The Black 'bankruptcy bias'

A new study shows that Blacks are twice as likely as their white counterparts to file for Chapter 13 bankruptcy, the more burdensome and expensive form of bankruptcy.  [The less onerous form of bankruptcy is Chapter 7.] 

According to the Consumer Bankruptcy Project, nearly 55% of all filing Chapter 13 bankruptcy are Black.  Even when adjusting for education, assets, homeownership, and income, the disparity persisted.

The study also showed that lawyers are, for whatever reason, more likely to push African Americans seeking bankruptcy toward Chapter 13 possibly because of the much higher attorney fees they are able to collect.   


A Chapter 13 trustee, who has served for 30 years, said that Blacks and ethnic minorities were overrepresented in Chapter 13 bankruptcy cases.  He noted that, "We should focus not on picking apart the conclusions but use this study as an indication that we should be attempting to fix what has become a complex, expensive, unproductive system."

More about the Black Bankruptcy Bias here.