The Stark Facts of Race and Bankruptcy

The Woodstock Institute in Chicago has a fantastic new report entitled, “Bridging the Gap II: Examining Trends and Patterns of Personal Bankruptcy in Cook County’s Communities of Color.” The results are ugly for anyone who believes in equal access to economic opportunities and justice.It should be required reading for anyone working with bankruptcy and credit. The basic findings from Cook County:

* Personal bankruptcies are concentrated in African-American communities

* African-Americans are much more likely to file chapter 13

* Women make up a larger share of individual bankruptcy filers, and a dramatically larger share in African-American communities, than men do

{snip}

The Chicago Reporter has published a story about the Woodstock report focusing on the disparity in chapter 13 filing rates between African Americans and all other races. Although only about one-third of all bankruptcies in Cook County are chapter 13’s, more than half of the bankruptcies by African Americans are chapter 13’s.

{snip} In a recent study with my colleague, Dov Cohen, we found the same racial disparity in chapter 13 filing rates not just in Cook County but across the country. In a national random sample of bankruptcy filers, Dov and I found that African Americans are around twice as likely to file chapter 13 than debtors of other races. This disparity remained even after controlling for factors such as home ownership or geographic location. An African American homeowner in a place with a high chapter 13 rate like Georgia or a low chapter 13 rate like Iowa is still twice as likely to file chapter 13 than a white homeowner in the same locale. Our study also controls for income and wealth, which should be a good proxy for ability to afford the attorney’s fee and court fees. {snip}

{snip}