Abstract: We document a persistent Black-white gap in personal bankruptcy outcomes. Using preliminary bankruptcy outcomes data from three states while we process new national data, we replicate earlier findings that Black filers are more likely to have their bankruptcy cases dismissed without any debt relief. We further show that these disparities hold even conditional on a wide array of individual characteristics observable on bankruptcy filings. After assembling a dataset covering personal bankruptcy filings along with imputed filer, judge, trustee, and attorney race, we uncover strong evidence for racial bias driven by homophily: Black filer court outcomes are less favorable when randomly assigned to a white bankruptcy trustee. There is also moderately strong evidence for the importance of bankruptcy trustees—court employees randomly assigned to oversee each bankruptcy case.

Bio: Sasha Indarte is an Assistant Professor of Finance at the Wharton School of the University of Pennsylvania. Her primary areas of research are household finance, banking, and macroeconomics. Her research investigates the causes and consequences of financial distress using big data, quasi-experimental research designs, and structural economic models. Her current research focuses on the drivers of personal bankruptcy, racial disparities in personal bankruptcy, and the impact of social insurance on household debt. Recently, her project “The Origins of Serial Sovereign Default” was awarded an NSF grant. She completed her PhD in Economics at Northwestern University in 2019 and her BA in Economics and Applied Mathematics & Statistics at Macalester College.