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What Is a Serial Bankruptcy Filer?

Serial bankruptcy filers are chronic, repeat bankruptcy filers. Two bankruptcy filings spread over a sufficient period do not constitute serial filings. However, three or more bankruptcy filings, particularly when compressed within a relatively short period, may constitute serial filing. Serial filing is one of those things that you tend to "know when you see it," as there is no standardized bright line test for its existence. The common denominator in serial filing cases is an abuse of the bankruptcy system by debtors to thwart creditors.

Defining Serial Bankruptcy

In today's economy, it is not uncommon to find a debtor willing to use the bankruptcy system over and over again without any intention to complete the bankruptcy process - solely to delay and frustrate creditors from collecting repayment of debts, or to prevent an eviction or foreclosure. A common pattern involves a husband and wife debtor who file jointly for one case, then the husband files separately, then the wife files separately, and then it is time for them to refile as a couple to repeat the cycle.

The specific definition of serial filing depends on the bankruptcy judge and/or trustee who is scrutinizing multiple filings of a debtor. Admittedly, the test is a subjective one, with no singularly defined objective standard or benchmark. Further, there are no substantial statistics or figures available for study, evaluation, and comparison, as bankruptcy courts do not compile and monitor repetitive filings.

Serial Bankruptcy Statistics

Notwithstanding the lack of available data compilations, the American Bankruptcy Institute (ABI) has studied serial bankruptcy filings. The ABI reports that, depending on the jurisdiction, anywhere from one to 20 percent of debtors are serial filers. Not surprisingly, the district where the bankruptcy is filed and the specific type of bankruptcy filed factor prominently in whether there is a higher rate of recidivism in the aforementioned percentage range. Chapter 13 reorganization plan debtors tend to have higher instances of repeat filings than their counterparts in Chapter 7 liquidation cases.

Prohibitions on Refiling

While the specific definition of serial filing may be slightly amorphous, the Bankruptcy Code does address timing prohibitions on refiling. A debtor cannot obtain a Chapter 7 discharge if he has obtained a discharge in a prior Chapter 7 case filed within the past eight years or a Chapter 13 case filed within the past six years. The time periods are measured from the commencement of the bankruptcy cases. Additionally, the automatic stay is diluted in its impact and effect for serial filers. As such, the automatic stay will last for only 30 days if a debtor's bankruptcy case was pending in the prior year but was dismissed. The stay will not even exist if two or more cases were pending in the prior year but were dismissed.