To modify the disclosure requirements for debt relief agencies providing bankruptcy assistance.

1. Rewrites page 112, line 17 through page 120, line 24

   ReplacesPrinted page

   Removes page 112, line 17 through page 120, line 24 of the printed bill. See that page

   Inserted: (12A) 'debt relief agency' means any person, other than an attorney or an employee of an attorney, who provides any bankruptcy assistance to an assisted person in return for the payment of money or other valuable consideration, or who is a bankruptcy petition preparer under section 110, but does not include--

   Inserted: (A) any person who is an officer, director, employee, or agent of a person who provides such assistance or of the bankruptcy petition preparer;

   Inserted: (B) a nonprofit organization that is exempt from taxation under section 501(c)(3) of the Internal Revenue Code of 1986;

   Inserted: (C) a creditor of such assisted person, to the extent that the creditor is assisting such assisted person to restructure any debt owed by such assisted person to the creditor;

   Inserted: (D) a depository institution (as defined in section 3 of the Federal Deposit Insurance Act) or any Federal credit union or State credit union (as those terms are defined in section 101 of the Federal Credit Union Act), or any affiliate or subsidiary of such depository institution or credit union; or

   Inserted: (E) an author, publisher, distributor, or seller of works subject to copyright protection under title 17, when acting in such capacity.

   Inserted: (b) Conforming Amendment.--Section 104(b) of title 11, United States Code, is amended by inserting "101(3)," after "sections" each place it appears.

   Inserted: SEC. 227. RESTRICTIONS ON DEBT RELIEF AGENCIES.

   Inserted: (a) Enforcement.--Subchapter II of chapter 5 of title 11, United States Code, is amended by adding at the end the following:

   Inserted: "Sec. 526. Restrictions on debt relief agencies

   Inserted: "(a) A debt relief agency shall not--

   Inserted: "(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;

   Show 37 more inserted paragraphsShow less

   Inserted: "(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;

   Inserted: "(3) misrepresent to any assisted person or prospective assisted person, directly or indirectly, affirmatively or by material omission, with respect to--

   Inserted: "(A) the services that such agency will provide to such person; or

   Inserted: "(B) the benefits and risks that may result if such person becomes a debtor in a case under this title; or

   Inserted: "(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.

   Inserted: "(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.

   Inserted: "(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.

   Inserted: "(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--

   Inserted: "(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;

   Inserted: "(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

   Inserted: "(C) intentionally or negligently disregarded the material requirements of this title or the Federal Rules of Bankruptcy Procedure applicable to such agency.

   Inserted: "(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--

   Inserted: "(A) may bring an action to enjoin such violation;

   Inserted: "(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

   Inserted: "(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.

   Inserted: "(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).

   Inserted: "(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--

   Inserted: "(A) enjoin the violation of such section; or

   Inserted: "(B) impose an appropriate civil penalty against such person.

   Inserted: "(d) No provision of this section, section 527, or section 528 shall--

   Inserted: "(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

   Inserted: "(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.".

   Inserted: (b) Conforming Amendment.--The table of sections for chapter 5 of title 11, United States Code, is amended by inserting after the item relating to section 525, the following:

   Inserted: "526. Restrictions on debt relief agencies.".

   Inserted: SEC. 228. DISCLOSURES.

   Inserted: (a) Disclosures.--Subchapter II of chapter 5 of title 11, United States Code, as amended by section 227, is amended by adding at the end the following:

   Inserted: "Sec. 527. Disclosures

   Inserted: "(a) A debt relief agency providing bankruptcy assistance to an assisted person shall provide--

   Inserted: "(1) the written notice required under section 342(b)(1); and

   Inserted: "(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--

   Inserted: "(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;

   Inserted: "(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;

   Inserted: "(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

   Inserted: "(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.

   Inserted: "(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:

   Inserted: " 'IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES FROM A BANKRUPTCY PETITION PREPARER.

   Inserted: " '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 A BANKRUPTCY PETITION PREPARER TO GIVE YOU A WRITTEN CONTRACT SPECIFYING WHAT THE BANKRUPTCY PETITION PREPARER WILL DO FOR YOU AND HOW MUCH IT WILL COST. Ask to see the contract before you hire anyone.' "

   Original wording

   On page 112, strike line 17 and all that follows through page 120, line 24, and insert the following:

Read automatically from the Congressional Record. Check the original before relying on it.

As printed