Stereotypes about race, responsibility persist in U.S. bankruptcy system: study

CHICAGO, Nov. 29 (Xinhua) -- Practitioners inside the bankruptcy system in the U.S. have little knowledge of the racial disparities that exist, relying instead on common stereotypes about race, responsibility and debt, a new research by University of Illinois (UI) experts in psychology and legal studies found.

The study has been published in the latest issue of the American Bankruptcy Law Journal.

The overrepresentation of blacks filing for Chapter 13 bankruptcy and the attendant lack of knowledge by consumer bankruptcy attorneys regarding the racial dimensions of the problem should be a major policy concern, said Robert Lawless, UI professor of Law.

To see how sensitive bankruptcy insiders were to racial disparities, the researchers sent surveys to a random national sample of consumer bankruptcy attorneys.

People filing for bankruptcy can file under either Chapter 7 or Chapter 13.

"There are advantages to each, but generally, Chapter 7 is considered cheaper and much more financially beneficial for someone who wants a fresh start," Lawless said.

Previous research showed that African-Americans are twice as likely to file Chapter 13 compared with whites, an occurrence that could not be explained by many other factors outside of race.

The new study showed that attorneys were also more likely to recommend Chapter 13 in a bankruptcy case when the hypothetical couple was named "Reggie and Latisha" as opposed to "Todd and Allison."

"We found that about 60 percent of consumer bankruptcy attorneys believed that whites were twice as likely to file Chapter 13 bankruptcy, when in reality it is actually blacks who are twice as likely to do so," Lawless said.

"Stereotypes can be quite powerful and can obscure huge patterns of how things actually are, especially if those patterns don't align with expectations," said co-author and UI psychology graduate student Faith Shin. "Attorneys likely hold common stereotypes about which groups are responsible and trustworthy, and that guides their beliefs about which groups file Chapter 13."

Another survey queried respondents who had little or no knowledge of the U.S. bankruptcy system but likely held common American stereotypes about which groups tended to be responsible or irresponsible, and their responses were slightly more accurate than the bankruptcy professionals, Lawless said.

The results have implications for general beliefs about how well insiders know their area of expertise, the researchers said. Enditem