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Chapter 13 study: Saying sorry may not help, might not hurt

When a person goes before a judge with a personal bankruptcy filing, there is nothing in the rules of engagement -- the Bankruptcy Code -- that suggests what the judge should do if the filing includes an apology.

Acknowledging that attitudes about bankruptcy in Texas and the United States in general can run the gamut from positive to negative in the general population, it might be interesting to see whether and how an expression of remorse might play with the nation's bankruptcy jurists. One pair law professors thought it would be, so they conducted just such a study.

What these two University of Illinois educators did was line up about one third of all the federal bankruptcy court judges in the country -- 137 in all. They then presented them with the scenario of a fictional family seeking approval of a debt repayment plan under Chapter 13 bankruptcy. Under the plan, unsecured creditors would get 18 percent of what was owed to them over three years. At the end of that time, Chapter 13 rules would dictate that the remaining debt would be erased.

The filing detailed that the family of four own a $180,000 home, a $26,000 vehicle and owe more than $25,000 in credit card debt. More than a third of their debt was for medical expenses. They also noted a monthly charge of $270 for gymnastics classes for their daughters.

At the end of the filing, the family explained that the plan reflected that it was all they could do just to meet their mortgage and feed the family. The report ended with the family acknowledging responsibility for their situation, and saying, "We are truly sorry."

Half of the participating judges got a version of the filing with the apology. The other half got one without it. And when the researchers got the decisions back, they found that more than 40 percent of the judges who saw the apology approved the Chapter 13 repayment plan. The rate of approval among judges who didn't see an apology was only about 34 percent.

The authors say that the results are hardly definitive. But they say they do show that judge's seem to exercise more than just the law in making their determinations.

Source: The Wall Street Journal, "Do Apologies Matter in Bankruptcy?," Katy Stech, Feb. 15, 2013

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