Undocumented Debtors

Immigration issues continue to be a major political football, and the work of Jean Braucher, Bob Lawless, and Dov Cohen on race in bankruptcy garnered front-page NY Times attention this year. This makes the publication of Chrystin Ondersma's paper titled Undocumented Debtors particularly timely. The paper is the first-ever look (to my knowledge) at whether and how undocumented people file bankruptcy. The key finding is that while it seems legal--and indeed arguably explicitly contemplated by the bankruptcy system--that undocumented people may file, the rate of filings is very low--on the order of less than one percent of the rate of debtors in the general population. Ondersma also provides a good overview of the credit systems available
to undocumented people, ranging from those offered by large national
entities, such as ITIN mortgages, to informal mechanisms such as tandas.

The empirical approaches used in the paper are novel but not perfect, as Ondersma acknowledges. In particular, I wanted to know more about what clerks of court responded to her inquiry. While about half did so, without the Central District of California and some similar places, the implications seem unreliable to me. Ondersma finds substantial local variation in procedure and practice, echoing over two decades of research on the disuniformity in the uniform U.S. system.

While the recommendation to repeal BAPCPA was a bit tired (I bet 75% or more of consumer bankruptcy scholarship since 2005 has the same thing), I found the discussion of building walls between the bankruptcy system and Homeland Security, similar to the approach used in the tax context, to be very thought provoking.