Watch for in Repeat Filers

When a debtor files for bankruptcy once, it often comes as a blow to the creditor’s expectations of repayment. When that same debtor files again—and sometimes again after that—the impact is compounded. Known as repeat filers, these individuals or businesses pose unique challenges for creditors. Understanding how multiple bankruptcies affect your rights, claims, and recovery strategies is crucial to minimizing financial loss and protecting your legal position.

This guide explores the legal landscape surrounding repeat bankruptcy filings and provides insights on how creditors can proactively respond to such situations.

What Is Repeat Bankruptcy Filing?

A repeat bankruptcy filer is someone who has filed for bankruptcy more than once within a set period. Although the Bankruptcy Code allows multiple filings, it also imposes certain limitations on the relief a debtor can receive in subsequent cases. The reasoning is clear: the bankruptcy system exists to offer honest debtors a fresh start—not to be abused by individuals seeking perpetual protection from creditors.

There are several scenarios where a debtor may file more than once:

• A debtor receives a discharge in one chapter and later files under a different chapter (e.g., Chapter 7 followed by Chapter 13)
• A debtor’s previous case was dismissed (voluntarily or involuntarily) and they are refiling
• A debtor is filing again after receiving a discharge but within a short timeframe

Understanding the timeline and legal consequences of these filings helps creditors determine what actions they can take and when.

The Bankruptcy Code’s Limitations on Multiple Discharges

The Bankruptcy Code sets specific limits on how often a debtor can receive a discharge. These timeframes vary depending on the chapters involved:

• Chapter 7 after Chapter 7: 8 years between filings to be eligible for a second discharge
• Chapter 13 after Chapter 13: 2 years between filings for another discharge
• Chapter 7 after Chapter 13: 6 years between filings unless certain repayment thresholds were met
• Chapter 13 after Chapter 7: 4 years between filings

Creditors should track these timelines closely. If a debtor files a case but is ineligible for a discharge, the entire strategy shifts from preparing for a discharge to contesting possible abuse of process or delay tactics.

Understanding the Impact of the Automatic Stay

One of the most significant protections afforded to debtors in bankruptcy is the automatic stay, which halts collection actions, foreclosures, repossessions, and lawsuits. But this protection isn’t unlimited for repeat filers.

Under 11 U.S.C. § 362(c):

• If a debtor files a second case within a year of a previously dismissed case, the automatic stay lasts only 30 days unless the debtor successfully motions the court to extend it.
• If two or more cases were dismissed within a year, no automatic stay arises at all unless the debtor proves the new case is filed in good faith.

Creditors should immediately review the debtor’s prior case history upon learning of a new filing. If the automatic stay is time-limited or nonexistent, it may be possible to resume collection actions or foreclose without violating bankruptcy rules.

Evaluating Good Faith in Serial Filings

The bankruptcy court places a premium on good faith. If a debtor repeatedly files cases with no meaningful effort to follow through or pay creditors, the court may dismiss the case or impose sanctions.

Indicators of bad faith may include:

• Filing solely to prevent foreclosure or repossession
• Failure to file required schedules or documents
• No payments made in a prior Chapter 13 plan
• Repeated voluntary dismissals
• A history of filing just before key collection dates (like auction or eviction)

Creditors can—and should—raise objections if they believe the case is being filed in bad faith. The court may then hold a hearing and dismiss the case or condition the stay.

Motion to Dismiss or Convert: Your Legal Tools

Creditors are not powerless when faced with a repeat filer. Motions to dismiss or convert are important tools, particularly if the case is harming creditors and not achieving bankruptcy’s intended goals.

Grounds to move for dismissal include:

• Abuse of the bankruptcy process (under § 707(b))
• Bad faith filings (particularly under Chapter 13)
• Failure to comply with court orders or procedural requirements
• Ineligibility for discharge based on timing or prior filings

Depending on the circumstances, creditors may prefer conversion over dismissal. For example, a Chapter 13 case with no reasonable prospect of plan confirmation might be better converted to Chapter 7 so the trustee can liquidate non-exempt assets for the benefit of creditors.

Challenging Dischargeability in Successive Cases

Even if the debtor is eligible for a second discharge, creditors may be able to contest the dischargeability of specific debts. This is particularly important for:

• Debts incurred through fraud or misrepresentation
• Willful and malicious injury claims
• Certain tax obligations
• Domestic support obligations
• Student loans (except under hardship exceptions)

In cases where a debtor has a history of gaming the system, courts may be more receptive to discharge challenges. Creditors should act promptly within the time limits for filing objections to discharge or dischargeability.

Repeat Business Bankruptcies: Commercial Risk Factors

While consumer filings often dominate the conversation around repeat bankruptcies, commercial debtors may also file multiple times—especially small businesses with volatile cash flows or operational instability.

Creditors dealing with commercial repeat filers should assess:

• Whether the business is operating under a new or “successor” entity
• Whether the principals are the same as in previous bankruptcies
• If the business has transferred assets or restructured to avoid obligations

Creditors may be able to pursue successor liability claims, pierce the corporate veil, or take action against personal guarantors when a business repeatedly files and leaves unpaid debts in its wake.

Credit Reporting and Collections After Dismissals

If a debtor’s case is dismissed, the automatic stay is lifted, and creditors can resume collections. However, timing is key. Creditors should confirm dismissal through PACER or the court docket and send updated demand letters or file state court actions accordingly.

Dismissed cases may also provide an opportunity to negotiate repayment with the debtor. If they’re unable to complete bankruptcy but still need relief, settling out of court can be advantageous—especially if secured by a consent judgment or stipulation that avoids future litigation.

Red Flags for Abuse and Fraud

Creditors should be alert to patterns that suggest bankruptcy abuse, especially in repeat filings:

• Transfers of property to relatives before filing
• Changing names or business structures to hide prior filings
• Filing in multiple jurisdictions
• Using multiple Social Security Numbers or EINs
• Filing pro se to delay proceedings before hiring counsel

These red flags can form the basis of a motion for dismissal, denial of discharge, or even a referral to the U.S. Trustee’s office for fraud investigation.

The Role of the Bankruptcy Court and U.S. Trustee

The court and the U.S. Trustee play key roles in curbing repeat filer abuse. However, they often rely on creditor input to uncover patterns of misuse. Creditors who actively participate in the process—by attending § 341 meetings, filing objections, and monitoring docket activity—are far better positioned to protect their rights.

Working with experienced bankruptcy counsel can also ensure timely responses and improve the odds of success when challenging a bad-faith filer.

Strategies to Reduce Risk Before Bankruptcy Is Filed

Many issues with repeat filers begin long before the bankruptcy is filed. Creditors should consider preventative strategies, such as:

• Requiring stronger personal guarantees or security interests
• Performing regular credit reviews and monitoring public records
• Limiting exposure to previously bankrupt individuals or entities
• Drafting contracts that include jurisdictional clauses and attorney fee provisions

Being proactive can help insulate a creditor from loss—or at least make recovery easier when things go wrong.

Final Thoughts: Protecting Your Rights Against Serial Bankruptcy Filers

Repeat bankruptcy filers create a complex environment for creditors. The potential for abuse, delay, and diminished recoveries grows with each successive case. But creditors are not without recourse. By understanding the rules around discharge eligibility, the limits of the automatic stay, and the legal tools available to challenge abusive conduct, creditors can take meaningful steps to protect their interests.

If you’re dealing with a repeat bankruptcy filer or need help developing a recovery strategy in a complex case, the experienced team at Tatman Legal is here to support you. We represent creditors across a wide range of bankruptcy and litigation matters and are committed to helping you navigate the system with confidence. Contact us today to schedule a consultation and discuss your case with a trusted creditors’ rights attorney.