An increasing number of people are turning to bankruptcy for a fresh start, but many are leaving themselves susceptible to more debt by opting for a Chapter 13 protection, which has a high failure rate.
Freeman Hess sits at the dining room table in his brick bungalow in Roseland on Chicago’s South Side. At 78, his gray hair is thin and fuzzy, like the coating of a peach, but his arms are muscular. He hasn’t lost the physical strength he acquired from operating a forklift for Cook County for 43 years. But in all his years of work, starting off picking cotton in Brownsville, Tenn., and coming to Chicago for better opportunities, he never imagined retirement being so stressful.
“I manage,” says Hess, his jaw tense. “But sometimes I just don’t have the money to pay my bills. They are taking it all.”
“They” is a collection of people—his lawyers, his creditors and the bankruptcy trustee. Hess filed for bankruptcy two years ago, and ever since, he’s been paying $1,090 a month, the majority of his income, to try and get rid of his debt, with two more years to go.
With the economic downturn, many Cook County residents are facing a similar situation: less money coming in, and more bills than they can handle. And more people, like Hess, are turning to bankruptcy for relief.
But many, particularly those in black communities, have been filing Chapter 13 bankruptcy, which carries a high risk of failure, leaving themselves vulnerable to end up with yet another mountain of debt, instead of a fresh start.
According to new data supplied to The Chicago Reporter by the Chicago-based Woodstock Institute, nearly a third of all bankruptcies in Cook County were filed under Chapter 13. Among filers living in communities where African Americans made up more than 80 percent of the population, the rate was much higher, with nearly a half of bankruptcies filed under Chapter 13.