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H.R. 1529: The Involuntary Bankruptcy Improvement Act 1 (July 22, 2003)

handle is hein.bank/crsbank0032 and id is 1 raw text is: Order Code RS21515 Updated July 22, 2003 CRS Report for Congress Received through the CRS Web H.R. 1529: The Involuntary Bankruptcy Improvement Act Robin Jeweler Legislative Attorney American Law Division Summary H.R. 1529 is intended to combat what some believe is a growing trend of frivolous involuntary bankruptcy filings by creditors acting in bad faith or to harass a debtor. The bill would amend 11 U.S.C. § 303 by adding a new subsection (). The subsection would give debtors two new remedies against bad faith filings. First, if a petition that is filed against an individual debtor is subsequently dismissed, and the court finds that the filing included false, fictitious, or fraudulent statements, then, at the debtor's request, the court must expunge all records relating to the filing. Second, the court may issue an order prohibiting all consumer reporting agencies from reporting any information relating to the filing. On April 1,2003, Representative Sensenbrenner introduced H.R. 1529, 108th Cong., 1st Sess. (2003), the Involuntary Bankruptcy Improvement Act of 2003. The House Judiciary Committee reported the bill favorably on May 19, 2003.1 The bill passed the House by voice vote on a motion to suspend the rules on June 10, 2003. If enacted, it would amend the U.S. Bankruptcy Code, 11 U.S.C. § 303, which governs involuntary bankruptcy. While the vast majority of bankruptcy cases are initiated voluntarily by a debtor, an involuntary filing by creditors against a debtor may be an adversarial proceeding. In a voluntary bankruptcy, the filing of the petition constitutes an order for relief' which triggers important bankruptcy protections such as the automatic stay against collection activities by creditors.2 In an involuntary bankruptcy, if the debtor challenges the filing, bankruptcy process is generally delayed until the court, after trial, enters an order for relief.3 1 H.Rept. 108-110, 108h Cong., 1t Sess. (2003). An identical bill, S. 1 128,108th Cong., It Sess. (2003) was introduced in the Senate on May 22, 2003. 2 11 U.S.C. § § 301, 362. 3 11 U.S.C. § 303(h). (continued...) Congressional Research Service * The Library of Congress

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