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If you’re interested in the research around how bankruptcy helps low-income Americans, here are seven articles you should reach. The articles discuss how bankruptcy improves credit scores, employment outcomes, and future earnings. They also mention how bankruptcy stops wage garnishment and serves as a lifeline for people trapped in a cycle of poverty.
Key takeaway: “For the past year, I’ve traveled the country trying to understand why bankruptcy often fails those it’s supposed to help. I analyzed millions of filings and interviewed dozens of judges, lawyers and people struggling with debt. The answer turns out to be simple: People are too broke to go bankrupt....Studies show clear benefits for those who successfully wipe out their debts, from higher credit scores to higher incomes. Moreover, this sort of targeted relief can help buoy the broader economy.”
Key takeaway: Chapter 7 filers on average increase labor supply by 12.3%.
Key takeaway: Millions of Americans see their wages garnished each year due to unsecured debts that would be wiped away in bankruptcy, immediately increasing salaries by up to 25 percent.
Key takeaway: 15-22% of American households would benefit from filing, which tells us tens of millions of Americans remain unserved in financial distress. This article remains the leading study on the market size for bankruptcy.
Key takeaway: “Both one and four quarters after bankruptcy, the credit scores of the individuals who go bankrupt are considerably higher than those of the newly insolvent who do not go bankrupt.” $200,000 is the approximate amount people with a low credit score will pay in interest and fees over the course of their lives. (MSN Money)
Key takeaway: People who cannot afford to file for bankruptcy “deal with persistent collection calls, go without healthcare, food, and utilities, lose homes and other property.”
Key takeaway: Black Americans struggling with debts are far less likely than their white peers to gain lasting relief from bankruptcy.