Allegations of racial biases have affected many different areas of life in this country — and the courts are no exception.
Just the same, there is one thing that you may not have seen coming. A new study indicates that racial biases may be in play even in bankruptcy courts.
Study indicates Black Americans in bankruptcy are treated differently
A recent study from the Wharton School of Business at the University of Pennsylvania, combined with a 2012 report, paint a grim reality for Black Americans with financial problems:
- Black filers were urged to file Chapter 13, which requires debt repayments over time, over the much faster Chapter 7 (or “total” bankruptcy) far more often than whites.
- Black filers had their bankruptcy cases dismissed far more often than whites who file bankruptcy. This means their debts aren’t discharged.
- Overall, only about 2% of Chapter 7 bankruptcies are dismissed, but Black filers are about 4% more likely than whites to have that happen.
- Among those filing for Chapter 13, the average dismissal rate is 50% — unless you’re Black. Then, you run an 80% chance of having the case dismissed.
While bankruptcies can be dismissed for incorrect procedures or suspicion of fraud, the vast majority of Chapter 13 cases that get dismissed are due to the debtor’s inability to keep up with the payments (which strongly indicates they should have been given a Chapter 7 bankruptcy, instead).
This is disturbing news, but it makes it clear that you want to educate yourself about your bankruptcy rights as soon as you think it may be a possibility. That way, you can make informed decisions about your debt relief options.
