Race and Chapter 13

As Adam noted in his kind post, the New York Times today featured our study, "Race, Attorney Influence, and Bankruptcy Chapter Choice." My co-authors are Credit Slips blogger Jean Braucher, a law professor at the University of Arizona, and Dov Cohen, a professor at the University of Illinois who holds a cross appointment in psychology and law. And, we all express many thanks to the NYT reporter, Tara Siegel Bernard, who spent a lot of time slogging through the statistics and legal intricacies in our study.

In a nutshell, the study reports real-world data from the Consumer Bankruptcy Project showing that, among bankrupcy filers, blacks file chapter 13 at higher rates than all other races. The effect is large -- for example, blacks even had a higher chapter 13 rate (54.6%) than homeowners (47.1%). The second part of the study showed that, in a random sample, bankruptcy attorneys were more likely to recommend chapter 13 for a hypothetical couple named "Reggie & Latisha" who went to the African Methodist Episcopal Church as compared to "Todd & Allison" who went to the United Methodist Church. Also, attorneys were more likely to see "Reggie & Latisha" as having good values and being more competent when they expressed a preference for chapter 13.

As I said in the NYT article, "I don’t think there is any overt conspiracy, but when you have a complex system, these biases can play out and the people within the system don’t see the pattern because nobody is in charge of looking at these big issues.” This is an important point. We have no data suggesting that some persons sat down and decided this is the way the system should be. One of the things that always impresses me whenever I attend conferences with bankruptcy attorneys is their dedication to making bankruptcy work better for their clients. I always come back energized from these conferences with ideas about how to make my research better. SImilarly, it is my hope that our article will result in a professional dialogue about when chapter 7 or chapter 13 is appropriate for a client. And, that can only be a good thing for anyone who finds themselves in need of bankruptcy.

The full study is forthcoming in the Journal of Empirical Legal Studies. The working paper version is available on the Social Science Research Network (SSRN). And, a shorter version of the study reporting the real-world data appears as a chapter in the book, Broke: How Debt Bankrupts the Middle Class, which was edited by Credit Slips blogger Katie Porter.

In the coming days, I'll try to put up a few posts talking about the study in more detail. If anyone has any questions about the study, please post them in the comments (preferably after reading the study), and I'll do my best to answer them.