II
110th CONGRESS
2d Session
S. 3259
IN THE SENATE OF THE UNITED STATES
July 14, 2008
Mr. Whitehouse (for himself and Mr. Durbin) introduced the following bill; which was read twice and referred to the Committee on the Judiciary
A BILL
To amend title 11, United States Code, with respect to the priority of certain high cost credit debts.
Short title
This Act may be cited as the
Consumer Credit Fairness
Act
.
Effects of high cost credit on bankruptcy proceedings
Definitions
Section 101 of title 11, United States Code, is amended—
by redesignating paragraph (27B) as paragraph (27C); and
by inserting after paragraph (27A) the following:
The term
high cost consumer credit transaction means an extension of credit
by a creditor
(as defined in section 103 of the Truth in Lending
Act (15 U.S.C. 1602(f))), resulting in a consumer debt that has an applicable
annual percentage rate (as determined in accordance with section 107(a) of the
Truth in Lending Act (15 U.S.C. 1606(a)), and including costs and fees incurred
in connection with the extension of such credit) that exceeds the lesser
of—
the sum of 15 percent and the yield on United States Treasury securities having a 30-year period of maturity; or
36 percent.
.
Subordination
Section 510 of title 11, United States Code, is amended by adding at the end the following:
For the purpose of distribution under this title, an allowed claim arising from a high cost consumer credit transaction shall be subordinated to all other claims.
Any lien securing a claim subordinated under paragraph (1) shall be transferred to the estate.
.
Exclusion
Section 707(b) of title 11, United States Code, is amended by adding at the end the following:
Paragraph (2) shall not apply if the debtor's petition resulted from a high cost consumer credit transaction.
.