Available at: https://scholarlycommons.law.northwestern.edu/nulr/vol120/iss5/1
Abstract:
The American consumer bankruptcy system is a costly regime with profound societal implications. Between 2008 and 2023, consumers filed 13.8 million bankruptcy cases across the ninety-four federal bankruptcy districts in the United States, generating over $4 billion in court filing fees alone. When accounting for attorney fees, trustee expenses, creditor costs, and broader economic externalities—such as increased interest rates borne by other consumers—the total financial impact easily reaches tens of billions, if not hundreds of billions, of dollars.
Against that backdrop, this study uncovers a startling phenomenon: nearly 46% of the consumers who filed bankruptcy in 2023 were repeat filers, defined as individuals with at least one prior bankruptcy record since 1997. This percentage has followed an overall upward trend, increasing at an average annual rate of 52 basis points since 2016.
There are significant geographic disparities in the prevalence of repeat bankruptcy filings. The U.S. District Court for the Western District of Tennessee has the highest percentage of repeat filers, with 76% of all filings coming from individuals with prior bankruptcy records. In contrast, the Southern District of West Virginia has the lowest percentage, with "only" 36% of filings attributed to repeat filers. Historically, repeat filing has been most common in the South, but by 2023, many jurisdictions outside the region—such as districts in Pennsylvania and Utah—also began to exhibit elevated rates of repeat filings.
These findings challenge foundational assumptions in bankruptcy scholarship and raise urgent policy questions about the system's efficacy in delivering a true "fresh start" to debtors. At a minimum, this Article calls to revise the estimated number of people benefiting from the bankruptcy system and reevaluate policies designed to address the prevalence of bankruptcy in American society.
As the first comprehensive national study of bankruptcy recidivism that covers both Chapter 7 and Chapter 13 bankruptcy, this Article leverages credit report data and court records to reveal novel insights about repeat filers. Contrary to the prevailing narrative that serial filings are driven by bad faith debtors exploiting Chapter 13, the study finds that the majority of repeat filers had previously received a discharge, with nearly half initially filing under Chapter 7. Furthermore, most repeat filings occur after a significant gap—typically exceeding seven years—suggesting that these debtors are not engaging in short-term strategic abuse of the system but are instead grappling with persistent financial instability.
This study also demonstrates that prior bankruptcy filings are a robust predictor of future filings, even after controlling for financial and demographic factors. This means that individuals with a bankruptcy history are disproportionately likely to file again when faced with financial distress compared to those without such a history. As repeat filers account for a growing proportion of all bankruptcy filings, their heightened sensitivity to financial shocks must be considered when evaluating policy changes.
By shifting the focus from short-term Chapter 13 abuse to the broader structural patterns of repeat bankruptcy, this Article offers a novel framework for understanding the long-term dynamics of consumer bankruptcy. These findings can have profound implications for bankruptcy law, financial regulation, and social safety net policies, urging a reevaluation of how the system addresses the enduring financial vulnerabilities of debtors.
The Bankruptcy Revolving Door: Does Repeat Filing Mean Bankruptcy Isn't Working?
Professor Belisa Pang's The Bankruptcy Revolving Door is one of the most important empirical bankruptcy articles of the year. Using an extraordinarily rich combination of PACER records and longitudinal credit bureau data, she demonstrates that nearly 46% of consumer bankruptcy filers in 2023 had previously filed bankruptcy, a figure that has steadily increased over the last decade. More importantly, she convincingly challenges the familiar narrative that repeat filing is primarily the result of bad-faith debtors repeatedly filing and dismissing Chapter 13 cases to frustrate creditors.
Instead, the overwhelming majority of repeat filers had previously completed a bankruptcy and received a discharge. Most waited many years before returning to bankruptcy court, suggesting that repeat filing often reflects renewed financial distress rather than abuse of the bankruptcy system.
The article deserves careful attention from bankruptcy scholars, judges, trustees, and policymakers.
Moving Beyond the "Serial Filer" Myth
Perhaps the article's greatest contribution is demonstrating that Congress may have spent the last twenty years fighting the wrong battle.
The popular image of the repeat filer has long been someone filing one Chapter 13 after another solely to delay foreclosure. Professor Pang's data shows that this stereotype represents only a small portion of repeat filings. Approximately 67% of repeat filers had successfully completed their previous case, and only 7.6% involved two dismissed Chapter 13 cases filed within one year. The median time between filings was nearly 9.6 years.
Those findings significantly undercut the premise that repeat filing itself is evidence of abuse.
A Few Legal Nuances
Having had the opportunity to comment on an earlier draft of this paper, there are several bankruptcy law issues that deserve additional discussion.
Section 362(c)(3)(A) Is More Limited Than Many Assume
The article discusses Congress's restrictions on the automatic stay for repeat filers under § 362(c)(3)(A). While that discussion accurately reflects the statutory language, readers should remember that there remains a significant split of authority over what the statute actually accomplishes.
Many courts—including the Bankruptcy Court for the Eastern District of North Carolina in In re Paschal, 337 B.R. 274 (Bankr. E.D.N.C. 2006)—have concluded that § 362(c)(3)(A) terminates the stay only with respect to the debtor and the debtor's property, but not property of the bankruptcy estate.
That distinction is particularly significant in Chapter 13. Under § 1306, virtually all post-petition earnings and many other assets become property of the bankruptcy estate. If the automatic stay remains in effect as to estate property, the practical consequences of § 362(c)(3)(A) are often far less dramatic than many commentators assume.
No Discharge Does Not Mean No Chapter 13
Likewise, debtors who are temporarily ineligible for another discharge are not barred from filing Chapter 13 or confirming a Chapter 13 plan.
The Fourth Circuit recognized this in Branigan v. Davis, holding that debtors may successfully complete what are commonly called "Chapter 20" cases even though they are ineligible for a discharge.
That distinction matters because Chapter 13 often serves purposes entirely independent of obtaining another discharge.
Chapter 13 Is About More Than Paying Credit Cards
The paper correctly notes that Chapter 13 requires debtors to devote their disposable income over three to five years toward paying creditors.
But those "creditors" are not simply unsecured credit card lenders.
In many Chapter 13 cases, the principal beneficiaries of plan payments are:
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mortgage lenders whose arrears are cured so families keep their homes;
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automobile lenders;
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taxing authorities holding priority claims;
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former spouses and children owed domestic support obligations; and
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other creditors whose claims would largely survive Chapter 7 anyway.
Viewed from that perspective, Chapter 13 is often less about paying unsecured debt than preserving assets and restructuring obligations that bankruptcy cannot simply erase.
The Liquidation Test Quietly Benefits Debtors
One feature of Chapter 13 that rarely receives sufficient attention is the hypothetical liquidation test under § 1325(a)(4).
Unsecured creditors need receive only what they would have recovered had the debtor filed Chapter 7.
That hypothetical liquidation assumes the costs of administering a Chapter 7 estate—including trustee commissions, professional fees, and costs of sale.
Consider a debtor who owns:
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a $200,000 home;
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subject to a $100,000 mortgage;
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with a $50,000 homestead exemption;
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owes $25,000 in priority IRS taxes; and
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has $50,000 in general unsecured debt.
In Chapter 7, after paying the mortgage and exemption, the Chapter 7 trustee would earn a substantial statutory commission before unsecured creditors received anything. Even before considering realtor commissions, attorney's fees, or closing costs, the trustee's commission alone could exceed $10,750.
Under Chapter 13, however, the debtor keeps the home. The plan still must pay the priority taxes, but unsecured creditors need receive only what would have remained after those hypothetical Chapter 7 administrative expenses.
Economically, Chapter 13 often functions as though Congress created an additional exemption without ever calling it one.
Creditors receive exactly what the Bankruptcy Code requires, while debtors avoid liquidation of their homes.
The Bigger Question
The article also raises a question that has bothered me for years whenever commentators compare Chapter 7 and Chapter 13 "success rates."
How successful is Chapter 7 really?
That is not criticism of Chapter 7. Rather, it highlights how difficult "success" is to define.
Does success simply mean receiving a discharge?
Or should we also ask whether the debtor:
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kept the family home;
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retained reliable transportation;
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paid priority taxes;
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cured child support arrearages;
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or found themselves back in bankruptcy court a decade later?
Those questions are extraordinarily difficult because the necessary long-term data are largely unavailable.
Professor Pang's finding that many Chapter 7 debtors eventually return to bankruptcy strongly suggests that eliminating unsecured debt frequently does not solve all of a family's financial problems.
At the same time, the article wisely shows that most repeat filings occur many years later. The longer the interval between cases, the more likely that the second bankruptcy reflects new hardships—illness, divorce, unemployment, inflation, or other financial shocks—rather than any failure of the original bankruptcy.
Bankruptcy Cannot Solve an Income Problem
Ultimately, Professor Pang's outstanding empirical work reinforces a truth that bankruptcy practitioners have understood for decades.
Bankruptcy is a solution to debt problems—not income problems.
Bankruptcy can eliminate unsecured debt.
It can stop foreclosures.
It can save homes.
It can restructure taxes.
It can provide families with a desperately needed fresh start.
But it cannot permanently solve inadequate wages, chronic illness, unstable employment, rising housing costs, or an economy in which many households remain only one financial emergency away from insolvency.
If nearly half of today's bankruptcy filers have filed before, perhaps the question is not whether bankruptcy is failing. Rather, it is whether too many American families continue to experience financial instability that no bankruptcy system—no matter how well designed—can permanently cure.
Professor Pang's article provides exactly the kind of rigorous empirical evidence that should inform that conversation, and it deserves a wide readership among bankruptcy judges, trustees, practitioners, academics, and policymakers alike.
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