« A Change in Name and More | Main | Fair Lending Law Developments »

Apologies for Bankruptcy

posted by Bob Lawless

My colleague, Jennifer Robbennolt, and I have posted a paper to SSRN exploring apologies in the bankruptcy context. Jennifer has done some of the leading studies on apologies in different legal contexts. Contrary to the instincts of many lawyers, apologies tend to produce better outcomes for defendants. For example, victims who hear an apology are less likely to feel they need to invoke legal process and are generally more amenable to settlements. Researchers have demonstrated these effects in a variety of legal settings such as personal injury, professional malpractice, and criminal law. We wondered whether we would see similar effects in bankruptcy.

On one hand, there might be no reason to think that bankruptcy should be any different than the other legal contexts where apologies have been shown to have effects. On the other hand, the harm from bankruptcy is perhaps more diffuse than, say, the typical personal injury suit and involves a loss to a group of people. Also, in the bankruptcy context, the debtor would typically have to deliver the apology to a representative of the creditors such as a bankruptcy judge or trustee.

We developed an experimental vignette designed to present a close case for confirmation of a chapter 13 plan with the trustee objecting to confirmation for lack of good faith and for failure to devote all disposable income to repayment. The "below-median" income debtors had some expenses that were more sympathetic such as below-average household expenses and some expenses that were less sympathetic such as gym fees for preteen daughters who competed on a traveling gymnastics team. In one version of the vignette, the debtors' testimony at the confirmation hearing included an apology, and the other version had no apology at all.

We were able to ask 137 sitting bankruptcy judges how they would rule on the case as well as other questions about the scenario. The judges split approximately 40-60 against confirmation, suggesting we did construct a scenario on which professional judgment would differ. Interestingly, both sides were equally confident in their decisions.

We did not find a main effect of apology on the judges' decisions. We did find that the judges' perception of the debtors' remorse did affect the decisions, and the apology in turn affected how remorseful the judges perceived the debtors to be. In academic lingo, the effect of the apology was mediated through the perceptions of remorse. The debtors who apologized were seen as more remorseful and were more likely to have their chapter 13 plan confirmed. It is not necessarily inconsistent with the legal doctrine for bankruptcy judges to consider the remorse of chapter 13 debtors. The confirmation decision, after all, is partially a prediction about the future, and more remorseful debtors might expend more effort to make the plan payments.

There is more detail in the full paper, including the limitations of the research and the implications we see for social science research on apologies generally as well as for bankruptcy practice specifically. Our paper is hardly the final word on the subject of apologies in bankruptcy, but we hope it advances  knowledge a little bit further down the road. In addition to the self-serving goal of drawing some attention to our paper, the blog post allows us to say thank you to the bankruptcy judges who responded to our survey and made the work possible.


I read the paper waiting for a 341 to be called, so apologies if I'm not ready closely enough, but are the hypothetical debtors pro se? The fact pattern Appendix makes it sound like they don't have a lawyer. Also, do you think being pro se changes things for them?

A lawyer might have gotten testimony that the orthodontia was not merely cosmetic but that it had to be done while the daughter was still growing to prevent future problems with jaw alignment. A lawyer may have also - or even should have - told them to leave the gymnastics expense off schedule J and trusted to automatic wage deductions to force the client to stay on budget for 36 months.

A judge may also be more sympathetic to someone who is doing a chapter 13 on their own than they would be to a debtor whose lawyer "should know better" than to include extraneous expenses. I think it's probably easier for a judge to see overreaching - or a lawyer who can't say no to a client - and deny confirmation regardless of the debtor's apology if the debtor is represented.

You pose an interesting question about whether legal representation mattered. Of course, the point of the vignette was to be realistic enough while still leaving room for the experimental manipulation to have effect. If the law and facts point in a clear direction, an apology will not make a difference. Just as an apology will not ameliorate the legal consequences to a hardened felon who has committed a vicious crime, it is unlikely to ameliorate the application of bankruptcy doctrine to financially irresponsible debtors.

I absolutely agree with your thesis, apologies matter. My point, however, is that the context matters almost as much as the content. Criminals almost always apologize at sentencing; although, in part because a demonstration of remorse can help them under sentencing guidelines. The apology at sentencing is almost an art form.

In bankruptcy, I believe that context matters insofar as it is a question of lack of candor, abuse of the system, manipulating the system, or simple inexperience. The hypothetical debtors were not serial filers, and they had not made any false statements or omissions. In that context an apology probably gets much more traction than a chapter 7 debtor who tried to hide property from the trustee and is now facing a Section 727 denial of discharge or a chapter 13 debtor who is on their 3rd petition in a year.

Additionally, the issue of whether a debtor is pro se goes may affect their apology. Putting together a schedule J requires a little bit of "feel" for what a trustee will object to and what a judge will allow. Without the benefit of an attorney, a court could see a genuinely apologetic debtor who overreached on schedule J more deserving of sympathy and an order of confirmation than the same debtor who had an attorney that - in at least some judges' minds - should have known better than to overreach on the expenses.

The comments to this entry are closed.


Current Guests

Follow Us On Twitter

Like Us on Facebook

  • Like Us on Facebook

    By "Liking" us on Facebook, you will receive excerpts of our posts in your Facebook news feed. (If you change your mind, you can undo it later.) Note that this is different than "Liking" our Facebook page, although a "Like" in either place will get you Credit Slips post on your Facebook news feed.



  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless ([email protected]) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.