(TUCSON, Ariz.) -- Racial disparities in bankruptcy filings last year show African-Americans are more likely to file for Chapter 13 bankruptcy than people from other races, says a new study.
The study, "Race, Attorney, Influence, and Bankruptcy Chapter Choice" was conducted by Jean Braucher of the James E. Rogers College of Law at the University of Arizona, Dov Cohen of the University of Illinois and Robert M. Lawless of the University of Illinois College of Law and is forthcoming in the Journal of Empirical Legal Studies.
The study discussed the two forms of bankruptcy, "The chief feature of a chapter 13 bankruptcy case is a plan under which the debtor must devote all of his or her disposable income to creditor repayment over a 3- to 5-year period. Chapter 7, in contrast, requires only that the debtor turn over all nonexempt assets, with over 90% of chapter 7 debtors having no assets to turn over."
Chapter 7 costs less than Chapter 13. The study showed that bankruptcy lawyers tended to suggest African-Americans file Chapter 13 bankruptcy while recommending Chapter 7 filing for white clients with a similar financial history.
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