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Race and Chapter 13

posted by Bob Lawless

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.


"We make fun of Methodists for their blandness, their excessive calm, their fear of giving offense, their lack of speed, and also for their secret fondness for macaroni and cheese."
- Garrison Keillor

Bob, I read the study this morning and have some observations. First, I think using A.M.E. and U.M.C. was a false equivalency and thus a faulty assumption for resolving the equivocal results of Study 1. You would be very hard-pressed to attend services in both churches and assert that there is a religious and cultural equivalency.

Second, I read Figure 1 on page 24 as indicating that the data show that, absent any stated preference, bankruptcy attorneys recommend 13 at essentially an identical rate for African-American (36%), white (37%), and control (40%). This seems very significant to me and I'm not sure the paper discusses the discrepancy between default attorney recommendations when there is no stated preference and when there is a stated preference. Wouldn't you expect a racial bias to be projected onto a blank screen?

Your analysis does treat the issue of attorneys second-guessing client preference. White United Methodists choosing 13 are second-guessed at roughly the same rate as African Methodists choosing 7. I think there is an interesting question here, but I'm not sure the authors have adequately corrected for reasonable perceptions of religiosity and culture based on persons with two very different modes of worship. The "bland" UMC variety Keillor gently pokes fun at (and happens to belong to) is quite different from the AME variety.

This isn't to say that the possible racial disparity suggested by research into aggegate filing data isn't worth looking into. Clearly it is.

Professor Lawless, here is the other interesting angle--"the whites are more likely to get their chapter 13 plan confirmed than the blacks!"

Chapter 13 Trustee demands more rigorous evidence from people of color, regarding the debtor ability to sustain a chapter 13 plan than they would ask of the white debtors. Whites are more relied upon faster by the judges at the time of confirmation of plan then the blacks or people of color.

Race is an interesting spectrum of civilization, which is still at a very primitive stage--inbuilt race aversions or comfort levels is quite visible in court here at least in New York.

Come to EDNY, Bankruptcy Court, you will find interesting pattern of race on all fronts!

A chapter 13 trustee plays pivotal role. Rather than study each debtor separately, why don't you pick up a study of these trustee that would reveal more. To make it more colorful, study Chapter 7 Trustees, they are a breed in themselves--how they value and examine debtor--race plays big time there.

I have never considered or heard anyone mention race in deciding which Chapter to recommend to a client. Frankly, this whole thing sounds like just more "proof" of racism imagined by race obsessed lefties. By the way, this week I have filed Chapter 13s for white, black and asian clients (no jehovah's witness hispanics though).

I am not going to comment on the methodology behind the study, which I have not read, but I confess to being mystified why any lawyer would ever "recommend" chapter 13 over chapter 7. Is that seriously what happened? I could see someone saying, "you don't qualify for 7, you're going to be forced into 13", although it seems less likely for African-Americans. I wouldn't call that a "recommendation", but "analysis" and "advice" as to what the law requires, as opposed to what choice a client who has a choice should make. But to "recommend" a 13 for someone who is eligible for a 7 would seem to be malpractice.

I see a colossal gap in this analysis. Where is the detailed study of 7 vs. 13 on the part of deaf
lesbian Eskimos?

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