S. 3259

Consumer Credit Fairness Act

Latest
Raw Text PDF XML

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.

1.

Short title

This Act may be cited as the Consumer Credit Fairness Act.

2.

Effects of high cost credit on bankruptcy proceedings

(a)

Definitions

Section 101 of title 11, United States Code, is amended—

(1)

by redesignating paragraph (27B) as paragraph (27C); and

(2)

by inserting after paragraph (27A) the following:

(27B)

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—

(A)

the sum of 15 percent and the yield on United States Treasury securities having a 30-year period of maturity; or

(B)

36 percent.

.

(b)

Subordination

Section 510 of title 11, United States Code, is amended by adding at the end the following:

(d)
(1)

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.

(2)

Any lien securing a claim subordinated under paragraph (1) shall be transferred to the estate.

.

3.

Exclusion

Section 707(b) of title 11, United States Code, is amended by adding at the end the following:

(8)

Paragraph (2) shall not apply if the debtor's petition resulted from a high cost consumer credit transaction.

.