New York Times Study Suggests Racial Bias in Chapter 13 Cases
A lot of factors are considered when helping a client choose what bankruptcy chapter to file. The New York Times published a story last week alleging that an unspoken factor considered by some bankruptcy attorneys is a client’s race. We’ll leave aside, for now, whether we think there’s any truth to the report and focus, instead, on what it suggests about the changing perception of chapter 13. As recently as 2005, the impression by many (including the drafters of the dramatic revisions to the bankruptcy code in that year) was that chapter 13 was where the wealthy belonged. Let the honest drywall hangers and cashiers file chapter 7 cases, but make the town dentist file chapter 13 and pay back a percentage of her debt. Of course both those scenarios happen, but to think of the two chapters only in that way has proved unrealistic. The reality of many bankruptcy cases is that middle class filers have the luxury of filing chapter 7 cases because they have managed to keep current on their house and car payments, while low income filers are forced to file chapter 13 cases because they have not. It has nothing to do with discrimination (at least around here) and everything to do with how much money a family has had to spread amongst their creditors. It’s one of those odd examples in life of when it is more expensive to be poor than rich.
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For more than 20 years, the Sasser Law Firm has been helping individuals and business owners sort through financial hardships to see the light at the end of the tunnel. Our North Carolina bankruptcy attorneys are all board-certified specialists, which means we have passed a complex exam, undergone a thorough peer review, and continue to earn legal education credits in this ever-evolving area of law.
