Post on 03-Apr-2018
7/28/2019 BK Apologies
1/29Electronic copy available at: http://ssrn.com/abstract=2208811
BankruptApologiesJenniferK.Robbennolt
UniversityofIllinois
RobertM.Lawless
UniversityofIllinois
AbstractApologies result in better outcomes for wrongdoers in a variety of legal contexts.
Previousresearch,however,hasprimarilyaddressedsettings inwhichaclearvictimreceives
the apology. This research examines the influence of apologies on a different kind of legal
decisionthe decision of a bankruptcy judge to confirm or not to confirm a proposed
repaymentplan.Thisexpandsexaminationofapologiestoa legalsetting inwhichthere isno
clearvictimand todecisionsofaneutral (nonvictim)decisionmaker.We find thatjudges
assessments of debtors were influenced by apologies. These assessments, in turn, affected
judgesconfirmationdecisions.
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BankruptApologiesJenniferK.Robbennolt
UniversityofIllinois
RobertM.Lawless
UniversityofIllinois*
I.IntroductionInmosteverycountry,filingbankruptcyisapublicactpossiblybecausemanypersons
seebankruptcyasapublicwrong.Whenaconsumerfilesbankruptcysheessentiallysaystothe
world,Myfinancialsituation ishopeless,andIwillbebreakingpromisesthat Imade tomy
creditors. Using a sample of U.S.bankruptcyjudges, this paper asks whether abankrupt
consumerimproveshersituationbyapologizingforbreachingherpromises.Inthecontextofa
particular U.S. consumer bankruptcy proceeding, we find an indirect effect of a debtors
apology onjudicial decisions, with apologies affecting perceptions of the debtor and those
perceptions influencing confirmationdecisionmaking.When our respondentjudgesbelieved
thatthedebtorwasmoreremorseful,theyweremorelikelytoapprovethedebtorsrepayment
planinbankruptcy.Thesefindingsprovideinsightintohowapologiesworkinthelegalcontext
moregenerallyaswellashavingpolicyimplicationsforthebankruptcysystem.
Contrary to the instinctsofmany lawyers,apologiescanoften improve financial (and
nonfinancial)outcomesfordefendants.Suchbenefitsstemfromtheattributionsthataremade
aboutaharmdoerwhoapologizes.Amongotherthings,apologizingharmdoersareperceived
to have acted less intentionally, are blamed less for their misdeeds, are thought to have
experiencedmoreregret,andarepredictedtobehavebetterinthefuturethanarewrongdoers
who do not apologize.1Accordingly, when a harmdoer apologizes, the injured party is less
*Addresscorrespondence toJenniferK.Robbennolt,UniversityofIllinoisCollegeofLaw,504E.PennsylvaniaAve.,
Champaign, IL61820;email:jrobbenn@illinois.edu.Robbennolt isProfessorofLawandPsychology,Universityof
Illinois.LawlessisProfessorofLaw,UniversityofIllinois.
WethankJosephDohertyforhishelpfulcommentsonapreviousversionofthispaperandparticipantsattheLaw&
SocietyConference(2012),theConferenceonEmpiricalLegalStudies(2012),theAmericanPsychologyLawSociety
annual meeting (2012), the European Association for Psychology and Law (2012), and a faculty workshop at theUniversityofKansasfortheirfeedback.Weareespeciallyappreciativetothemanysittingbankruptcyjudgeswho
tooktimeoutoftheirbusyscheduletofilloutoursurveyandhelpadvanceunderstandingofthelegalsystem.
1Seee.g.,JamesR.Davis&GreggJ.Gold,AnExaminationofEmotionalEmpathy,AttributionsofStability,andtheLinkBetween Perceived Remorse and Forgiveness, 50 PERSONALITY & INDIVIDUAL Differences 392 (2011); GreggJ. Gold &Bernard Weiner, Remorse, Confession, Group Identity, and ExpectanciesAbout Repeating a Transgression, 22 BASIC &APPLIEDPSYCHOL.291(2000);JenniferK.Robbennolt,ApologiesandSettlementLevers,3J.EMPIRICALLEGALSTUD.333(2006);StevenJ.Scher&JohnM.Darley,HowEffectiveAretheThingsPeopleSaytoApologize?EffectsoftheRealizationoftheApologySpeechAct,26PSYCHOLINGUISTIC RES.127(1997).
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2 BankruptApologieslikely to feel the need to involve an attorney2and more likely tobe amenable to settlement.3
Thesepotentialbenefitsofapologieshavebeendemonstratedacrossanumberoflegalsettings,
includinggeneralpersonalinjurycases,4professionalmalpractice,5criminallaw,6andlandlord
tenantdisputes.7
Theeffects
of
apologies
in
legal
contexts,
however,
have
primarily
been
explored
in
the
context of the negotiated settlement of a dispute between two parties. Prior research has
examinedsettings inwhichthere isadisputebetweenprivateparties(oradefendantandthe
state)and inwhich there isaclearvictim.Bankruptcypresentsadifferent legalcontextwith
implications forhowapologiesoperate.First,agroupofcreditorswilloftenshare thewrong
that flows from a bankruptcy filing, perhaps ameliorating the perception of wrongdoing
becausethereisnooneclearvictim.8Second,theharmdoerinitiatesabankruptcycase,andthe
filingofabankruptcypetitionmayitselfbeperceivedasanacceptanceofresponsibilitybythe
harmdoer.9The harm frombankruptcy the nonpayment of debt stems from the debtors
2KathleenMazoretal.,HealthPlanMembersViewsAboutDisclosureorMedicalErrors,140ANNALSOFINTERNALMED.409(2004).
3RussellKorobkin&ChrisGuthrie,PsychologicalBarrierstoLitigationSettlement:AnExperimentalApproach,93MICH.L.REV.107(1994);Robbennolt,supranote1.4Jennifer K. Robbennolt, Apologies and Legal Settlement:An Empirical Examination, 102 MICH. L. REV. 460 (2003);Robbennolt,supranote1.5KathleenMazoretal.,HealthPlanMembersViewsAboutDisclosureorMedicalErrors,140ANNALSOFINTERNALMED.409(2004);KathleenMazoretal.,MoreThanWords:PatientsViewsonApologyandDisclosureWhenThingsGoWronginCancerCare,PatientEduc&Couns.,Aug.8,2011(ArticleinPressDOI:10.1016/j.pec.2011.07.010); AmyB.Witmanetal.,HowDoPatientsWantPhysicianstoHandleMistakes?ASurveyofInternalMedicinePatientsinanAcademicSetting,156ARCHIVESOFINTERNALMED.2565(1996).
6Seee.g.,TheodoreEisenbergetal.,ButWasHeSorry?TheRoleofRemorseinCapitalSentencing,83CORNELLL.REV.1599(1998);ChrisKleinkeetal.,EvaluationofaRapistasaFunctionofExpressedIntentandRemorse,132J.SOC.PSYCHOL.525(1992);RandolphB.Pipes&MarciAlessi,RemorseandaPreviouslyPunishedOffenseinAssignmentofPunishmentand Estimated Likelihood of a Repeated Offense, 85 PSYCHOL. REP. 246 (1999). See also Stephanos Bibas & Richard A.Bierschback, Integrating Remorse andApology into Criminal Procedure, 114 YALE L.J. 101 (2004); CarrieJ. Petrucci,ApologyintheCriminalJusticeSetting:EvidenceforIncludingApologyasanAdditionalComponentintheLegalSystem,20BEHAV.SCI.&L.337(2002).
7RussellKorobkin&ChrisGuthrie,PsychologicalBarrierstoLitigationSettlement:AnExperimentalApproach,93MICH.L.REV.107(1994).
8 See generally, Karen E. Jenni & George Loewenstein, Explaining the Identifiable Victim Effect. 14 J. RISK &UNCERTAINTY235(1997).
9Previousresearchhasfoundthatoneofthekeyfeaturesofanapologytheelementthatdistinguishesanapology
fromotherwaysofaccountingforonesbehavior(suchasofferinganexcuseorajustification)istheacceptingof
responsibility for having caused harm. See e.g., Barry R. Schlenker & Michael F. Weigold, Interpersonal ProcessesInvolvingImpressionRegulationandManagement,43ANN.REV.PSYCHOL.133(1992);Robbennolt,supranote4;MarvinB.Scott&StanfordM.Lyman,Accounts,33AM.SOC.REV.46 (1968);seealsoMARTHAMINOW,BETWEENVENGEANCEANDFORGIVENESS115 (1998) (Fullacceptanceof responsibilityby thewrongdoer is thehallmarkofanapology.).
Although the U.S. Bankruptcy Code allows creditors to initiate involuntarybankruptcy cases against debtors, 11
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BankruptApologies 3financial condition, and debtors sometimes express the decision to file bankruptcy as an
owningup to theirfinancialcondition.Thus, itcouldbe that themoredispersedharmand
natureofvictimparticipationinbankruptcycaseswoulddampenanyeffectofanapology.
Ontheotherhand,itisnotclearwhybankruptcyshouldbeanydifferentthananyother
legalsettingwe
might
expect
that
apologies
have
similar
ameliorative
effects
across
settings.
Indeed,bankruptcy is often thought of as a rehabilitative system, one which entails some
considerationofhowwemightexpectthedebtortobehaveinthefuture.10Althoughthereisno
sectionoftheBankruptcyCodethatdirectsbankruptcyjudgestoconsideradebtorsapology,
there are situations in which a debtors remorse maybe relevant. For example, in chapter 7
proceedings,bankruptcyjudgescandismisscasesthatwouldbeanabuseofthebankruptcy
system.11Althoughin2005Congressincorporatedamathematicalformulaintothedefinitionof
abuse,12the formulaonlycreatesapresumption,andbankruptcyjudgesretaindiscretion in
determining whether a case constitutes abuse. More significantly, the U.S. Trustee and
chapter
7bankruptcy
trustees
have
even
greater
discretion
over
when
to
challenge
cases
as
abusive. Similarly, in considering whether to approve a repayment plan under chapter 13,
bankruptcyjudgesarespecificallydirectedtoconsiderthedebtorsgoodfaithinfilingthecase
initially and in crafting the proposed repayment plan. In addition,judges are to consider
whetherthedebtorwillbeabletomakethepaymentsundertheproposedplan.13Thedebtors
remorsewouldoftenberelevanttoboththeassessmentofgoodfaithandthepredictionabout
futurebehaviorastoplanpayments.
There is onenoteworthy featureof thebankruptcy system thatmakes it an especially
useful setting within which to study particular aspects ofhow apologies operate in the legal
context. Because the typical consumerbankruptcy filing offers the prospect of only a smallpercentagerecoveryonasmallclaim,14creditorsdonotactivelyparticipate inmostconsumer
bankruptcycases.Thus,inthebankruptcysetting,anyapologywouldusuallyhavetobegiven
to ajudge or abankruptcy trustee as a proxy for the creditor victims. This raises several
complications for apologies. First, as a general matter, psychological research in nonlegal
settings has found that third party observers respond differently to apologies than do the
U.S.C.303,involuntarycasesareexceedinglyrare,sorarethattheAdministrativeOfficeofU.S.Courtsnolonger
releasesstatisticsonthenumberofinvoluntarycasesfiledannually.
10E.g.,KARENGROSS,FAILUREANDFORGIVENESS(1999).1111U.S.C.707(a).
12Id.at707(b)(2).13Id.at1325(a)(6).14Over 90% of chapter 7 cases are no asset cases that result in zero recovery for creditors. DalieJimnez, TheDistributionofAssetsinConsumerChapter7Cases,83AM.BANKR.L.J.795(2009).Inanationalprobabilitysamplefrom2007,themeanproposedrepaymenttocreditorsinchapter13was28%ofthedebt.SeeJeanBraucher,DovCohen&RobertM.Lawless,Race,AttorneyInfluence,andBankruptcyChapterChoice,9J.EMPIRICALLEGALSTUD.393(2012).
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4 BankruptApologiesvictims of the harm. In particular, third party observers are not subject to the same social
constraintsasarevictimssocialnorms thatprescribe thatwhenonereceivesanapology the
proper response is to accept it. Thus, third parties havebeen found tobe more critical of
apologies.15
Inaddition,
research
has
found
that
attorneys
respond
differently
to
apologies
than
do
laypeople.Tobesure,laypeopleandattorneystendtounderstandthecontentofapologiesin
similar ways. But while apologies tend to make lay people more amenable to settlement,
apologies are more likely tobe seenby attorneys as admissions thatbolster theirbargaining
position.16Thus, it is possible thatbankruptcyjudges, as attorneys, mightbe less swayedby
apologies.
Thefewstudiesthathaveexaminedtheeffectsofapologiesonjudgeshavehadmixed
results. In a series of experimental studies conductedby Rachlinksi, Guthrie, and Wistrich,
judgeswerefoundtoberelativelyunaffectedbyapologiesofferedby litigants.17Incontrast,a
recent
experimental
study
of
labor
arbitrators
found
that
sincere
apologiesby
grievants
in
employmentcasesresultedinincreasedgrievantwinrates.18
Only one prior study has specifically examined the role of apologies in the decision
makingofbankruptcyjudges. Inthecontextofabroaderstudyonbankruptcyjudgesuseof
decisionmaking heuristics such asanchoring and framing, Rachlinski, Guthrie, and Wistrich
asked judges to assess a chapter 7 bankruptcy problem in which a bank objected to the
15Jane L. Risen & Thomas Gilovich, Target and Observer Differences in theAcceptance of QuestionableApologies, 92J.PERSONALITY &SOC.PSYCHOL.418(2007).
16JenniferK.Robbennolt,Attorneys,Apologies,andSettlementNegotiation,13HARV.NEGOT.L.REV.349(2008).SeealsoRussellKorobkin&ChrisGuthrie,Psychology,Economics,andSettlement:ANewLookattheRoleoftheLawyer,76TEX.L.REV.77(1997).
17JeffreyJ.Rachlinski,ChrisGuthrie,&AndrewWistrich,DoApologiesAffectTrialJudges,draft.18MicheleHoyman,LamontStallworth,&DavidKershaw,TheDecisionMakingofLaborArbitratorsinDisciplineandDischargeCasesWhereaGrievantOffersanApology:APolicyCapturingStudy,paperpresentedattheannualmeetingoftheMPSAAnnualNationalConference,May23,2009(N=180NationalAcademyofArbitratorsmembers).SeealsoDafnaEylonetal.,BeyondContractualInterpretation:BiasinArbitratorsCasePerceptionsandAwardRecommendations,21
J.ORG.BEHAV.513(2000);DanielJ.Kaspar&LamontE.Stallworth,TheImpactofaGrievantsOfferofApologyandtheDecisionMakingProcessofLaborArbitrators:ACaseAnalysis,17 HARV.NEGOT.L.REV.1 (2012).The researchon theeffectsofapologiesonjurordecisionmakingissimilarlymixed.Seee.g.,MarcT.Boccaccinietal.,IWanttoApologize,ButIDontWantEveryonetoKnow:APublicApologyasPretrialPublicityBetweenaCriminalandCivilCase,32LAW&PSYCHOL.REV.31(2008);BrianBornsteinetal.,TheEffectsofDefendantRemorseonMockJurorDecisionsinaMalpracticeCase,20BEHAV.SCI.&L.393(2002);KeithE.Niedermeieretal.,ExceptionstotheRule:TheEffectsofRemorse,Status,andGenderonDecisionMaking,31J.APPLIEDSOC.PSYCHOL.604(2001);ScottE.Sundby,TheCapitalJuryandAbsolution:TheIntersectionofTrialStrategy,Remorse,andtheDeathPenalty,83CORNELLL.REV.1557(1998).
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BankruptApologies 5discharge of a credit card debt the debtor had incurred while on a Cancun vacation.19 An
apologybythedebtordidnotaffectthejudgesdecisionsondischargeability.20
Tounderstand thisnullresult, it is important toexamine thedetailsof theRachlinski,
Guthrie,andWistrichstudy.Thejudgesweretoldthefollowingaboutthedebtors(Jareds)
decision:
Despitehisfinancialproblems,Jaredwasabletoobtainanewcreditcardwithacreditlimit
of $3000.Jared used the card tobook his trip. When he asked for time off, his employer
informedhimthathewouldbefiredifhetookaweekoffsoearlyinhisnewjob.Jaredwent
anyway.Whilethere,hegenerouslychargeddrinksandmealsforfriendsonhisnewcredit
card,maxingthecardoutatatotalof$2976,allofwhichwasrelatedtothetrip.Jaredargues
thatalthoughheknewhewasdeeplyindebt,hebelievedthathisnewjobwouldenablehim
torepaythedebt,ashehadinthepast.Heassertsthathehadneverconsideredbankruptcy
beforediscussinghissituationwiththecreditcounselor.21
Thejudges were instructed that thebank that had issued the credit card was opposing the
discharge, arguing thatJared never had any intention of repaying this debt and that it was
thereforenotdischargeableunder11U.S.C.523(a)(2)(A)(whichexceptsfromdischargeadebt
forfalsepretenses,afalserepresentation,oractualfraud).
Importantly,thestatutorysectioncitedinthefactpatternisconcerned,notaboutfraud
relatedtothedebtorsfinancialcondition,butratheraboutfraudrelatedtothedebtorsintenttorepay.22If a creditor can show the debtorobtained goods or services with an intention not to
repay, thengroundswouldexist to find thedebtnondischargeableundersection523.Sucha
showingisincrediblydifficultasanevidentiarymatter.Asexplainedbytheleadingbankruptcy
treatise,Thedebtorsinsolvencyorinabilitytopaydoesnotbyitselfprovideasufficientbasis
for inferring the debtors intent. A debtors honestbelief that a debt wouldbe repaid in the
future, even if in hindsight found to have been very unrealistic, negates any fraudulent
19JeffreyJ. Rachlinski, Chris Guthrie & Andrew Wistrich, Inside the BankruptcyJudgesMind, 86 B.U.L. REV. 1227(2006).
20Id.at1254.
21Id.at1264.
22Thenextpartofthestatutedealswithfalserepresentationsaboutthedebtorsfinancialconditionandrequiresthat
suchrepresentationshavebeeninwritingbeforetheyareactionablebyacreditor.11U.S.C.523(a)(2)(B).Although
therequirementofawritingmayseemcuriousatfirstblush, it is importanttorememberthatbankruptcydebtors
alwaysarriveinbankruptcycourtinbadfinancialshape.Thewritingrequirementservesanevidentiarypurposeof
filteringoutweakclaims that thedebtor falsely representedhisorher financialcondition.The factpattern in the
Rachlinski,Guthrie&Wistrichstudydidnotmentionawrittenrepresentationoffinancialconditionanddirectedthe
bankruptcyjudgestothesectiondealingwithintenttorepay.
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6 BankruptApologiesintent.23Theonlyevidenceoffered inthefactpattern isthatthedebtorhadamistakenbelief
abouthisabilitytorepayandindeeddidnotconsiderbankruptcyuntilafterincurringthedebt.
Thehypotheticalcreditoroffersnoevidencetocontradictthedebtorsexplanationofhismental
state at the time the debt was incurred. Given the evidence, the creditorsburden, and the
governinglaw,
the
debtor
would
seem
to
have
astrong
chance
of
winning
the
case.
Curiously,however, thedebtor faresverypoorlyamong therespondents.Acrossboth
the apology and no apology conditions, 75.7% of the bankruptcy judges said they were
somewhat unlikely, unlikely, or very unlikely to discharge the credit card debt. There
was virtually no effect of the apology (75.9% discharged in the apology condition vs. 75.4%
dischargedinthenonapologycondition).Becausewedofindaneffectfromanapologyusinga
hypotheticalvignettewithbankruptcyjudges,thedifferencebetweenthetwostudiesfindings
merits further discussion. The high rate of nondischarge and null result in the Rachlinski,
Guthrie&Wistrichstudymayreflectthewaythatspecialistjudgesreactedtoaquestionnaire
thatused
anontechnical
presentation
and
nontechnical
wording.
First,Rachlinski,Guthrie&Wistrichaskedrespondents,WouldyoudischargeJareds
debtforhisCancunvacation,andweregivenoptionsrangingfromverylikelytodischarge
toveryunlikelytodischarge.24Thequestionandresponseoptions,however,asksomething
different than what would be asked in a bankruptcy proceeding. The Bankruptcy Code
statutorilydischargesallofabankruptcy filersprebankruptcydebts.An individualcreditor
canbringa lawsuitwithinabankruptcycase,knownasanadversaryproceeding,toobjectto
the dischargeability of a particular debt. Section 523 lists twentyone separate grounds for
nondischargeability,oneofwhichisthereasonatissuehereadebtincurredwithafraudulent
intent to repay. Thejudges role is only to determine whether the creditor has satisfied itsburden of showing the appropriate elements of section 523. If thejudge determines that the
elementsofsection523arenotpresent,thedebtisautomaticallydischarged.Thejudgehasno
discretiontodenythedebtsdischargeonsomegeneralprinciple,andthejudgesviewsabout
theappropriatenessofdischargingthedebtarenotlegallyrelevant.Yet,theRachlinski,Guthrie
&Wistrichpaperasks itsrespondents if theywoulddischarge thedebt,nothow theywould
ruleintheadversaryproceeding.Indeed,thequestionitselfmayhavebeenconfusingtothese
expert respondents. To answer the question as posed, abankruptcy specialist would have to
translate the question in her mind. If she thought the adversary proceeding objecting to
dischargeabilitywasveryunlikelytobesuccessful,thenshewouldneedtoanswerthatthedebtwasverylikelytobedischarged.Itispossiblethatthehighrateofnondischargeability
reflectsthisconfusion.
234COLLIERONBANKRUPTCY523.08[1][d](16thed.2012).
24Rachlinski,Guthrie&Wistrich,supranote19,at1265.
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BankruptApologies 7Thequestionnairealsousesnonspecialistlanguageindescribingthecreditorsclaim.It
citessection523(a)(2)(A)innotingthecreditormaintainsthedebtwasincurredbyfraud.Inthe
same sentence, however, the questionnaire states the creditor is opposing the discharge. A
bankruptcy specialist would understand the phrase opposing the discharge to refer to an
objectionto
the
discharge
of
all
debts
under
section
727,
not
just
one
debt
under
section
523
for
whichtheworddischargeabilityisgenerallyused.Althoughthisdifferenceinphrasingmay
seem like a minor quibble, thejuxtaposition of these twodisparate concepts in one sentence
along with the other signals in the questionnaire might have suggested to the specialist
respondentsthatthequestionnairewasnotlookingfortheirexpertopinionbuttheirpersonal
viewsondischarging thisparticulardebt.Thedebtor,Jared, isnotaparticularlysympathetic
character,havingrunupacreditcardbillforavacationmanypeoplewouldnothavetaken.If
thequestionwasunderstoodasbeingupto therespondents individualsenseofjustice, then
the low rate of discharge would notbe particularly surprising.25Overall, the questionnaires
nontechnicalpresentation
makes
itdifficult
to
ascribe
meaning
to
the
null
result.
Inthisstudy,weworkwithapoolofrespondentpooloffederalbankruptcyjudgesand
endeavor to construct a fact pattern with verisimilitude to thejudges everyday experiences
such that an apology would have room to affect thejudges discretion. Part II of this paper
continueswithadescriptionofourmethodologyandthefactpatternweused,whichpresented
judgeswithamarriedcoupleseekingcourtapprovaloftheirproposedchapter13repayment
plan.Judgeswerepresentedwithexperimentalconditionsinwhichthecoupleeitherdidordid
25The questionnaire also hints at the applicability of a statutory presumption not mentioned in the hypothetical.
Purchases of luxury goods or services aggregating more than $1,225 and incurred within 60 days of filing
bankruptcyarepresumed fraudulent.11U.S.C.523(a)(2)(C).At the timeof thesurveyadministration in2004, seeRachlinski,etal.,supranote19,at1231,thepresumptionaroseforamountsover$1,225andincurredwithin60daysoffiling.Sincethattime,theamounthasbeenloweredto$500andthetimeframeexpandedto90days.Althoughthe
timelineofthehypotheticalisnotentirelyclear,respondentsweretoldthattwomonthselapsedbetweenthedebtors
returnfromthetripthathadcreatedthedebtandthetimeatwhichthedebtorconsultedacreditcounselorandthen
(shortly thereafter) filedbankruptcy. The amount of the debt was $2,976. Thus, there appears tobe room for
respondents to conclude thatboth the timeframe and debt threshold were met for the statutory presumption to
apply.Ifthepresumptionapplies,thereis littleroomforjudicialdiscretion inthefactpattern,andthehighrateat
whichjudgesfoundthedebtnondischargeableisunderstandable.
Giventhestatutorypresumption,perhapsthemorecuriousresultisthat24.3%ofthebankruptcyjudgessaidthey
were somewhat likely, likely, or very likely to discharge the debt. We can think of three reasons why a
bankruptcyjudgemightstilldischargethedebtdespitethestatutorypresumption.First,apermissibleinterpretation
of thehypotheticals timeline is that thebankruptcy filingoccurredjustafter the expirationof the 60day period.Second, expert bankruptcy judges may have responded to a survey from nonexperts by assuming that the
researchers were not asking about the applicability of the presumption that was not cited in the factpattern. Seegenerally NORBERT SCHWARTZ, COGNITION AND COMMUNICATION:JUDGMENTAL BIASES, RESEARCH METHODS, AND THE
LOGICOFCONVERSATION (1996). Third, the statutory presumption canbe overcome. In the fact pattern, the debtor
testified he did not contemplate filingbankruptcy until after incurring the debt, and a few cases suggest such
testimonycanbeevidencenegatingthepresumption,seeBankOneColumbusv.Fulginit(InreFulginiti),201B.R.730(Bankr.E.D.Pa.1996);SearsRoebuck&Co.v.Johannsen,(InreJohannsen),160B.R.328(Bankr.W.D.Wis.1993);J.C.PenneyCo.v.Leaird(InreLeaird),106B.R.177(Bankr.E.D.Wis.1989).
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8 BankruptApologiesnotofferanapology.PartIIIpresentsourresults.Wefindnosimplemaineffectoftheapology
onthelikelihoodthejudgewouldapprovetheplan.Wedo,however,findanindirecteffectof
thedebtorsapologyonthe likelihoodthatajudgewouldapprovetheplan,withtheeffectof
apologyonconfirmationmediatedby thejudgesperceptionof thedebtorsremorse.Part IV
concludes
and
offers
some
thoughts
on
what
our
findings
mean
for
the
administration
of
bankruptcycasesaswellasforthebroaderpsychology literatureon theeffectofapologies in
differentlegalcontexts.
II.MethodWe administered the survey instrument to 137bankruptcyjudges, either as part of a
judicialeducationseminarthatoccurredinthefallof2010oronlineintheearlypartof2011.In
2010,therewere337activebankruptcyjudgesandanother29seniorjudgesstillhearingcases
onrecallstatus.Thus,approximately37.4%ofallbankruptcyjudgesrespondedtooursurvey.
Eachjudge
was
asked
to
make
adecision
in
arealistic
chapter
13
bankruptcy
problem
involving a married couple who had filed bankruptcy. 26 To understand the problem, the
research design, and thejudges responses, abasic understanding of thebankruptcy law the
judgeshadtoapplyisneeded.
Most every consumer considering bankruptcy must choose between chapter 7
bankruptcyandchapter13bankruptcy.Achapter7bankruptcyrequiresthedebtortoturnover
anyassetsnotexemptedby lawornotfullyencumberedbyalien.Abankruptcytrusteesells
theseassetsanddistributes theproceeds tocreditors. Inpractice,very fewconsumerdebtors
haveanyassetstodistributeanddonotevenseetheinsideofacourtroom.Formostconsumer
debtors, chapter 7 resembles a very quick administrative proceeding where a discharge ofindebtedness comes within a few months after the filing of forms and a meeting with a
bankruptcytrustee.
Chapter13,incontrast,requiresadebtortodevoteallofhisorherdisposableincometo
repaymentofcreditorsoverathree tofiveyearperiod.Becausechapter13leavesthedebtors
assetsinplaceandcontemplatesrepaymentoutofthedebtorsfutureincome,itcanbeauseful
toolfordebtorsseekingtoprotectavaluableasset.Byfarthemostcommonuseofchapter13is
to protect the debtors residence. We chose to present thejudges a fact pattern representing
issues in chapter 13because the terms of the repayment plan can present legal issues over
whichajudgemightbeabletoexerciseconsiderablediscretion,thusprovidingacontextwithinwhichanapologybythedebtormightinfluencedecisionmaking.Thefactpatternwasloosely
designed on a problem from a leading lawschoolbankruptcy textbook intended to present
studentswithtoughissuesrelatedtoconfirmationofachapter13plan.27
26Indeed,onejudgecommentedthatthescenariopresentedwasalltooreal.
27ELIZABETHWARREN&JAYLAWRENCEWESTBROOK,THELAWOFDEBTORSANDCREDITORS324(6thed.2009).
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BankruptApologies 9Inourfactscenario,amarriedcouplewithtwodaughters(ages10and13)hasaskedthe
judge to approve (or confirm inbankruptcy parlance) a chapter 13 repayment plan. The
couple was described as having modest debts and assets. They had a $180,000 home with a
$1,200mortgagepaymentanda$26,000automobilewitha$550carpayment.Thecouplehad
$25,500
in
credit
card
debts,
some
of
which
was
incurred
for
a
reason
that
would
likelybe
viewed more sympathetically (the husbands medical expenses) and some of which was
incurredforareason thatwould likelybeviewedwithmoreskepticism(avacation).Thefull
factpatternisreproducedintheAppendix.
The respondentswere told that thechapter13 trustee,aprivateattorneyhiredby the
DepartmentofJustice tosupervisechapter13cases,hadobjectedto theplanfor lackofgood
faithandforfailuretodevoteallofthedebtorsdisposableincometorepaymentasrequiredby
theBankruptcyCode.28Therespondentsweretoldthatacourthearinghadtakenplaceatwhich
thedebtorstestified,thusgivingaplausiblecontextinwhichthedebtorsmightapologize.The
factpattern
also
told
the
respondents
that
the
debtors
were
below
median
income
debtors,
meaningtheywerebelowthemedianincomeforahouseholdoftheirsizeintheirstate.Fora
bankruptcy specialist, the debtors income status wouldbe crucial as different rules apply
dependingonwhetherthedebtorisaboveorbelowthemedianincome.
Importantlyforourresearchdesign,theBankruptcyCodespecifiesaflexiblecalculation
to determine disposable income for belowmedianincome debtors. Under this flexible
calculation, disposable income is simply the debtors income minus amounts reasonably
necessaryforthedebtorshouseholdexpenses,charitablecontributionsupto15%of income,
andbusinessexpenses(ifthedebtoroperatesabusiness).29Therespondentsweretoldthatthe
debtorsbankruptcyschedulesshowed$3,420inmonthlypayments(includingpaymentsonthemortgageandcarloan)against$3,550inmonthlyincome.Thebalanceof$130permonthwould
allowarepaymentof18%ofthecreditcarddebtover5years.Thefactpatternfurtherspecified
that thecouplesclaimedmonthlyexpenses included$270permonth forgym fees, training
fees, and travel for the [couples] daughters who both compete as members of the local
gymnastics club and $250 per month for anticipated orthodontia treatment for the oldest
daughter.
Thus, the survey instrument presented several issues about which reasonablejudges
coulddiffer inassessingwhether theplanhadbeenproposed ingood faithandwhether the
debtorsexpenseswerereasonablynecessaryforsupportofthedebtorsortheirdependents.Respondents were randomly assigned to one of two versions of the survey. In one version,
2811U.S.C.1325(a)(3)requires,asaprerequisitetoconfirmation, thattheplanhasbeenproposedingoodfaithnot
by any means not forbiddenby law, while 11 U.S.C. 1325(b) requires the plan to devote all of the debtors
disposableincometorepaymentundertheplan.
29Id.1325(b)(2).
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10 BankruptApologiesrespondentswere told thedebtorsofferedanapology:Wehavenowayofkeepingupwith
ourbillsandrepayingeverything.Itisallwecandotopaythemortgageandkeepfoodonthe
table.Weknowthatweareresponsibleforthemesswearein.Wearetrulysorry.Intheother
version,thefinaltwosentenceswereomittedsuchthatnoapologywasoffered.
Weasked
our
respondents
whether
they
would
confirm
the
debtors
proposed
chapter
13 repayment plan and, on a scale of 1 to 7, how confident they were in their confirmation
decision.Inmakingtheirdecisions,thefollowingfactsshouldhavebeenthemostsalienttoour
respondents:
$550carpaymentonaoneyearoldautomobile $1,050inmonthlyhouseholdexpensesforutilities,foodandclothing,transportation,
andotherbasicneeds
$270inmonthlygymnasticsexpenses
$250in
anticipated
monthly
orthodontia
expenses
$4,000creditcarddebtfromavacation $9,000creditcarddebtfrommedicalexpenses
Respondentswereasked,onscalesof1to7,whethereachofthesefactsmadethemsignificantly
more likely or significantly less likely to confirm the proposed chapter 13 plan. Respondents
were also asked about their perceptions of the debtors and their situation: (1) the extent to
which the debtors were responsible for the financial situation, (2) the extent to which the
debtorshadacceptedresponsibilityfortheirbadfinancialsituation,(3)theextenttowhichthe
debtorsregrettedtheirspendingpatterns,(4)theseriousnessofthedebtorsfinancialdistress,(5) confidence in the debtors ability tobe careful in the future, (6) the extent to which the
debtors were realistic, (7) the extent to which the debtors were selfdisciplined, and (8) the
extent to which the debtors had good values. Variables were coded so that higher numbers
always indicate that respondents believed the debtors possessed more of the given
characteristic.
Because the respondents were sittingbankruptcyjudges, webelieved anonymity was
important to ensure a sufficient response rate. Extensive demographic questionseven
somethingassimpleasgenderwouldhavemadeitlikelythatindividualrespondentscould
be identified. Consequently, the only demographic information captured was the number ofyears a respondent hadbeen serving as abankruptcyjudge. Our respondents tended tobe
experiencedbankruptcyjudges.Themean(median)reportednumberofyearsonthebenchwas
13.45(11.00).Therewasasubstantialvariationinjudicialexperiencewiththebottom10%ofthe
judgesreportingexperienceof5yearsorlessexperienceandthetop10%reporting25yearsor
more.
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BankruptApologies 11III.FindingsA. DiscretioninConfirmationDecisionsTheconstructionofthescenariowassuccessfulinproducingdifferingopinionsamong
therespondentjudges.Acrossconditions,37.6%ofourrespondentsindicatedthattheywould
confirmtheproposedrepaymentplan,while62.4%indicatedthattheywouldnotconfirmthe
plan.Despitethedifficultyoftheproblem,judgeswerequiteconfidentintheirjudgment.Ona
scaleof1 to7 (with7beinghighlyconfident), themean levelofconfidencewas5.53and the
median was 6.30Figure 1 shows the confidence of thejudges responses interacted with their
confirmationdecisionwhere 7indicatesextremeconfidenceinadecisiontodenyconfirmation
and+7indicatesthesamelevelofconfidenceinadecisiontograntconfirmation.
Figure1.DecisiontoConfirmandConfidenceinDecisionTheresponsesof137bankruptcyjudgestoafactpatternaskingwhethertheywouldconfirmachapter13repayment
planaredisplayedbelow.Judgeswereaskedtoratetheirconfidenceintheirdecisiononascalefrom1to7.Judges
whowerethemostconfidentintheirdecisionnottoconfirmwererecodedasascoreof 7,andjudgeswhowerethe
mostconfidentinadecisiontograntconfirmationweregivenascoreof+7.Thefigureshowsthat,althoughjudges
differedintheiropinionsofwhetherconfirmationwasappropriateinthiscase,theytendedtobeconfidentintheir
owndecision.
30A variety of previous work explores the ways in which decisionsbecome more coherent and decision makers
becomemoreconfident in theirdecisionsonce theyhavemade them.Seee.g.,DanSimon,AThirdViewoftheBlackBox:CognitiveCoherenceinLegalDecisionMaking,71U.CHI.L.REV.511 (2004);MaraMatheretal.,MisremembranceofOptionsPast:SourceMonitoringandChoice,11PSYCHOL.SCI.132(2000).
0%
5%
10%
15%
20%
25%
7 6 5 4 3 2 1 1 2 3 4 5 6 7
decisionsto denyconfirmation decisionsto grantconfirmation
7/28/2019 BK Apologies
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12 BankruptApologiesB. MainEffect:Apology OutcomeJudges who heard an apology from the debtors were slightly more likely to grant
confirmationofthedebtorsplan(40.6%)thanjudgeswhodidnothearanapology(34.4%).This
differencewasnotsignificant,however,whetherconfirmationwasanalyzedasadichotomous
variable(2
=0.545,
p=0.460)
or
as
acontinuous
variable
on
ascale
from
7to
+7
(t(130)
=
0.942,
p=0.348;WilcoxonZ= 1.642,p=0.101).Thus,wedidnotfindasimplemaineffectfromthe
apologyontherespondentsdecisiontoconfirmthedebtorschapter13plan.
C. MediatedEffects:Apology Perceptions CaseOutcomeAlthough there was no simple main effect of apology on confirmation decisions, the
apology did affect the judges assessment of the debtors which in turn affected the case
outcome.Thus,we find that inourdata theeffectofanapologyonconfirmationdecisions is
indirect,mediatedthroughtherespondentsassessmentsofthedebtors.Focusingonlyonmain
effectswhileignoringmediatedeffectscanmissimportantcausalpathwaysforaphenomenon
under investigation.31This section explores several different analysesby which this mediated
effectofapologiesonbankruptcydecisionmakingcanbeseen.
The apology affected thejudges perception of the debtors along several dimensions.
When the debtors apologized, the respondents rated the debtors as having accepted more
responsibility(4.32(1.29)vs.3.64(1.33),t(130)=3.003,p=.003)aswellashavinggreaterregret
for their spendingpatterns (4.44 (1.29)vs.3.53 (1.37), t(129)=3.919,p
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BankruptApologies 13Figure2.EffectofApologyonRespondentsPerceptionsofDebtors
Perceptions of 137bankruptcyjudges about hypothetical debtors varied depending on whether thejudges were
givenafactscenariothatcontainedanapology.Inthefactscenario,amarriedcoupleaskedthejudgetoconfirma
chapter13repaymentplanovertheobjectionofthebankruptcytrustee.Judgeswereaskedtorate,on1to7scales,
thedegreetowhichthedebtorshadacceptedresponsibility,hadregretfortheirspendingpatterns,wouldtakemore
carewiththeirfinancesinthefuture,wererealistic,wereselfdisciplined,werepersonsofgoodvalues,hadcaused
theirownproblems,andhadseriousfinancialdistress.Asindicatedbytheasterisks,thefirsttwovariablesproduced
statisticallysignificantdifferencesatthe5%levelorless.Thethirdvariable,CareintheFuture,producedadifference
thatapproachedstatisticalsignificance(indicatedbythedagger).
Theeffectstriggeredbythedebtorsapologyareconsistentwiththeeffectsofapologies
foundinothercontexts.Althoughthedebtorsdeliveredtheirapologytothebankruptcyjudge
and not to the creditors who were actually harmed by the debtors conduct, the apology
neverthelessledtoanincreasedperceptionthatthedebtorhadacceptedresponsibilityandfelt
regret. Similarly, apologies seemed to have an effect on judges expectations about future
1
2
3
4
5
Accept
Resp.
Regret Carein
Future
Realistic Disci
plined
Good
Values
Caused
Own
Problems
Distress
Serious
ness
Apology NoApology
* *
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14 BankruptApologiesbehavioroneofthekey inferencesthattendstobedrawnfromapologies.33Theapologydid
not increase the respondents perceptions about the debtors along dimensions less closely
associatedwithapologies(beingrealistic,beingselfdisciplined,andhavinggoodvalues).
Conceptually, respondents perceptions of the debtors regret and acceptance of
responsibility
tap
into
similar
ideas.
Inboth
instances,
the
respondents
are
assessing
the
debtorspresentmental state regardingpastevents.Therefore,wecombined these two items
intoanindexwelabeledremorse(alpha=.713).Aswouldbeexpectedfromtherelationship
oftheindividualitemsinremorsetotheofferingofanapology,Remorseissignificantlyhigher
in the presence of an apology (4.34 (1.07) vs. 3.59 (1.21), t(128) = 3.778,p
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BankruptApologies 15realistic were more likely to confirm the proposed plan (46.4%) than were respondents who
believedthatthedebtorsweremoreunrealistic(22.0%)usingboththedichotomous, 2=6.149,
p=.013.andcontinuousmeasuresofconfirmation,t(93)=2.840,p=.006.Perceptionsofwhether
thedebtorsweredisciplined,orhadgoodvaluesdidnothaveanyeffecton theconfirmation
decision.36
Figure
3
displays
the
effects
of
these
differentjudgments
about
the
debtors
on
judgesconfirmationdecision.
Thus, theexistenceof anapologyaffected the respondentsperceptionof thedebtors
remorseandtheirexpectationsabouthowthedebtorwouldmanagetheirfinancesinthefuture.
Both of these sets of perceptions in turn were associated with a higher likelihood that the
proposedplanwouldbeconfirmed.
36Respondentswhomadeabovemedianevaluationsofwhetherthedebtorshadgoodvalueswerenomorelikelyto
confirmthechapter13plan(42%)thanrespondentsbelowthemedian(42.5%), 2
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16 BankruptApologiesFigure3.EffectofRespondentsPerceptionsofDebtorsonConfirmationDecision
Federalbankruptcyjudges(n=137)weregivenahypotheticalfactpatternaboutamarriedcouplewhowasasking
thejudge toconfirm theirchapter13plan.Thejudgeswereasked tomakeseveralassessmentsabout themarried
coupleon 1 to 7 scales.Thebar chart representsmedian splits onjudges assessments of the extent to which the
couplehadacceptedresponsibility,regrettedtheirspending,feltremorse(whichwasa2itemindexofthefirsttwo
items), would take greater care with their finances in the future, and were realistic. The yaxis represents the
percentageofrespondentswhosaidtheywouldconfirmthecoupleschapter13plan.Statisticalsignificanceatthe
5%levelorlessisindicatedbyasterisks.
We
used
structural
equation
models
to
test
the
indirect
effects
of
the
apology
on
confirmationdecisionsthroughtheseperceptionsofthedebtors.Wefoundanindirecteffectof
apology on confirmation decisions that is mediated through remorse. We first used the
dichotomous confirmation decision as the dependent variable. The model fit indices for this
modelweregood, 2=.01,p=.921,RMSEA
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BankruptApologies 17good, 2
7/28/2019 BK Apologies
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18 BankruptApologiesThe respondents were told that the couple had listed $1,050 as monthly household
expenses for utilities, food and clothing, transportation, and otherbasic needs. According to
data from the Consumer Bankruptcy Project (CBP), a national random sample of 2007
bankruptcyfilers,debtorshadamean(median)of$1,128($1,031)forsuchexpenses.39Ofcourse,
theamount
of
household
expenses
ishighly
dependent
on
the
debtors
income.
Using
asimple
linearregressionanalysisfromtheCBPdata,realworlddebtorswiththesame incomeasour
hypotheticalcouplewouldhavehadexpensesof$1,290,afigurewhichapproaches$1,400once
adjustedforthefouryearsofinflationbetweentheCBPdataandthetimeofoursurveys.Thus,
the hypothetical debtors household expenses are not excessive as compared to realworld
bankruptcyfilersandsuggestsomeleveloffrugality.Notsurprisingly,wewillseethatofthe
four expenses listed in the hypothetical our respondents reacted most favorably to the
householdexpenses.
Incomparison,weintendedthe$550carpaymenttobemoreimmoderatebutnotoverly
excessive.The
car
was
the
familys
only
vehicle
and
was
not
an
expensive
make
(a
Ford).
On
the
other hand, the car was a oneyear old sports utility vehicle (SUV), and a family looking to
economize probably could find less expensive options. Bankruptcy court files suggest most
debtors have cars that are seven years old or more.40The IRS Guidelines, whichbankruptcy
courts must use for abovemedian income debtors, would have allowed a $496 automobile
payment.41
The$250orthodontiaexpensefora13yearoldchildallowedtherespondentstoexercise
their discretion in different ways. On the one hand, some respondents might see this as a
discretionarymedicalexpenseoratleastasamedicaltreatmentthatcouldbeputoffuntilthe
couple had finished their repayment plan. Although someone new to the problems of theoverindebtedmightsee thepostponementofmedicaltreatmentasaseverehardship, it isnot
uncommon.TheCBPaskedbankruptcydebtorswhatthingstheyhadtodowithoutbecause
of affordability in the two years prior to filingbankruptcy. Of these realworldbankruptcy
debtors,57.6% reported theyhad togowithoutneededdentalcare,and36.9%reported they
hadtogowithoutneededmedicalcarefromadoctor.Ontheotherhand,respondentscouldsee
the orthodontia expense as a necessary medical treatment for a child and conclude that,
although many bankruptcy debtors may do without dental treatment, skipping a childs
39One of this papers authors (Lawless) participated in the 2007 CBP, and the data reported in the text are hiscalculationsfromthe2007CBPdata.Forafullmethodologyaswellasapresentationofthebasicfindingsfromthe
2007CBP,seeRobertM.Lawless,etal.,DidBankruptcyReformFail?:AnEmpiricalStudyofConsumerDebtors,82AM.BANKR.L.J.349(2008).
40 Bob Lawless, Cars in Bankruptcy, Credit Slips (Aug. 4, 2006) (available athttp://www.creditslips.org/creditslips/2006/08/cars_in_bankrup.html).
41ThefigureinthetextisfromtheIRSGuidelinesforthefallof2010,whichcanbefoundonthewebsiteoftheU.S.
TrusteeProgramattheDepartmentofJustice:http://www.justice.gov/ust/eo/bapcpa/meanstesting.htm.
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BankruptApologies 19orthodontiatopayacreditcardcompanyisnotsomethingajustbankruptcysystemwouldask
debtorstodo.
Thefinalexpensewas$270permonth forgym fees, training fees,andtravelfor the
couplesdaughterswhocompetedasmembersofthelocalgymnasticsclub.Weestimatedthe
amount
based
on
personal
experience
with
a
YMCA
club
in
the
Midwest
as
well
as
conversations withparents from theclubabout theirowncosts. Thecosts for the daughters
gymnasticsrepresentedalow tomidtieroptionandwerenotthetopoftheline.Also,this
proposed expenditure was not for the couple themselves but for the daughters, and
respondentscouldhaveviewed theexpenseasreflecting thecouplesgoodparenting.At the
same time, the gymnastics expense was clearly the least essential item among the debtors
expenses.Moreover, the$270monthlyexpense forgymnasticswasmore than twice the$130
monthlypaymentthedebtorswereproposingtosendtotheircreditors.
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20 BankruptApologiesFigure5.EffectofApologyonExpensesandEffectofExpensesonConfirmation
Bankruptcyjudges(n=137)wereaskedhowtheywouldruleontherequestofahypotheticalcoupletoconfirma
chapter13plan. Inoneversionofthesurvey instrument,thecoupleofferedanapology.Thefactpatternspecified
fourmonthlyexpensesthejudgescouldconsiderinreachingtheirdecision:$1,050inroutinehouseholdexpenses;a
$550carpayment,$250inorthodontiaforateenagedaughter,and$270forgymnasticsfeesfortwodaughters.Ona
scale of 1 to 7, respondents could identify whether each expense made them significantly less likely/significantly
more likely to confirm the chapter 13 plan. Panel A shows how thejudges responded on the 17 scalebased on
whetherthejudgeswereexposedtotheapology.Noneofthedifferencesarestatisticallysignificant.PanelBshows
therateatwhichjudgesconfirmedthechapter13repaymentplaydependingonhowtheyevaluatedeachexpense
(mediansplit).Statisticalsignificanceatthe5%levelorlessisshownbytheasterisks.Together,theresultsshowthat,
judges perceptions of the claimed expenses affected their confirmation decisions,but that the apology did not
directlyaffectthejudgesperceptionoftheseexpenses.
A.EffectofApologyonExpenses B.EffectofExpensesonConfirmation
1
2
3
4
5
6
House
holdExp.
Car
Pmt.
Ortho
dontia
Gym
nastics
Apology NoApology
0%
10%
20%
30%
40%
50%
60%
70%
80%
House
holdExp.
Car
Pmt.
Ortho
dontia
Gym
nastics
Abovemedian Belowmedian
* * *
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BankruptApologies 21Figure5showsourresults.Overall,judgesviewedtheroutinehouseholdexpensesmost
favorably(M=4.9)andthegymnasticsfeesleastfavorably(M=2.2),withthecarpayment(M=
3.6) and orthodontics costs (M = 3.9) in the middle. There was no effect of the apology on
judgesevaluationsofanyoftheclaimedexpenses.
Although
there
was
no
evidence
that
judges
perceptions
of
the
expenses
were
influenced by the apology, the claimed expenses were clearly important to the judges
confirmation decisions.Judges who had abovemedian views of the household expenses, the
orthodontia,andthegymnasticsfeesweresignificantlymorelikelytosaytheywouldconfirm
thedebtorsproposedchapter13plan.42Thisisperhapsnotsurprisingassuchexpensesare,of
course,directlyrelevanttothelegalstandardsforconfirmationofachapter13plan.Thelower
theexpenses, themoredebtorscanreturn tocreditors. In turn,debtorswhocanpaymore to
theirchapter13debtorsaremorelikelytobeconsideredtohaveproposedaplanthatisingood
faithandthatdevotesanappropriateamountoftheirdisposableincometocreditorrepayment.
Interestingly,
as
noted
above,
thejudges
reacted
most
negatively
to
the
gymnastics
expense,andtheirreactiontothisexpensewasaparticularlystrongindicatorofwhetherthey
would confirm the plan. Although the apology did not directly affect the how thejudges
perceived the gymnastics expense,judges perceptions of this expense were associated with
theirsenseofthedebtorsremorse.Judgeswhohadabovemedianperceptionsofthedebtors
remorseviewedthedebtorsgymnasticsexpensemorefavorably(2.54vs.1.90,t(102)=2.812,p=
.006).Theotherexpenseshadnosignificantrelationshipwithremorse.
IV.Implications,Recommendations,&ConclusionThisresearchexaminedthedecisionsofasetofdecisionmakersbankruptcyjudges
who are specialized and sophisticated. Thejudges were presented with a hypotheticalbut
realistic fact pattern involving a married couple who were asking thejudge to confirm their
proposedchapter13repaymentplan.Inoneversionofthefacts,themarriedcoupleapologized
for their financial problems.Judges were asked to indicate whether they would confirm the
proposed plan, to indicate their confidence in that decision, and to make a variety of
assessmentsofthedebtorsandtheirfinancialsituation.
Wefindthatapologiesinfluencejudicialconfirmationdecisionsindirectlythroughtheir
effect onjudges perceptions of the debtors. Specifically, debtors who apologize are seen as
more remorseful and are expected to more carefully manage their finances in the future ascompared todebtorswhodonotofferanapology.Theseperceptionsof thedebtors, in turn,
42Judgeswithabovemedianratingsofthehouseholdexpensessaidtheywouldconfirmtheplan57.9%ofthetime
comparedto21.9%ofthetimeforjudgeswithbelowmedianratings(2=17.640,p
7/28/2019 BK Apologies
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22 BankruptApologiesinfluence judges confirmation decisionsjudges were more likely to confirm a proposed
repaymentplanwhentheyperceivedthedebtorsasexperiencingmoreremorseandwhenthey
expectedthedebtorstomorecarefulwiththeirmoneygoingforward.
We also find that judges evaluations of the debtors claimed expenses were not
influencedby
apologies.
The
judges
evaluations
of
these
expenses,
however,
significantly
and
appropriately influenced their inclination to confirm or disconfirm the proposed plan. In
addition, perceptions of the expense that generated the most skepticism among thejudges
expenses related to the daughters gymnastics teamwere associated with the degree of
remorsejudges perceived the debtors as experiencing and were in turn strongly related to
whetherjudgesconfirmedtheproposedchapter13repaymentplan.
Thus,wefindthatapologieshaveeffectsonjudgesinbankruptcycasesthataresimilar
totheeffectsthatapologieshaveon individualsinavarietyofothercontextsandalsoextend
thisprevious research in importantways. Inparticular,debtorswhoapologizeareperceived
more
positively
and
experiencebetter
outcomes.
This
is
the
case
even
thoughbankruptcy
involvesaharmthatdifferssomewhatfromtheharmsinvolvedinmanyotherlegalsettings
that is, the harm inbankruptcy is directed toward a group of creditors and canbe, thus,
somewhat more diffuse. In addition, the specific harm involved in bankruptcy is the
nonpaymentofanobligation.Thisharmoccursbecausethedebtorlackstheresourcestopay.
Presumably, in most cases the debt would have gone unpaid even in the absence of a legal
declaration ofbankruptcy.Thus, the formaljudicial proceeding ofbankruptcycouldevenbe
seenasevidencingsometakingofresponsibilityfortheharmcaused. Thisisespeciallythecase
forachapter13bankruptcyproceedingbecause it involvessomerepayment tocreditors.The
apology in this case influenced judicial decision making over and above any signaling ofresponsibility taking that maybe inherent in the decision to file chapter13bankruptcy. This
finding is consistent with research that has found that the effects of apologies increase as
additionalcomponentsofapologiesareadded.43
Inaddition,apologiesinfluencedtheperceptionsanddecisionsofjudgesthirdparties
tothedisputeorthewrongatissueandactorswhoreceivetheapology,inasense,asproxies
fortheinjuredparties(thecreditors).Previousresearchhasfoundthatthirdpartiestendtobe
morecriticalofapologies44andwemighthaveexpectedjudgestobesuspiciousofthemotives
underlying an apology offered in this context. 45 Despite this likely skepticism, judges
perceptionswerepositivelyinfluencedbytheapology.
43Seee.g.,Scher&Darley,supranote1.44Risen&Gilovich,supranote15.
45SeeJenniferK.Robbennolt,TheEffectsofNegotiatedandDelegatedApologies inSettlementNegotiation,__L.&HUM.BEHAV.__(forthcoming).
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BankruptApologies 23Previousresearchhasexploredtheeffectsofapologiesonanothersetoflegallytrained
actorspracticingattorneysratherthanjudges.Thisresearchhasfoundthatapologiescanput
onewhoapologizesinaworsepositionintheeyesofanattorneyfortheotherside.46Butthere
are at least two distinctions that might explain why these two sets of legally trained actors
responddifferently
to
apologies.
First,
the
judges
in
this
study
were
acting
in
aneutral
capacity,
while the attorneys in the previous study were acting as partisan agents for their clients.
Second,thedecisiontobemadeinthisstudywasnotultimatelyadecisionaboutresponsibility,
butratheradecisionabouttheappropriatenessandlikelysuccessofplansgoingforward.
Inmanylegalcontexts,parties(andtheirlawyers)canbereluctanttoofferapologiesfor
fear that the apology willbe interpretedby opponents and factfinders as an admission of
responsibility, guilt, or liability. 47 While it remains to be seen whether and under what
circumstances apologies adversely affect legal decisions involving guilt or liability, 48 the
bankruptcycontextoffersaglimpseofhowapologiesoperateinadifferentlegalenvironment.
Inparticular,
(absent
bad
faith)
the
focus
in
bankruptcy
isless
on
the
debtors
responsibility
for
having incurred the debt (such responsibility typicallybeing clear) andmoreonhow tobest
allowcreditors torecoverat leastsomeoftheir losseswhileallowingthedebtora freshstart.
Thus,theplanconfirmationdecisionmorecloselyresemblesasentencingdecisioninthatithas
atleastoneeyeonthefuture.And,indeed,ourfindingsareconsistentwithpriorworkthathas
foundthatcriminaldefendantsfarebetterintermsofsentencingwhentheyexpressremorse.49
The papers findings also have value for discussionsof the purposes of the consumer
bankruptcy laws. Many scholars have advocated a utilitarian justification for consumer
bankruptcy,especiallythebankruptcydischarge,emphasizingthewaysinwhichthedischarge
46Robbennolt,supranote16.47SeeJonathanCohen,AdvisingClientstoApologize,72S.CAL.L.REV.1009(1999);Robbennolt,supranote16.48Priorresearchhasfoundthatapologiescanmoderatejudgmentsofresponsibility.Seee.g.,BruceW.Darby&BarryR.Schlenker,ChildrensReactionstoApologies,43J.PERSONALITY &SOC.PSYCHOL.742(1982);BruceW.Darby&BarryR.Schlenker,ChildrensReactionstoTransgressions:EffectsoftheActorsApology,Reputation,&Remorse,28BRIT.J.SOC.PSYCHOL. 742 (1989); Kenichi Ohbuchi et al.,Apology asAggression Control: Its Role inMediatingAppraisal of andResponsetoHarm,56J.PERSONALITY &SOC.PSYCHOL.219(1989);KenichiOhbuchi&KobunSato,ChildrensReactionstoMitigatingAccounts:Apologies, Excuses, and Intentionality of Harm, 134J.SOC.PSYCHOL. 5 (1984); Scher & Darley,supranote1;BernardWeineretal.,PublicConfessionandForgiveness,59J.PERSONALITY281(1991).Ontheotherhand,in the criminal context, confession evidence proves tobe quite powerful. See e.g., Saul M. Kassin & KatherineNeumann,OnthePowerofConfessionEvidence:AnExperimentalTestoftheFundamentalDifferenceHypothesis,21L.&HUM.BEHAV.469 (1997);SaulKassin&GisliH.Gudjonsson,ThePsychologyofConfessions:AReviewoftheLiteratureandIssues,5PSYCHOL.SCI.PUB.INT.33(2004).Seealsostudiesofapologiesandjurordecisionmakingcitedsupranote18.
49Seee.g.,Eisenbergetal.,supranote6;ChrisL.Kleinkeetal.,supranote6(findingthatrecommendedsentenceswerepredictedbyperceived remorse);Pipes&Alessi, supranote6.ButseeChristyTaylor&ChrisL.Kleinke,EffectsofSeverity ofAccident, History of Drunk Driving, Intent, and Remorse onJudgments of a Drunk Driver, 22J.APPLIEDSOC.PSYCHOL. 1641 (1992) (finding a relationshipbetween remorse and perceptions of the defendant,but finding no
significanteffectofremorseonsentencing).
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24 BankruptApologiescan operate as insurance against income and the general, lastresort social safety net that
bankruptcycanbeforsome.50Otherscholars,however,haveofferedamodelofthebankruptcy
discharge thatrestson thedebtorowningup to financial failureand therehabilitation that
comes from an acknowledgement of wrongdoing. 51 Our findings suggest that a debtors
apologyand
the
decision
makers
perception
of
the
debtors
remorse
can
be
important
for
how
much bankruptcy relief the debtor will receive. In practice, bankruptcy may be about
forgivenessat least for some actors in the bankruptcy in some contexts. To be fair, the
scholarlydebateaboutbankruptcyspurposes is largelynormative,butfor thisscholarship to
succeedinchangingthenormativeviewofbankruptcy,itwillneedtoengagewiththerealityof
bankruptcyinpractice.
Thepaperalsoshedssome lightonhowjudgesactuallydecidecasesandtheeffectof
apologieson thosedecisions.First,whilebankruptcy lawdoesnot formallyconsiderapology
andremorse,theBankruptcyCodedoesdirectjudgestotakeintoaccountwhetherthedebtoris
likelyto
be
able
to
successfully
fulfill
the
terms
of
the
plan
over
aperiod
of
years.
52Although
ourhypotheticaldidnotdirecttherespondentstothisspecificstatutoryprovision,itwouldnot
besurprisingiftheytookitintoaccountwhileformulatingtheirdecisions.Asnotedabove,one
ofthekeyinferencesthatpeopletendtomakefromasincereapologyisthattheoffenderisless
likely to reoffend in the future. Judges may make a similar inference about a sincerely
apologeticdebtorsfuturecompliancewithabankruptcyplan.Wediddirectthejudgestotherequirementthatthedebtorproposeachapter13planin
goodfaith,53anotherplacewhereapologyandremorsemayplayanappropriaterole.Theterm
good faithallows theconsiderationofmostany factoracourtmightdeem legallyrelevant,
and thecontrollingprecedentdirectsasmuch for thechapter13good faithrequirement.54
Tothe extent good faith includes a consideration of desert of the debtors worthiness for
bankruptcyreliefanapologyandremorsewouldbelegallyrelevant.
Thesurveydesign,however,alsoaskedthejudgesaboutadecisionwhereapologyand
remorseshouldnotbelegallyrelevant.Inarrivingathowmuchdisposableincomethedebtor
50Hynesoffersanexcellentsummaryofthecompetingjustificationsofferforconsumerbankruptcy,seeRichardM.Hynes, Why (Consumer) Bankruptcy?, 56 ALA. L. REV. 121, 14853 (2004). Feibelman also has offered an extendedanalysisandcritiqueofthesocial insurancejustificationforconsumerbankruptcy.AdamFeibelman,DefiningtheSocialInsuranceFunctionofConsumerBankruptcy,13AM.BANKR.INST.L.J.129,passim(2005)51GROSS,supra note 10;JasonJ. Kilborn,Mercy,Rehabilitation,andQuidProQuo:A RadicalReassessment of IndividualBankruptcy,64OHIOST.L.J. (2003).SeegenerallyJonathan R.Cohen,TheCultureofLegalDenial,84NEB.L.REV.247(2005).
5211U.S.C.1325(a)(6).
53Id.1325(a)(3).548COLLIERONBANKRUPTCY,supranote23,at1325.04[1](InexaminingwhethertherehasbeenaseriousabuseoftheCode,manycourtshavecontinuedtousethefactsensitiveallofthecircumstancestypeofanalysisdeveloped
bytheappellatecourtspriortothe1984amendments.).
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BankruptApologies 25hastodevotetocreditorrepayment,thejudgeswereaskedtoconsiderfourseparateexpenses.
TheformalstatementoflawintheBankruptcyCodeallowsthedeductionofexpensesthatare
reasonablynecessarytosupportthedebtorsorthedebtorsdependents,55aformulationthat
shouldnotallowconsiderationof remorse.Although theapologydidnotdirectlyaffecthow
judges
perceived
the
various
expenses,
thejudges
perception
of
the
debtors
remorse
was
relatedtohowtheyperceivedtheclaimedexpensefortheirdaughtersgymnasticsfees,which
wasthemostdiscretionaryofthedebtorsproposedexpensesandconsequentlyturnedoutto
havethelargesteffectontheconfirmationdecision.
Academicsoftendebatehowmuchlawmatters,thatis,towhatdegreejudgesfollowthe
writtenlawasopposedtotheirownpreferences.Ourfindingssuggestlegaldoctrinemattersa
lotthe claimed expenses were a major component of thejudges decisionsbut that other
factorsalsoenteredintothedecision.Theseotherfactorshadeffectswithinthecontemplation
oftheformalrules,suchasremorseshapingthelikelihoodoffuturepaymentortheexistenceof
good
faith,but
also
had
effects
not
mandated
by
formal
law,
such
as
remorse
affecting
the
judges assessment of whether a proposed expense was reasonably necessary. Thus, our
findings suggest, perhaps not surprisingly, that judges decisions can be complex and
multidimensional.Lawmatters,butsodootherthings.
Finally, this research may have practical relevance for practicingbankruptcy lawyers.
We find thataperceptionof remorsemakes thejudgemoredisposed to thedebtorscase,at
least in consumer bankruptcy. Our findings may formally confirm a folk wisdom of the
professional community that serves the bankruptcy courts. There is an old saying among
commerciallawyersthatpigsgetfatandhogsgetslaughteredselfinterestistobeexpected
butthecourtswillhammerclientswhodisplayexcessiveselfinterest.Manydebtorsdonotseethe inside of the bankruptcy court room and would not often have a chance to formally
apologize.Butwhileanapologycanbe important, it istheoverallperceptionofremorse that
appearstomattermore.Thus,evenwhenobviousopportunitiesforshowingremorsesuchas
hearings or written pleadingsare not available in a given case,bankruptcy attorneys can
convey remorse through honest acknowledgement and transparent disclosure in the many
schedulesandformsfiledinthebeginningofeverybankruptcycase.56
55Id..1325(b)(2).
56Anecdotally, oneofthejudgesinvolvedinthestudytoldoneoftheauthors(Robbennolt)thathemadeinferences
aboutthedebtorsdegreeofremorsefromthecontentoftherepaymentplanthatwasproposed.
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26 BankruptApologiesAPPENDIX:FACTPATTERN
Thefirstcaseonyourdockettodayisaconfirmationhearingforthechapter13planof
BethanyandMarkMiller.Thechapter13trusteehasobjectedtoconfirmationforlackofgood
faith(
1325(a)(3))
and
for
failure
to
devote
all
of
the
debtors
projected
disposable
income
to
repaymentofunsecuredclaims(1325(b)).TheMillersarebelowmedianincomedebtors.The
Millersweretheonlywitnessestotestifyattheconfirmationhearing.Basedontheirtestimony
andtheirbankruptcyschedules,youunderstandthefactstobethefollowing.
Mark,ahighschoolgraduate,isacustodianatalocalmiddleschool.Bethany,whohas
anassociatesdegreefromacommunitycollege,hasworkedoffandonasa teachersaide in
elementaryschoolsandnowhasasteadypositioninoneofthelocalschools.TheMillershave
twochildren,bothgirls,ages10and13.
TheMillershavetwosecureddebts.First,theyowe$180,400onafirstmortgagefortheir
residence.
The
current
market
value
of
the
residence
is
$180,000,
and
the
monthly
mortgage
payment is$1,200.Theyhave twomonthsofarrearages that theywillcure through theplan
witha$100monthlypayment. Theother secureddebt is for $26,100 foraoneyear oldFord
ExplorerSUV.Thisdebtisnotindefault,andtheplanproposestocontinuethe$550monthly
carpayment.TheMillershavenononexemptassets.
Unsecured debt totals $25,500 and is owed to various credit card companies. At the
confirmationhearing,Bethanytestifiedthatmostofthedebtpiledupduringthefourmonths
when I didnt have ajob. We had to charge a lot ofbasic expensesjust to getby. Another
$9,000ofthecreditcarddebtrepresentsmedicalexpensesresultingfromcomplicationsdueto
Marksdiabetes.Bethanyalsoadmittedthatabout$4,000ofthecreditcardbalancecamefroma2weekvacation theytook lastyeartotheCaribbean.Wetookthegirlsandstayed inanall
inclusiveresort,shetestified.Bethanythentriedtoexplain,Wehavenowayofkeepingup
withourbillsandrepayingeverything.Itisallwecandotopaythemortgageandkeepfoodon
thetable.
TheMillersScheduleIshows$3,550incombinedmonthlyaftertaxincome.Inaddition
to their mortgage and car payments, their Schedule J lists $1,050 as monthly household
expensesforutilities,foodandclothing,transportation,andotherbasicneeds.Inaddition,the
Millers listexpensesof$270permonth forgym fees, training fees,and travel for theMillers
daughterswhobothcompeteasmembersofthelocalgymnasticsclub,and$250permonthfororthodontic treatment the Millers plan tobegin for their 13year old child within the next
several months. Thus, they show total monthly payments of $3,420 against $3,550 monthly
income. They propose a 36month plan with a payment to unsecured creditors of $130 per
month(foratotalof$4,680andan18%dividendtounsecuredcreditors).
Asnotedabove,thechapter13trusteehasobjectedtoconfirmationforlackofgoodfaith
( 1325(a)(3)) and for failure to devote all of the debtors projected disposable income to
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BankruptApologies 27repaymentofunsecuredclaims (1325(b)).The trusteeobjects to thesizeof thecarpayment
andtheexpensesfororthodontiaandgymnastics.Iftheseexpensesweredisallowedandifthe
Millers were able to find an automobile with just $60 in lower car payments, unsecured
creditorswouldbepaidinfull.