Emory Bankruptcy Developments Journal


The serial filing of chapter 13 cases solely for the purpose of frustrating and delaying foreclosure or other legitimate collection efforts, and with no serious intent to reorganize, has long been perceived as an abuse of the bankruptcy system requiring a fulsome response. In 2005 Congress seized on a solution involving withdrawal or withholding of the automatic stay. Since it is the existence of the stay that most prompts abusive filings, the solution seemed appropriate. It was not for a variety of reasons examined in this article, but most notably because not all serial filings are abusive, and the stay serves to implement multiple bankruptcy policies, implicating the interests of participants in the system other than the debtor. Thus, this article contends that the new paragraphs added to section 362(c) in 2005 are overly broad, out of kilter with the structure of other stay termination provisions, and as likely as not to produce more mischief than they prevent. Moreover, the article asserts that there currently are better, more narrowly tailored, tools available to the courts to address bad faith serial filings that neither run the risk of depriving deserving debtors of bankruptcy relief and that do not prejudice the interests of other creditors in the case. Building on these tools, this article constructs an alternative approach to stay modification in the case of repeat filings that distinguishes the differing considerations at work in rehabilitation versus liquidation cases, and that contemplates a more meaningful role for bankruptcy courts to exercise experienced judgment in balancing the equities in individual cases in a fashion that a mechanical, self-executing statutory approach can never replicate.