Racial Disparities in Debt Collection

57 Pages Posted: 16 Oct 2019

See all articles by Jessica LaVoice

Jessica LaVoice

University of Pittsburgh - Department of Economics

Domonkos F. Vamossy

University of Pittsburgh

Date Written: September 2019


A distinct set of disadvantages experienced by black Americans increases their likelihood of experiencing negative financial shocks, decreases their ability to mitigate the impact of such shocks, and ultimately results in debt collection cases being far more common in black neighborhoods than in non-black neighborhoods. In this paper, we create a novel data-set that links debt collection court cases with information from credit reports to document the disparity in debt collection judgments across black and non-black neighborhoods and to explore potential mechanisms that could be driving this judgment gap. We find that majority black neighborhoods experience approximately 40% more judgments than non-black neighborhoods, even after controlling for differences in median incomes, median credit scores, and default rates. The racial disparity in judgments cannot be explained by differences in debt characteristics across black and non-black neighborhoods, nor can it be explained by differences in attorney representation, the share of contested judgments, or differences in neighborhood lending institutions.

Keywords: debt collection, racial disparities

JEL Classification: D14, D18, D63, G21, J15

Suggested Citation

LaVoice, Jessica and Vamossy, Domonkos F., Racial Disparities in Debt Collection (September 2019). Available at SSRN: https://ssrn.com/abstract=3465203 or http://dx.doi.org/10.2139/ssrn.3465203

Jessica LaVoice

University of Pittsburgh - Department of Economics ( email )

4901 Wesley Posvar Hall
230 South Bouquet Street
Pittsburgh, PA 15260
United States

Domonkos F. Vamossy (Contact Author)

University of Pittsburgh ( email )

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