Racial Disparity in the Consumer Bankruptcy System
Are African-Americans not getting the "fresh start" they deserve when filing for bankruptcy? According to a new study entitled "Race, Attorney Influence, and Bankruptcy Chapter Choice," by Jean Braucher of the University of Arizona and Dov Cohen and Robert Lawless, both of the University of Illinois, blacks file Chapter 13 at higher rates than all other races.
The abstract states that "although chapter 13 can offer some legal advantages for persons seeking to
protect valuable assets such as a house or automobile, it generally offers less relief and costs more than the primary alternative available to consumers, chapter 7. The chief feature of a chapter 13 bankruptcy case is a plan under which the debtor must devote all of his or her disposable income to creditor repayment over a 3‐ to 5‐year period. Chapter 7, in contrast, requires only that the debtor turn over all nonexempt assets, with over 90% of chapter 7 debtors having no assets to turn over."
You can download the full paper from the Social Science Research Network here.
