'No money down' bankruptcies prevalent among the poor, minorities

"A new paper from a University of Illinois law professor who studies consumer credit issues examines the breakdown in access to justice among the poor and minorities in the bankruptcy system, from which about 1 million Americans will seek help this year.

A crucial decision for those filing for bankruptcy is whether to choose a traditional Chapter 7 bankruptcy, in which attorney's fees are paid upfront, or a Chapter 13 bankruptcy, in which attorneys charge more than double their usual Chapter 7 rates but allow clients to roll the fees into a three- to five-year debt repayment plan – thus requiring "no money down."
But attorneys are increasingly using the more expensive no money down option – a tactic that's used even more often with blacks than with whites, according to research co-written by Robert M. Lawless, the Max L. Rowe Professor of Law at Illinois..."

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