Black People More Likely to File for More Expensive Bankruptcy Option, Experts Say

Blacks among all bankrupt filers are on average twice as likely to file a more expensive type of personal bankruptcy than debtors of other races.

Several studies focusing on racial disparities in the consumer bankruptcy system have also found that black people constitute a higher percentage of debtors in the bankruptcy system compared to the total population, law professor Robert Lawless told The Consumer on Wednesday. Bankruptcy Forum of the American Bankruptcy Institute.

The number of blacks applying for chapter 13 is also significantly higher than among whites and those of other races.

The disparities highlight the role that unconscious bias and systemic racism can play in the bankruptcy system, experts from an ABI virtual panel said at a conference focused solely on consumer bankruptcy.

Chapter 13, which can be the ‘no down payment’ option for bankruptcy protection, is more expensive and requires filers to make monthly payments for at least three to five years before their debt is discharged, while Chapter 7 does not require reimbursement. plan and allows liquidation of assets to pay creditors. Most people don’t have any assets to liquidate, Lawless said.

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