While the overall number of people filing for federal bankruptcy protection decreased in 2011, African-Americans are twice as likely as whites to be steered into filing a costlier and more arduous form of bankruptcy by greedy attorneys, according to a revealing and disturbing new study released earlier this year by several national bankruptcy industry experts.

The comprehensive study, entitled “Race, Attorney Influence, and Bankruptcy Chapter Choice,” was co-written by Robert M. Lawless, a law professor and bankruptcy expert, and Dov Cohen, a psychology professor, both at the University of Illinois, and Jean Braucher, a law professor at the University of Arizona.

The 46-page report was released in January and notes that among the nearly 1.5 million bankruptcy petitions filed last year, nearly one-third of the cases were slotted for the more expensive and tedious Chapter 13 filing. A large percentage of those debtors in Chapter 13 are African-Americans, according to the study and various other sources.

The key component of a Chapter 13 bankruptcy filing and the subsequent proceeding is that a consumer’s debt is restructured so that a significant portion of their disposable income goes toward repaying a portion of the outstanding debt–including outstanding attorney fees and legal bills–for three to five years. In contrast, under a Chapter 7 filing, a consumer’s debts are essentially written off or discharged and a person can walk out of court virtually debt free.

The study also noted that lawyers are twice as likely to direct African-Americans into Chapter 13 than white debtors in similar dire financial situations. The survey highlighted the notion that Blacks had “good values” when they opted to file Chapter 13.

Add to the mix similar discriminatory and questionable practices in mortgage financing, predatory lending and higher interest rates on credit cards and consumer loans for minorities, all of which have all come under fire from various sources in recent months, and it should come as little surprise that bias in bankruptcy proceedings exists.

“We have always favored a direct and unflinching examination of the bankruptcy process in America and believe in fair play; we have no reservations about having tough questions posed about the practices of debtor’s attorneys,” said William Brewer, president of the National Association of Consumer Bankruptcy Attorneys in Washington, D.C.

“If fuller research indicated that there is an unfair disparity in how Americans are handled in bankruptcy, we will be the first party in line to propose necessary changes, remedy any such imbalance,” he added.

Brewer made his comments in a media release one day before “Race, Attorney Influence and Bankruptcy Chapter Choice” was released. He defended some debt attorneys, saying, “Bankruptcy attorneys are the first-line defenders for Americans who have been unemployed for long periods of time, crushed by crippling health care bills or trapped in the foreclosure crisis.”

In 2005, under former President George W. Bush, major revisions to the Bankruptcy Code were initiated. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made it more difficult for people to file for Chapter 7 and ultimately steered filers to Chapter 13, or wage earner’s bankruptcy. The law was designed in large part to protect major credit card companies, who had lobbied for years for changes in bankruptcy laws.

Next week, Part 2: Students and bankruptcy.