A Tale of Two Debtors: Bankruptcy Disparities by Race

Abstract

This article offers the first quantitative evidence on race and bankruptcy. Minority debtors fare worse overall in bankruptcy — blacks are 40% and Hispanics 43% less likely than whites to receive a discharge in Chapter 13 after controlling for variables such as education, income, and employment. While the data do not allow for causal inference, Chapter 13 trustees were twice as likely to have made a motion to dismiss even against black debtors who ultimately completed their multi-year bankruptcy plans than against similar white debtors. The paper also indicates that a lack of attorney representation by minority debtors may make them less likely to obtain relief.

Keywords: consumer, Chapter 7,Hispanic, BAPCPA, poverty, family, home ownership, law, debt, mortgage, credit cards, ethnicity