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Studies show unconscious racial bias in bankruptcy filings

The two primary forms of bankruptcy for Florida consumers are Chapter 7 and Chapter 13. Which one is filed under will depend on a variety of factors, including the person’s income and expenses and whether the person is employed. Although the factors that go into a bankruptcy filing do not have anything to do with the debtor’s race, multiple studies have shown that there is racial bias in bankruptcy cases.

At the 90th annual National Conference of Bankruptcy Judges, a panel of bankruptcy professionals discussed studies on bankruptcy filings by African American debtors. Studies conducted between 2007 and 2013 have found that African American debtors are much more likely than non-African American debtors to file for Chapter 13 bankruptcy instead of Chapter 7 bankruptcy.

While discussing the results of the studies, the members of the panel said that they do not believe that bankruptcy professionals are consciously racist when they make decisions. The panel members said that although bankruptcy professionals strive to make unbiased decisions, their decisions are still influenced by unconscious bias. The panel members advised bankruptcy professionals to avoid unconscious bias by slowing down their decision-making processes and gathering a lot of information about a debtor’s case before drawing any conclusions about it.

The Chapter 7 bankruptcy process is very different from the Chapter 13 bankruptcy process. In Chapter 7, a debtor’s non-exempt assets are liquidated to pay off creditors, and much of the remaining unsecured debt is discharged. Chapter 13 bankruptcy is a debt repayment plan that may last between three and five years. People who are not sure about their options may want to talk to an lawyer about their situation.

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