Blacks Face Bias In Bankruptcy Filings

A new study analyzing bankruptcy filings found that African-Americans were about twice as likely as whites to wind up in the more difficult and expensive form of bankruptcy filings.

Most debtors who file for bankruptcy file under Chapter 7 of the bankruptcy code. Chapter 7 filings tend to have a higher success rates and are less expensive then the alternative Chapter 13, which requires debtors to dedicate their disposable income to paying back their debts for several years. Under Chapter 7 filings debtors are often relieved of their debts in a matter of months.

The study showed the racial disparity persisted, even when the researches adjusted for income, home ownership, assets and education, suggesting that lawyers were disproportionately steering blacks into a bankruptcy filing that was not as good for them financially.

Robert M. Lawless, a bankruptcy expert and law professor authored the report with Dov Cohen, a psychology professor, both with the University of Illinois and Jean Braucher, a law professor at the University of Arizona.

The entirety of the research findings will be published in The Journal of Empirical Legal Studies later in the year. Lawless doesn’t believe his study uncovered any obvious evidence of discrimination in the bankruptcy process but instead something more challenging to address. I don’t think there is any overt conspiracy,” Professor Lawless said. “But when you have a complex system, these biases can play out and the people within the system don’t see the pattern because nobody is in charge of looking at these big issues.”

Those working in the consumer credit counseling services were not surprised by the findings, noting they show the same underlying issues that created the problems of predatory mortgage lending that exacerbated the housing crisis.

The findings also highlight the need for tough enforcement of anti-discrimination laws across the board. Predatory lending is against the law, but without vigorous enforcement there’s simply nothing to stop ingrained prejudices from driving market conditions and setting up unsustainable and parasitic economies again.

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Photo from steakpinball via flickr.


Plastic Surgery
Plastic Surgery4 years ago

I will share it more

Will Rogers
Will R4 years ago

It wasn't long ago that women were accused by men of playing the 'rape card'. Accusing blacks of playing the race card is just as abhorrent, unsympathetic and patronising.

Will Rogers
Will R4 years ago

Amazing! Blacks are being discriminated against, and some people have the audacity to accuse them of playing the race card! And the ones who accuse them of that? They hold the rest of the deck, all 51 cards.
The race card argument is moot. The ones who deal the cards are the real problem. ...So what? You believe blacks are holding the deck...then if so, they've dealt all the good cards to the whites!
But in this case, the lawyers are the croupiers, and seemingly part of the European American agenda to oppress black America by resenting and trivialising, not only the only card they have to use, but the truth.

Eternal Gardener
Eternal G6 years ago


Sue H.
Sue H6 years ago

Sad but not surprising information.

Rose L.
Rose L6 years ago

@ Marilyn L: "Rosie L, PLAY the victim?!?!"

I assume you are directing this at Rose L? And please re-read my post and pose your question again.

You will find that no where in my post did I write any such thing. Here is what I wrote:

"Do black people really want to continue to be portrayed as victims? The victim mentality is not helping them or any other minority!"

Marilyn L.
Marilyn L6 years ago

Rosie L, PLAY the victim?!?! Those of us who have felt discrimination for one reason or another don't have to play the victim we are or have been the victim of hate; that is simply a fact. Most people who make comments like you have are either bigoted and racist themselves or want to bury their head in the sand and pretend it no longer exists. Pretending it does not exist only gives the racist and bigots more power. It is very clear and doesn’t take professors, attorneys or psychologists to see the blatant racism that has raised its ugly head in the past 11 years. This study doesn’t surprise me at all.

Nancy L.
Nancy L6 years ago

Thanks for posting

Gillian Dunn
Gillian Dunn6 years ago

I can't say this comes a surprise.

Chad A.
Chad Anderson6 years ago

There can only be so much systemic bias before those who excuse and rationalize it must themselves be considered racist. The US is a deeply racist society. I am white and have no doubt that I have benefited personally from the oppression of others. Pushing for racial justice is the only absolution.