If you are Black, you have likely experienced racial prejudice in various aspects of your life. One area you might not have expected it to come into play is when filing for bankruptcy. However, Massachusetts Institute of Technology research shows it can be a problem here, too.
The reason it is a problem is that bankruptcy is not automatic. Whether the court accepts your filing or not comes down to someone’s say so and people can exhibit racist biases. In the case of Chapter 13, the trustee appointed to your case has a major impact on the judge’s decision.
The study found that Black filers were 31% more likely to have their Chapter 13 filing dismissed in court than White filers. Dismissals happen when the trustee rejects the filer’s payment plan or the filer is unable to keep up with their payment plan (perhaps because it was unreasonably demanding in the first place).
Most trustees are White
The report found that 84% of trustees are White and that White trustees were more lenient toward White filers than Black ones when deciding what was an allowable exemption in the bankruptcy. Thus, the White filers ended up with lower payment targets than the Black filers, making it easier for them to keep up with the payments and succeed in completing the bankruptcy.
Bankruptcy can be tough at the best of times, but it is even more so if you face stricter conditions because of your race. Getting legal guidance to fight for a fair deal can help.