Black people are more likely to file for personal bankruptcy, choose the repayment option

Lenasha Maloy, a nursing assistant from Tulsa, Oklahoma, filed for bankruptcy three times before getting what she needed: a court order saving her home from foreclosure.

Ms Maloy won the court order in 2019 after meeting bankruptcy requirements and providing documents to obtain relief from the debt she had accumulated due to overdue mortgage payments. Ms. Maloy stopped making monthly payments after becoming a babysitter for her chronically ill parents and assumed some of their medical debts.

In the United States, black people in debt like Ms. Maloy are more likely to file for bankruptcy, if they can afford the filing fees, than any other racial group, according to studies, researchers and legal experts. The reasons for filing range from trying to keep their cars to getting rid of parking tickets. These people are also twice as likely among all bankruptcy filers to choose a more expensive type of personal bankruptcy known as Chapter 13, according to studies.

These models have created a situation in which blacks pay more for bankruptcy, but are less likely than other households to benefit from the longer process, the researchers say.

As prolonged government assistance during the pandemic wears off, more people of color are expected to face financial hardship due to lost wages, unemployment or high medical bills, economists and researchers say. bankrupt lawyers.

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