under section
547(b) of this title; and
(2) was made for the benefit of a creditor that at the time of such
transfer was an insider;
the trustee may not recover under subsection
(a) from a transferee that is not an insider.
(d) The trustee is entitled to only a single satisfaction under subsection
(a) of this section.
(e)
(1) A good faith transferee from whom the trustee may recover under subsection
(a) of this section has a lien on the property recovered to secure the
lesser of--
(A) the cost, to such transferee, of any improvement made after the
transfer, less the amount of any profit realized by or accruing to such
transferee from such property; and
(B) any increase in the value of such property as a result of such
improvement, of the property transferred.
(2) In this subsection, "improvement" includes--
(A) physical additions or changes to the property transferred;
(B) repairs to such property;
(C) payment of any tax on such property;
(D) payment of any debt secured by a lien on such property that is
superior or equal to the rights of the trustee; and
(E) preservation of such property.
(f) An action or proceeding under this section may not be commenced after
the earlier of--
(1) one year after the avoidance of the transfer on account of which
recovery under this section is sought; or
(2) the time the case is closed or dismissed.
[Rev. 5-18-05]
11
USC § 551. Automatic preservation of avoided transfer
Any transfer avoided under section
522, 544,
545, 547,
548,
549,
or 724(a)
of this title, or any lien void under section
506(d) of this title, is preserved for the benefit of the estate but only
with respect to property of the estate.
[Rev. 5-18-05]
11
USC § 552. Postpetition effect of security interest
(a) Except as provided in subsection (b) of this
section, property acquired by the estate or by the debtor after the
commencement of the case is not subject to any lien resulting from any
security agreement entered into by the debtor before the commencement of the
case.
(b)
(1) Except as provided in sections
363, 506(c),
522,
544,
545,
547,
and 548
of this title, if the debtor and an entity entered into a security agreement
before the commencement of the case and if the security interest created by
such security agreement extends to property of the debtor acquired before
the commencement of the case and to proceeds,
products,
offspring, or profits of such property, then such security interest extends
to such proceeds, products,
offspring, or profits acquired by the estate after the commencement of the
case to the extent provided by such security agreement and by applicable
nonbankruptcy law, except to any extent that the court, after notice and a
hearing and based on the equities of the case, orders otherwise.
(2) Except as provided in sections
363, 506(c),
522,
544,
545,
547,
and 548
of this title, and notwithstanding section
546(b) of this title, if the debtor and an entity entered into a
security agreement before the commencement of the case and if the security
interest created by such security agreement extends to property of the
debtor acquired before the commencement of the case and to amounts paid as
rents of such property or the fees, charges, accounts, or other payments for
the use or occupancy of rooms and other public facilities in hotels, motels,
or other lodging properties, then such security interest extends to such
rents and such fees, charges, accounts, or other payments acquired by the
estate after the commencement of the case to the extent provided in such
security agreement, except to any extent that the court, after notice and a
hearing and based on the equities of the case, orders otherwise.
[Rev. 5-18-05]
11
USC § 553. Setoff
(a) Except as otherwise provided in this section and in sections
362 and 363
of this title, this title does not affect any right of a creditor to offset a
mutual debt owing by such creditor to the debtor that arose before the
commencement of the case under this title against a claim of such creditor
against the debtor that arose before the commencement of the case, except to
the extent that--
(1) the claim of such creditor against the debtor is disallowed;
(2) such claim was transferred, by an entity other than the debtor, to
such creditor--
(A) after the commencement of the case; or
(B)
(i) after 90 days before the date of the filing of the petition; and
(ii) while the debtor was insolvent (except for a
setoff of a kind described in section
362(b)(6), 362(b)(7),
362(b)(17),
362(b)(27),
555,
556,
559, 560,
or 561);
or
(3) the debt owed to the debtor by such creditor was incurred by such
creditor--
(A) after 90 days before the date of the filing of the petition;
(B) while the debtor was insolvent; and
(C) for the purpose of obtaining a right of setoff against the debtor (except
for a setoff of a kind described in section
362(b)(6), 362(b)(7),
362(b)(17),
362(b)(27),
555,
556,
559,
560,
or 561).
(b)
(1) Except with respect to a setoff of a kind described in section
362(b)(6), 362(b)(7), 362(b)(17),
362(b)(27),
555,
556,
559,
560,
561,
365(h),
546(h),
or 365(i)(2)
of this title, if a creditor offsets a mutual debt owing to the debtor
against a claim against the debtor on or within 90 days before the date of
the filing of the petition, then the trustee may recover from such creditor
the amount so offset to the extent that any insufficiency on the date of
such setoff is less than the insufficiency on the later of--
(A) 90 days before the date of the filing of the petition; and
(B) the first date during the 90 days immediately preceding the date of
the filing of the petition on which there is an insufficiency.
(2) In this subsection, “insufficiency” means amount, if any, by
which a claim against the debtor exceeds a mutual debt owing to the debtor
by the holder of such claim.
(c) For the purposes of this section, the debtor is presumed to have been
insolvent on and during the 90 days immediately preceding the date of the
filing of the petition.
[Rev. 5-18-05]
11
USC § 554. Abandonment of property of the estate
(a) After notice and a hearing, the trustee may abandon any property of the
estate that is burdensome to the estate or that is of inconsequential value
and benefit to the estate.
(b) On request of a party in interest and after notice and a hearing, the
court may order the trustee to abandon any property of the estate that is
burdensome to the estate or that is of inconsequential value and benefit to
the estate.
(c) Unless the court orders otherwise, any property scheduled under section
521(1) [sic--reference to previous subsection; now
521(a)(1)] of this title not otherwise administered at the time of the
closing of a case is abandoned to the debtor and administered for purposes of section
350 of this title.
(d) Unless the court orders otherwise, property of the estate that is not
abandoned under this section and that is not administered in the case remains
property of the estate.
[Rev. 5-19-05]
11
USC § 555. Contractual
right to liquidate, terminate, or accelerate a securities contract
The exercise of a contractual right of a stockbroker, financial institution, financial
participant, or securities clearing agency to cause the
liquidation,
termination, or acceleration of a securities contract, as defined in section
741 of this title, because of a condition of the kind specified in section
365(e)(1) of this title shall not be stayed, avoided, or otherwise limited
by operation of any provision of this title or by order of a court or
administrative agency in any proceeding under this title unless such order is
authorized under the provisions of the Securities Investor Protection Act of
1970 or any statute administered by the Securities and Exchange Commission.
As
used in this section, the term "contractual right" includes a right
set forth in a rule or bylaw of a derivatives clearing organization (as defined
in the Commodity Exchange Act), a multilateral clearing organization (as defined
in the Federal Deposit Insurance Corporation Improvement Act of 1991), a
national securities exchange, a national securities association, a securities
clearing agency, a contract market designated under the Commodity Exchange Act,
a derivatives transaction execution facility registered under the Commodity
Exchange Act, or a board of trade (as defined in the Commodity Exchange Act), or
in a resolution of the governing board thereof, and a right, whether or not in
writing, arising under common law, under law merchant, or by reason of normal
business practice.
[Rev. 5-19-05]
11
USC § 556. Contractual
right to liquidate, terminate, or accelerate a commodities contract or forward
contract
The contractual right of a commodity broker, financial
participant, or forward contract merchant to cause the
liquidation,
termination, or acceleration of a commodity contract, as defined in section
761 of this title, or forward contract because of a condition of the kind
specified in section
365(e)(1) of this title, and the right to a variation or maintenance margin
payment received from a trustee with respect to open commodity contracts or
forward contracts, shall not be stayed, avoided, or otherwise limited by
operation of any provision of this title or by the order of a court in any
proceeding under this title.
As
used in this section, the term "contractual right" includes a right
set forth in a rule or bylaw of a derivatives clearing organization (as defined
in the Commodity Exchange Act), a multilateral clearing organization (as defined
in the Federal Deposit Insurance Corporation Improvement Act of 1991), a
national securities exchange, a national securities association, a securities
clearing agency, a contract market designated under the Commodity Exchange Act,
a derivatives transaction execution facility registered under the Commodity
Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or
in a resolution of the governing board thereof and a right, whether or
not evidenced in writing, arising under common law, under law merchant or by
reason of normal business practice.
[Rev. 5-19-05]
11
USC § 557. Expedited determination of interests in, and abandonment
or other disposition of grain assets
(a) This section applies only in a case concerning a
debtor that owns or operates a grain storage facility and only with respect to
grain and the proceeds of grain. This section does not affect the application
of any other section of this title to property other than grain and proceeds
of grain.
(b) In this section--
(1) "grain" means wheat, corn,
flaxseed, grain sorghum, barley, oats, rye, soybeans, other dry edible
beans, or rice;
(2) "grain storage facility" means a
site or physical structure regularly used to store grain for producers, or
to store grain acquired from producers for resale; and
(3) "producer" means an entity which
engages in the growing of grain.
(c)
(1) Notwithstanding sections
362, 363,
365,
and 554
of this title, on the court’s own motion the court may, and on the request
of the trustee or an entity that claims an interest in grain or the proceeds
of grain the court shall, expedite the procedures for the determination of
interests in and the disposition of grain and the proceeds of grain, by
shortening to the greatest extent feasible such time periods as are
otherwise applicable for such procedures and by establishing, by order, a
timetable having a duration of not to exceed 120 days for the completion of
the applicable procedure specified in subsection (d) of this section. Such
time periods and such timetable may be modified by the court, for cause, in
accordance with subsection (f) of this section.
(2) The court shall determine the extent to which
such time periods shall be shortened, based upon--
(A) any need of an entity claiming an interest in such grain or the
proceeds of grain for a prompt determination of such interest;
(B) any need of such entity for a prompt disposition of such grain;
(C) the market for such grain;
(D) the conditions under which such grain is stored;
(E) the costs of continued storage or disposition of such grain;
(F) the orderly administration of the estate;
(G) the appropriate opportunity for an entity to assert an interest in
such grain; and
(H) such other considerations as are relevant to the need to expedite
such procedures in the case.
(d) The procedures that may be expedited under
subsection (c) of this section include--
(1) the filing of and response to--
(A) a claim of ownership;
(B) a proof of claim;
(C) a request for abandonment;
(D) a request for relief from the stay of action against property under
section 362 (a) of this title;
(E) a request for determination of secured status;
(F) a request for determination of whether such grain or the proceeds
of grain--
(i) is property of the estate;
(ii) must be turned over to the estate; or
(iii) may be used, sold, or leased; and
(G) any other request for determination of an interest in such grain or
the proceeds of grain;
(2) the disposition of such grain or the proceeds
of grain, before or after determination of interests in such grain or the
proceeds of grain, by way of--
(A) sale of such grain;
(B) abandonment;
(C) distribution; or
(D) such other method as is equitable in the case;
(3) subject to sections
701, 702,
703,
1104,
1202,
and 1302
of this title, the appointment of a trustee or examiner and the retention
and compensation of any professional person required to assist with respect
to matters relevant to the determination of interests in or disposition of
such grain or the proceeds of grain; and
(4) the determination of any dispute concerning a
matter specified in paragraph (1), (2), or (3) of this subsection.
(e)
(1) Any governmental unit that has regulatory
jurisdiction over the operation or liquidation of the debtor or the
debtor’s business shall be given notice of any request made or order
entered under subsection (c) of this section.
(2) Any such governmental unit may raise, and may
appear and be heard on, any issue relating to grain or the proceeds of grain
in a case in which a request is made, or an order is entered, under
subsection (c) of this section.
(3) The trustee shall consult with such
governmental unit before taking any action relating to the disposition of
grain in the possession, custody, or control of the debtor or the estate.
(f) The court may extend the period for final
disposition of grain or the proceeds of grain under this section beyond 120
days if the court finds that--
(1) the interests of justice so require in light
of the complexity of the case; and
(2) the interests of those claimants entitled to
distribution of grain or the proceeds of grain will not be materially
injured by such additional delay.
(g) Unless an order establishing an expedited
procedure under subsection (c) of this section, or determining any interest in
or approving any disposition of grain or the proceeds of grain, is stayed
pending appeal--
(1) the reversal or modification of such order on
appeal does not affect the validity of any procedure, determination, or
disposition that occurs before such reversal or modification, whether or not
any entity knew of the pendency of the appeal; and
(2) neither the court nor the trustee may delay,
due to the appeal of such order, any proceeding in the case in which such
order is issued.
(h)
(1) The trustee may recover from grain and the
proceeds of grain the reasonable and necessary costs and expenses allowable
under section 503 (b) of this title attributable to preserving or disposing
of grain or the proceeds of grain, but may not recover from such grain or
the proceeds of grain any other costs or expenses.
(2) Notwithstanding section
326(a) of this title, the dollar amounts of money specified in such
section include the value, as of the date of disposition, of any grain that
the trustee distributes in kind.
(i) In all cases where the quantity of a specific type
of grain held by a debtor operating a grain storage facility exceeds ten
thousand bushels, such grain shall be sold by the trustee and the assets
thereof distributed in accordance with the provisions of this section.
[Rev. 5-19-05]
11
USC § 558. Defenses of the estate
The estate shall have the benefit of any defense available to the debtor as
against any entity other than the estate, including statutes of limitation,
statutes of frauds, usury, and other personal defenses. A waiver of any such
defense by the debtor after the commencement of the case does not bind the
estate.
[Rev. 5-19-05]
11
USC § 559. Contractual
right to liquidate, terminate, or accelerate a repurchase agreement
The exercise of a contractual right of a repo participant or
financial participant to cause the
liquidation,
termination, or acceleration of a repurchase agreement because of a
condition of the kind specified in section
365(e)(1) of this title shall not be stayed, avoided, or otherwise limited
by operation of any provision of this title or by order of a court or
administrative agency in any proceeding under this title, unless, where the
debtor is a stockbroker or securities clearing agency, such order is authorized
under the provisions of the Securities Investor Protection Act of 1970 or any
statute administered by the Securities and Exchange Commission. In the event
that a repo participant or financial participant
liquidates one or more repurchase agreements with a debtor and under the terms
of one or more such agreements has agreed to deliver assets subject to
repurchase agreements to the debtor, any excess of the market prices received on
liquidation of such assets (or if any such assets are not disposed of on the
date of liquidation of such repurchase agreements, at the prices available at
the time of liquidation of such repurchase agreements from a generally
recognized source or the most recent closing bid quotation from such a source)
over the sum of the stated repurchase prices and all expenses in connection with
the liquidation of such repurchase agreements shall be deemed property of the
estate, subject to the available rights of setoff.
As
used in this section, the term "contractual right" includes a right
set forth in a rule or bylaw of a derivatives clearing organization (as defined
in the Commodity Exchange Act), a multilateral clearing organization (as defined
in the Federal Deposit Insurance Corporation Improvement Act of 1991), a
national securities exchange, a national securities association, a securities
clearing agency, a contract market designated under the Commodity Exchange Act,
a derivatives transaction execution facility registered under the Commodity
Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or
in a resolution of the governing board thereof and a right, whether or
not evidenced in writing, arising under common law, under law merchant or by
reason of normal business practice.
[Rev. 5-19-05]
11
USC § 560. Contractual
right to liquidate, terminate, or accelerate a swap agreement
The exercise of any contractual right of any swap participant or
financial participant to cause the
liquidation,
termination, or acceleration of one or more swap agreements because of a
condition of the kind specified in section
365(e)(1) of this title or to offset or net out any termination values or
payment amounts arising under or
in
connection with the termination, liquidation, or acceleration of one or more
swap agreements shall not be stayed, avoided, or otherwise limited by
operation of any provision of this title or by order of a court or
administrative agency in any proceeding under this title.
As
used in this section, the term "contractual right" includes a right
set forth in a rule or bylaw of a derivatives clearing organization (as defined
in the Commodity Exchange Act), a multilateral clearing organization (as defined
in the Federal Deposit Insurance Corporation Improvement Act of 1991), a
national securities exchange, a national securities association, a securities
clearing agency, a contract market designated under the Commodity Exchange Act,
a derivatives transaction execution facility registered under the Commodity
Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or
in a resolution of the governing board thereof and a right, whether or
not evidenced in writing, arising under common law, under law merchant, or by
reason of normal business practice.
[Rev. 5-19-05]
11
USC § 561. Contractual right to terminate, liquidate,
accelerate, or offset under a master netting agreement and across contracts;
proceedings under chapter 15
(a) Subject to subsection (b), the exercise of any contractual right,
because of a condition of the kind specified in section
365(e)(1), to cause the termination, liquidation, or acceleration of or to
offset or net termination values, payment amounts, or other transfer
obligations arising under or in connection with one or more (or the
termination, liquidation, or acceleration of one or more)--
(1) securities contracts, as defined in section
741(7);
(2) commodity contracts, as defined in section
761(4);
(3) forward contracts;
(4) repurchase agreements;
(5) swap agreements; or
(6) master netting agreements,
shall not be stayed, avoided, or otherwise limited by operation of any
provision of this title or by any order of a court or administrative agency in
any proceeding under this title.
(b)
(1) A party may exercise a contractual right described in subsection (a)
to terminate, liquidate, or accelerate only to the extent that such party
could exercise such a right under section
555, 556,
559,
or 560
for each individual contract covered by the master netting agreement in
issue.
(2) If a debtor is a commodity broker subject to subchapter IV of chapter
7--
(A) a party may not net or offset an obligation to the debtor arising
under, or in connection with, a commodity contract traded on or subject to
the rules of a contract market designated under the Commodity Exchange Act
or a derivatives transaction execution facility registered under the
Commodity Exchange Act against any claim arising under, or in connection
with, other instruments, contracts, or agreements listed in subsection (a)
except to the extent that the party has positive net equity in the
commodity accounts at the debtor, as calculated under such subchapter; and
(B) another commodity broker may not net or offset an obligation to the
debtor arising under, or in connection with, a commodity contract entered
into or held on behalf of a customer of the debtor and traded on or
subject to the rules of a contract market designated under the Commodity
Exchange Act or a derivatives transaction execution facility registered
under the Commodity Exchange Act against any claim arising under, or in
connection with, other instruments, contracts, or agreements listed in
subsection (a).
(3) No provision of subparagraph (A) or (B) of paragraph (2) shall
prohibit the offset of claims and obligations that arise under--
(A) a cross-margining agreement or similar arrangement that has been
approved by the Commodity Futures Trading Commission or submitted to the
Commodity Futures Trading Commission under paragraph (1) or (2) of section
5c(c) of the Commodity Exchange Act and has not been abrogated or rendered
ineffective by the Commodity Futures Trading Commission; or
(B) any other netting agreement between a clearing organization (as
defined in section 761) and another entity that has been approved by the
Commodity Futures Trading Commission.
(c) As used in this section, the term "contractual right"
includes a right set forth in a rule or bylaw of a derivatives clearing
organization (as defined in the Commodity Exchange Act), a multilateral
clearing organization (as defined in the Federal Deposit Insurance Corporation
Improvement Act of 1991), a national securities exchange, a national
securities association, a securities clearing agency, a contract market
designated under the Commodity Exchange Act, a derivatives transaction
execution facility registered under the Commodity Exchange Act, or a board of
trade (as defined in the Commodity Exchange Act) or in a resolution of the
governing board thereof, and a right, whether or not evidenced in writing,
arising under common law, under law merchant, or by reason of normal business
practice.
(d) Any provisions of this title relating to securities contracts,
commodity contracts, forward contracts, repurchase agreements, swap
agreements, or master netting agreements shall apply in a case under chapter
15, so that enforcement of contractual provisions of such contracts and
agreements in accordance with their terms will not be stayed or otherwise
limited by operation of any provision of this title or by order of a court in
any case under this title, and to limit avoidance powers to the same extent as
in a proceeding under chapter
7 or 11 of
this title (such enforcement not to be limited based on the presence or
absence of assets of the debtor in the United States).
[Rev. 5-19-05]
11
USC § 562. Timing of damage measurement in connection
with swap agreements, securities contracts, forward contracts, commodity
contracts, repurchase agreements, and master netting agreements
(a) If the trustee rejects a swap agreement, securities contract (as
defined in section
741), forward contract, commodity contract (as defined in section
761), repurchase agreement, or master netting agreement pursuant to section
365(a), or if a forward contract merchant, stockbroker, financial
institution, securities clearing agency, repo participant, financial
participant, master netting agreement participant, or swap participant
liquidates, terminates, or accelerates such contract or agreement, damages
shall be measured as of the earlier of--
(1) the date of such rejection; or
(2) the date or dates of such liquidation, termination, or acceleration.
(b) If there are not any commercially reasonable determinants of value as
of any date referred to in paragraph (1) or (2) of subsection (a), damages
shall be measured as of the earliest subsequent date or dates on which there
are commercially reasonable determinants of value.
(c) For the purposes of subsection (b), if damages are not measured as of
the date or dates of rejection, liquidation, termination, or acceleration, and
the forward contract merchant, stockbroker, financial institution, securities
clearing agency, repo participant, financial participant, master netting
agreement participant, or swap participant or the trustee objects to the
timing of the measurement of damages--
(1) the trustee, in the case of an objection by a forward contract
merchant, stockbroker, financial institution, securities clearing agency,
repo participant, financial participant, master netting agreement
participant, or swap participant; or
(2) the forward contract merchant, stockbroker, financial institution,
securities clearing agency, repo participant, financial participant, master
netting agreement participant, or swap participant, in the case of an
objection by the trustee,
has the burden of proving that there were no commercially reasonable
determinants of value as of such date or dates.
[Rev. 5-19-05]
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