  This paper shows that black and Hispanic borrowers are 39% more likely to
experience a debt collection judgment than white borrowers, even after
controlling for credit scores and other relevant credit attributes. The racial
gap in judgments is more pronounced in areas with a high density of payday
lenders, a high share of income-less households, and low levels of tertiary
education. State-level measures of racial discrimination cannot explain the
judgment gap, nor can neighborhood-level differences in the previous share of
contested judgments or cases with attorney representation. A
back-of-the-envelope calculation suggests that closing the racial wealth gap
could significantly reduce the racial disparity in debt collection judgments.
