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Filing for bankruptcy is always a difficult process for an individual or family to endure. A recent study indicates that there is a large disparity between Chapter 13 bankruptcies filed by African-Americans versus Caucasians. Overall, a majority of personal bankruptcies are filed as Chapter 7, but this is not the case for African-Americans who more often declare Chapter 13 bankruptcy. Miami families facing the decision to file bankruptcy should be advised of all their options in order to make the best decision.

The study, scheduled for publication in the Journal of Empirical Legal Studies, found that African-Americans are twice as likely to file for Chapter 13 bankruptcy, as compared to their Caucasian counterparts. For those trying to clear their debt, Chapter 13 is usually considered to be more expensive and difficult option than Chapter 7 bankruptcy.

Overall, Chapter 7 filings are most successful in clearing personal debts. Nearly two-thirds of chapter 13 filings are not completed according to the established debt payment plan, which brings an indebted person back to where they started.

This is not to say that Chapter 13 filings are always inappropriate. In some cases, Chapter 13 is the best option for people to clear their debt, particularly if the individual wants to save their home from foreclosure.

One expert said that the results of this study are not shocking. Just as in other elements of personal finance, such as determining mortgage rates, African-Americans tend to face inequality.

Critics of the study results say that many of the factors that go into bankruptcy filings were not taken into consideration. However, one author of the study has indicated that they accounted for many things that could have skewed their results.

Whether or not the results of this study are indicative of some inherent bias against African-Americans, people facing a personal financial crisis should seek professional advice. The goal of any bankruptcy filing is to get a person back into good financial standing, so they can start over. Without the proper knowledge going into filing for bankruptcy, a person may be sent down the wrong path to regain financial security.

Source: The New York Times, “Blacks Face Bias in Bankruptcy, Study Suggests,” Tara Siegel Bernard, Jan. 20, 2012