Landing On Bankrupt

A staggering story from the New York Times today: a new study of personal bankruptcy rates in the last several years found African-Americans were nearly twice as likely as whites to be driven towards expensive and painful Chapter 13 bankruptcy procedures, rather than the much less onerous Chapter 7.

The disparity persisted even when the researchers adjusted for income, homeownership, assets and education. The evidence suggested that lawyers were disproportionately steering blacks into a process that was not as good for them financially, in part because of biases, whether conscious or unconscious.

The vast majority of debtors file under Chapter 7 of the bankruptcy code, which typically allows them to erase most debts in a matter of months. It tends to have a higher success rate and is less expensive than the alternative, Chapter 13, which requires debtors to dedicate their disposable income to paying back their debts for several years.

The study of racial differences in bankruptcy filings was written by Robert M. Lawless, a bankruptcy expert and law professor, and Dov Cohen, a psychology professor, both with the University of Illinois; and Jean Braucher, a law professor at the University of Arizona.

A survey conducted as part of their research found that bankruptcy lawyers were much more likely to steer black debtors into a Chapter 13 than white filers even when they had identical financial situations. The lawyers, the survey found, were also more likely to view blacks as having “good values” when they expressed a preference for Chapter 13.

“Unfortunately I’m not surprised with these results,” said Neil Ellington, executive vice president of Consumer Education Services, a credit counseling agency in Raleigh, N.C. “The same underlying issues that created the problem in mortgage lending, with minorities paying higher interest rates than their white counterparts having the same loan qualifications, are present in all financial fields.” 

So not only did the financial industry prey upon minorities, particularly the black middle class, in creating the financial crisis in 2008, it appears that the bankruptcy law industry has preyed on black families again when it came to fixing the issue.  Awesome.

And I've talked about the most pernicious and generation effect of the 2008 financial crisis before:  the near total annihilation of the black middle class in the US.  The median net worth of black households in 2009 was $5,677...less than 5% of the same number for white Americans, $113,149.

There IS no black middle class.  It has been all but decimated.  And now we learn that those who have seen their dreams destroyed are far more likely to have been forced into economic servitude for no other reason than the color of their skin.

Of course, nobody wants to talk about this.  It's far too awful to think about the fact that as bad as things are economically for the white middle class, it's bordering on genocide for blacks (and Latinos don't fare much better, either.)  The financial crisis and its results have combined over the last several years to create a permanent black underclass in America.  Those who tried to get out were all but destroyed.

The message of course is not to try to improve your lot in the first place.  And for black America, we've been put back at square one.  Again.