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Could small debt lead some African Americans to bankruptcy?

A recently published article looks at the issue of institutional racism and discusses the financial challenges faced by many African American families. According to the authors, black families in Arkansas and across the nation continue to suffer from disparities within the court system, which can lead to serious financial troubles. For some, bankruptcy is the most viable solution and can provide a chance to start anew and build a stronger financial foundation.

The article focuses on small debt, and how those seemingly minor financial obligations can snowball into serious financial straits. Small debts can include utility bills, traffic tickets or other accounts that hold a minimal balance. When an individual or family is unable to pay those expenses, the result can be a lawsuit intended to recover the past due amount. Statistics show that in communities where the population is predominantly black, judgments for small debts are more than 50 percent more common than in areas where the population is mostly white.

If a family is already struggling to make ends meet, a judgment can be devastating. Wage garnishment often follows, which leaves the family with even fewer resources to put toward living expenses. In the end, some families are left with little choice other than to seek bankruptcy protection to gain a measure of breathing room.

There can be no doubt that our nation has made considerable gains in regard to race relations and equality since the civil rights movement. That said, there is still plenty of work to be done. Court judgments concerning small debt offers a glimpse into the type of racism that remains in place, and can complicate financial matters for many families. In some cases, the best way to eliminate those debts and begin anew is to seek bankruptcy protection, an option that many Arkansas families have chosen.

Source: salon.com, "Small debt is destroying black lives: Institutional racism and the wealth gap America still refuses to acknowledge", Paul Kiel, Jan. 9, 2016

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