The January 20, 2012 New York Times article titled “Blacks Face Bias in Bankruptcy, Study Suggests”

reports on a soon-to-be-released study showing significant disparities in the treatment of white versus

 black clients facing bankruptcy. The study’s reported results are disturbing but neither surprising nor

unexpected. African Americans continue to face major obstacles to succeeding economically in

America. A preponderance of data and studies demonstrate blacks continue to face unfair barriers

across the opportunity spectrum, from securing employment for which they are qualified and receiving

equal pay and promotions, to accessing mainstream banking products, including safe and affordable

mortgage credit. Now, it’s been documented that blacks also face bias in restructuring debt after a

 personal financial crisis.

The irony of this situation is, of

course, that blacks are more likely

to face financial crises directly as a

result of multiple barriers they face

accessing opportunities based solely

on their race. The study is reported

 

to have found that African Americans are twice as likely to be steered toward higher cost and less

sustainable Chapter 13 bankruptcy filings, versus lower cost and more effective Chapter 7 filings, even

when the financial characteristics of the clients are identical. This result parallels, for example, the

 propensity of blacks to have been steered toward high cost and unsustainable subprime mortgage loans

during the years leading up to the recent foreclosure crisis. Research from the Center for Responsible

Lending showed that in 2004 African Americans were more likely to receive subprime loans than

white borrowers, even when risk factors such as credit scores were taken into consideration. Not only

did that excessive peddling of reckless mortgage products to blacks result in their having experienced

foreclosures at a disproportionately higher rate than white borrowers, but also, blacks are over-

represented in the ranks of the long-term unemployed which has also grown as a result of the financial

crisis.

The article does not attribute overt and intentional discrimination to have been the cause of the biased

treatment of blacks. Rather the article suggests the unfair treatment may have been a result of subtle,

disparate actions based on the subconscious behavior of bankruptcy attorneys toward African

Americans. Yet this finding, while interesting, is in many ways inconsequential. The negative impact

of the biased treatment is the same whether or not it’s intentional; blacks are steered to the more

costly, yet less effective, legal route to preserve their wealth and rebuild their financial futures. A

recent study by the Pew Research Center shows that since the economic crisis began, people of color

have experienced an exceptional loss of assets, with the median net wealth of African Americans

having fallen by more than 50 percent since the economic crisis ensued. As a result, the inability of

 blacks to access fair treatment when attempting to restructure their debts is a particularly disturbing

reality since blacks are among the populations most in need of competent and fair bankruptcy

 protection.

In many ways, overt discrimination would be preferred to the more subtle and unconscious behavior

implied in the study since overt actions can be more easily identified and addressed. But a society in

which people err so significantly toward biased treatment of their clients that it becomes systemic and

statistically significant is a sad commentary on race relations in America today. This situation also

drives home the need to collect and make available more complete and timely data on a range of

 professional practices from financial services, including bankruptcy protection, to access to

employment, housing and more. Better data and information is the best way to monitor, understand

and resolve lingering vestiges of discrimination that continue to unfairly impede and undermine the

economic wellbeing and mobility of people of color in America.