The Color of Debt: How Collection Suits Squeeze Black Neighborhoods

By: Paul Kiel and Annie Waldman. Published by ProPublica. Published August 15, 2015.

Link to article

Two investigative journalists for ProPublica analyzed debt in collections by neighborhood tract. They find that debt is concentrated in neighborhoods that are majority black and that the average balance for which a balance was sued varies by race; white residents were sued for higher amounts, suggesting that they are better able to resolve smaller debts.

Highlights include:

  • “In fact, when ProPublica attempted to measure, for the first time, the prevalence of judgments stemming from these suits, a clear pattern emerged: they were massed in black neighborhoods.”
  • “The disparity was not merely because black families earn less than white families. Our analysis of five years of court judgments from three metropolitan areas — St. Louis, Chicago and Newark — showed that even accounting for income, the rate of judgments was twice as high in mostly black neighborhoods as it was in mostly white ones.”
  • “These findings could suggest racial bias by lenders or collectors. But we found that there is another explanation: That generations of discrimination have left black families with grossly fewer resources to draw on when they come under financial pressure.”
  • “ProPublica’s analysis of court data for Newark and Chicago found that the debts that led to suits in mostly black neighborhoods were, on average, about 20 to 25 percent smaller than the debts of residents of mostly white ones.bIn the Newark area, for instance, when a company sued a resident of a middle-income white neighborhood, the average balance was $3,466; in a black neighborhood, the average was $2,628.”
  • “This suggests white consumers are, in general, better able to resolve smaller debts.”


Categories: Consumer, Consumer/finance, Legal Aid Practitioners, News Media, Policymakers and Funders, Researchers and Academics, State Comparison, Victims of Crime

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