Black Americans are 28% more likely to be fired from bankruptcy than non-black filers

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It’s no secret that the wealth gap between black and white Americans has persisted for decades.

Today, a recent report shows black Americans are up to 28% more likely to be fired from bankruptcy than non-black filers, helping to widen America’s wealth gap. , according to experts. combat.

A bankruptcy rejection closes your bankruptcy case, resulting in the loss of the protection of an order preventing creditors from collecting debts. The bankruptcy applicant remains responsible for his debts.

A to study by the Wharton School of Business at the University of Pennsylvania found a bias in dismissal rates for bankruptcy. Black Americans were more likely to be asked to file Chapter 13 bankruptcy compared to Chapter 7, revealing an implicit bias in Wisconsin Bankruptcy advice and proceedings, Yahoo.com reported.

In general, Chapter 7 is a type of bankruptcy which clears many types of unsecured debt. This can be a last chance to help get your finances back on track. The downside is that you may have to give up some of your assets, which will have a negative long-term impact on your creditworthiness.

Quarterbacked by Wharton Finance Professor Sacha Indarte, the researchers found that black bankruptcy filers were more likely to have Chapter 7 and Chapter 13 bankruptcy cases withdrawn by the court.

Bankruptcy proceedings can be canceled for several reasons. This could happen if a judge concludes that there was willful misconduct on the part of a depositor or if forms were incorrectly submitted to the court. But one of the most common reasons would be non-repayment of debts filed under Chapter 13.
“When we see that black filers are much more likely to have their case rejected, it means that they are have access to debt relief at a much lower rate, ”Indarte said in an interview.

The study showed that Chapter 7 cases for black filers were 4% more likely to be rejected than non-black filers. The average termination rate for bankruptcy is 2. Chapter 13 has a termination rate of 50%.

However, black filers consistently have an 80% chance of having their bankruptcy rejected. Additionally, black filers using Chapter 13 were 28 percent more likely to be fired than other filers.

Find more details about the study here.

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