Saying Sorry Might Help Your Bankruptcy Case

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Debtors going through bankruptcy can boost their chances of a successful outcome with one simple step, according to a new study: apologize.

Judges are more likely to look favorably on a repayment plan and accept discretionary spending budgets if the person filing for bankruptcy says they’re sorry, University of Illinois law professors Jennifer K. Robbennolt and Robert M. Lawless found in their research.

Apologies have been shown to improve outcomes in criminal and civil disputes, but there had been little prior study on their affects on bankruptcies. The authors note that bankruptcy cases stand out from criminal cases in that debtors have only done small “harm” to many creditors, who are almost never present at the proceedings, as opposed to a criminal case where someone may have committed an intentional act against a victim who can be apologized to in person in court. “This expands examination of apologies to a legal setting in which there is no clear “victim” and to decisions of a neutral (non‐victim) decision maker,”  the study reports.

Moreover, they note, filing for bankruptcy in and of itself could already be considered an admission of culpability. Nevertheless, an actual apology can be effective. “Bankruptcy is often thought of as a rehabilitative system, one which entails some consideration of how we might expect the debtor to behave in the future,” the study says, and owning up to mistakes can reassure a judge that the filer is earnest about getting his or her fiscal house in order.

The professors completed the study by sending two nearly-identical scenarios, one involving the filers saying “We are truly sorry,” to bankruptcy judges and asking how they would respond. The results found that the judges viewed the family that apologized more favorably, which in turn could lead a more favorable confirmation decision.

“Debtors who apologize are seen as more remorseful,” it concludes, “and are expected to more carefully manage their finances in the future as compared to debtors who do not offer an apology.”

Apology Accepted

David Leibowitz

An apology could be especially useful in a Chapter 13 bankruptcy, where the judge must approve the debtor’s budget and repayment plan. “If there’s a shade of gray in deciding a Chapter 13 plan, it can’t hurt and might give you the push to get you over the edge in some circumstances,” says David P. Leibowitz, founding attorney at the Chicago-based bankruptcy firm LakeLaw. “The judge has a fair amount of discretion.”

It’s not a sure thing, but it won’t hurt, either. “If I thought the judge might look at my plan, and thought it was a close call, I might respectfully request consideration and apologize for any creditors I could have harmed,” Leibowitz says.

He notes that the amount of personal input a judge exercises varies depending on the bankruptcy court. In high-volume areas, judges often rely more on the work of the bankruptcy trustee rather than giving each individual case personal scrutiny.

“I don’t think the Chapter 13 trustee cares one way or another if there’s an apology,” the attorney says. “He does the number crunching, figures out whether it’s sound and gives a recommendation to the judge.”

“On the other hand,” says Leibowitz, “in a slower community, where the judge looks at everything, or a place that’s more moralistic and less relativistic, maybe an apology makes a difference.”

The bottom line: It’s worth a try.

“A lot of things require judgment,” Leibowitz says. “How could it hurt to be nice?”