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Are African American consumers given poor bankruptcy advice?

Faced with serious financial problems, many Washington residents will look for relief. That relief may come in the form of a bankruptcy filing. As part of that process, consumers sit down with a bankruptcy attorney and go over the process to determine if bankruptcy is the best option for their needs, and which type of bankruptcy is most advantageous. According to a recently published report, not all consumers receive that level of advice.

The report looked at the bankruptcy services marketed to African American consumers in one southern state. According to some, black men and women who are struggling to pay their bills are at risk of falling victim to questionable legal "services" that provide no guidance through the bankruptcy process. In fact, many people found themselves in the middle of a Chapter 13 bankruptcy case with absolutely no understanding of the differences between Chapter 13 and Chapter 7.

Unsurprisingly, many of these cases never reached completion. Some individuals filed for bankruptcy over and over again. They did receive an immediate lessening of collections efforts, but when their cases were not completed, they were often right back where they started in terms of debt. Most of these services charged a flat fee up front, or offered to accept payments over time, requiring no up-front investment.

Some of these consumers could benefit from a Chapter 7 bankruptcy, and might have regained their financial footing once the process was complete. Instead of being counseled on their options and advised on a solid course of action, it appears that many African American consumers were sold an expensive quick fix solution, with no lasting benefit. For anyone in Washington who is considering filing for bankruptcy, it is important to understand that thorough and individualized consultations should be an expected part of that process.  

Source:, "How the Bankruptcy System Is Failing Black Americans", Paul Kiel and Hannah Fresques, Sept. 28, 2017

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