Rodney Brown thought he had found a way to keep the bank from foreclosing on his Spring Hill home even though he hadn't made a mortgage payment in at least five years.
In April, Brown declared bankruptcy, a move that immediately stops any foreclosure action. That might have worked, except Brown has declared bankruptcy so often that Tampa bankruptcy Judge Catherine Peek McEwen finally had enough.
"I find and conclude that you are a serial abusive bankruptcy filer,'' McEwen said in a recent hearing, reading off a list of seven separate filings since 2008. "I am going to ban you for two full years from filing. I'm sorry, Mr. Brown, you've just had too many chances.''
Brown is among a growing legion of debtors who have been declared abusive as judges get tough on people gaming an overworked bankruptcy system. In the past year and a half, at least 85 Tampa Bay residents have been barred from refiling for up to two years after it became obvious they declared bankruptcy primarily to block foreclosure.
Another 25 bay area debtors whose bankruptcy cases are pending have been ordered to show cause why they should not be declared abusive filers.
Debtors already barred from refiling include:
• A Palm Harbor couple who filed 11 bankruptcy petitions in eight years to stop foreclosure. The bank got a final judgment against them in 2007 but repeatedly had to cancel foreclosure auctions because of all the filings.
• Another Palm Harbor couple who filed 18 bankruptcy petitions over a decade. They had been living free for 12 years before the bank finally got a writ of possession in 2014.
• A Safety Harbor woman who has filed seven petitions since 2011, including two this year. She hasn't made a mortgage payment in more than six years.
• • •
Tampa bankruptcy judges also are cracking down on non-lawyers who have prepared petitions for serial filers. To drum up business, one preparer even bragged to prospective clients that he had declared bankruptcy six times to block foreclosure on his own home.
McEwen, one of four bankruptcy judges in Tampa, said serial filers are a "drain on the system'' and cut into the time that court officials can spend on debtors who file for legitimate purposes.
"My sense is that I do see it going up,'' she said of abusive filings, "though that could be because of the process we set in effect where we are actually looking at them. Before, they could have gotten dismissed under the radar screen and we judges wouldn't have seen that some had three or four or five filings."
There is no limit on how many bankruptcy petitions a person can file. As soon as the petition is filed, an automatic stay takes effect barring banks and other creditors from trying to collect debts, including mortgage debts. At the same time the petition is filed, however, the debtor is supposed to submit documents listing assets, liabilities and creditors.
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Until a few years ago, bankruptcy case managers quickly dismissed cases missing the required paperwork. When creditors complained that cases were thrown out before they even had time to hire an attorney, "I realized … people were sliding through the system with multiple filings and stays (of foreclosure) without any consequences,'' McEwen said.
As a result, a procedure is now in place to catch anyone declaring bankruptcy for a third time. Judges can order the debtor to come to court and show cause why he or she should not be declared an abusive serial filer and temporarily banned from refiling.
That's what happened one morning this month when McEwen held three show cause hearings.
The first case was that of Martin Prenatt, a Valrico man on his fourth bankruptcy filing in two years. Neither he nor his attorney showed up, and neither could be reached by phone. McEwen dismissed the case because Prenatt hadn't filed the required paperwork on time, and banned him from refiling for two years.
Timothy Kemplin, a Gulfport man who has declared bankruptcy three times since 2013, was up next.
He too failed to appear in person, telling the judge by phone that he couldn't come because it was raining and his car's windshield wipers didn't work.
McEwen noted that Kemplin hadn't attended an earlier hearing either. He said that was because his car had overheated.
Though sounding skeptical, the judge gave Kemplin until July to show he would be able to fulfill the requirements of his plan to repay creditors.
McEwen had no patience for Brown, the Spring Hill man who was another no-show. Though he argued by phone that his pre-2014 filings were to save his car from repossession, not his house, she chastised him for failing to submit even the most basic documents with his latest petition.
"By now, you have some training in doing what should be done,'' McEwen said as she declared him a serial abusive filer and banned him from refiling for two years.
The Times' attempts to reach Brown and Prenatt after their hearings were not successful. Kemplin, who has been in foreclosure since 2012, said he did not think he was abusing the system: "I'm just trying to do what I need to do.''
In declaring debtors abusive, McEwen and her colleagues issue orders that serve to notify state judges and court clerks of the refiling ban. In big, bold type the orders say that any bankruptcy petitions filed within the period of the ban "shall not stop any foreclosure sale.''
• • •
It was such an order that allowed a sale to proceed this year on the Palm Harbor home of Marina and Guenter Tesch.
The now-divorced couple bought the house in 2006 for $416,000 but defaulted on the mortgage in less than a year. The bank foreclosed in 2007 but the foreclosure sale was canceled when Guenter Tesch filed the first of what would be his seven bankruptcy petitions.
Tesch, however, didn't submit the required documents, so the case was dismissed and the sale was rescheduled. Over the following years, a pattern emerged. Tesch and his wife would take turns filling petitions to block the sale. The cases would be dismissed for various reasons. The sale would be rescheduled, one of the Tesches would file a new petition, and so on.
Their luck ran out May 6 after Marina Tesch filed her fourth petition, bringing the couple's total to 11.
"This court finds that the Debtor and the Debtor's spouse … have engaged in a scheme to delay, hinder and defraud (the bank) by multiple bankruptcy filings,'' Judge Rodney May wrote.
May banned both Tesches from refiling for two years and let a scheduled sale go through. The bank now has the house eight years after foreclosing.
Records show Tesch, born in Germany, and his ex-wife have been unemployed and supported by relatives for years. When the Times contacted him, he said he couldn't speak then; he did not call back or return a subsequent call.
With the Tesches' many cases staggered between two judges — May and McEwen — it was hard for either judge to detect what was going on until the system that tags three-time filers went into effect, McEwen said.
She and other judges also are getting tough on some petition preparers, non-lawyers who draw up bankruptcy petitions. After two preparers were found to be helping abusive serial filers, both agreed to stop when McEwen threatened to make them return client fees.
Another preparer agreed to stop doing petitions for Chapter 13 repayment cases, the kind filed by the Tesches. He had prepared 10 of the couple's 11 petitions.
Contact Susan Taylor Martin at firstname.lastname@example.org or (727) 893-8642. Follow @susanskate.