Study Suggests Black Women are Filing for Bankruptcy at Disproportionate Rates in the Pandemic

At the beginning of the COVID-19 pandemic, economic experts and commentators started to predict that a wave of bankruptcy filings would come months later as a result of job losses and business closures. By and large, that consumer bankruptcy wave has not come, largely due to government relief and stimulus plans that have allowed debtors to continue paying their bills even if their jobs have not returned. While the possibility of a coming bankruptcy wave is still looming when government relief ends, it is important to know that not all Americans have been able to stay afloat during the pandemic. Certain populations and demographics have been disproportionately affected financially by the pandemic and have in fact been filing for personal bankruptcy at much higher rates compared to others.

According to a recent article in Yahoo! Finance, Black women have been filing for consumer bankruptcy at much higher rates than other consumers, suggesting that structural racism and sexism may be resulting in significant financial struggles for certain people that are not necessarily being taken into account or emphasized in the broader pandemic discourse.

Bankruptcy Questionnaire Suggests Disproportionate Pandemic Impact

A bankruptcy questionnaire by Upsolve, the nonprofit bankruptcy startup, suggests that the pandemic and the resulting recession are having a disproportionate impact on Black women in the United States. The questionnaire asked for information from “17,000 low-income users over the past year,” and it revealed that “COVID-19 has pushed many to seek bankruptcy protection.” Yet not all of the low-income consumers who responded to the survey felt the same effects of the pandemic. According to University of Illinois bankruptcy professor Robert Lawless, “Black people are overrepresented in bankruptcy, and also Black women are especially overrepresented in bankruptcy.” The new information gathered by Upsolve demonstrates that the pandemic may be exposing and exacerbating existing structural inequalities.

Recognizing that bankruptcy is typically where consumers turn “only after exhausting all other options—including cutting back on necessities, selling or pawning possessions, and avoiding necessary medical care,” the fact that more Black women are filing for bankruptcy suggests that none of those other options are available. The data ultimately suggests that the COVID-19 emergency has taken an enormous toll on Black women in particular. As Upsolve co-founder and CEO Rohan Pavuluri explained, “it makes sense that more people are saying COVID-19 is their main reason for filing, but that number has increased for Black women at a higher rate than white women,” and “those are jarring statistics.”

Reasons for Disproportionate Bankruptcy Filings Based on Race and Gender

Why are more Black women filing for bankruptcy during the pandemic? The article suggests a number of possible reasons:
  • Black workers, much more than white workers, do not tend to have jobs that allow them to work remotely, meaning that many Black workers may have been forced to choose between their personal health and their financial well-being;
  • Unemployment rates for Black workers have decreased at lower rates than for other workers;
  • Income and wealth gaps, resulting from structural racism in the U.S., means that Black Americans tend to have less wealth and security than white Americans; and
  • Women in general earn less than men, and Black women earn substantially less, with the wage gap rising during the COVID-19 pandemic.
Seek Advice From an Oak Park Bankruptcy Lawyer

If you need help managing debt and have questions about consumer bankruptcy, one of our experienced Oak Park bankruptcy attorneys can speak with you about your options. Contact the Emerson Law Firm today to learn more.



See Related Blog Posts:

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