The results of a recent study released by Professors Robert Lawless and Jennifer K. Robbennolt of the University of Illinois Law School seems to suggest that people who file for bankruptcy would fare greater chance of success if they would apologize for getting into debt. Really? I mean really.
What this study suggest is wrong on so many levels. Let’s count them all:
- Ordinary people who file for bankruptcy did something wrong.
- What they did wrong was somehow intentional.
- What they did wrong was preventable.
- That people are happy to file for bankruptcy.
- That the means test passed as the main part of the Bankruptcy Code revisions in 2005 doesn’t matter.
- That procedurally judges have the time to consider an apology in every case set before them for confirmation of a payment plan.
- That judges have the discretion to approve a plan that is not the “best efforts” required by the Bankruptcy Code just because someone is sorry that they filed in the first place.
This study is getting great coverage in the press because it perpetuates all of the stereotypes created by the credit industry about a remedy included in the U.S. Constitution. Face it, bad things happen to good people and not every financial problem is curable by a budget plan outside of bankruptcy. And sometimes even in bankruptcy, Chapter 7 (straight bankruptcy) is warranted.
I covered this topic in this week’s Money Go Roundtable podcast with Jay Fleischman. If you agree with with us, we want to hear from you. Tell us your story. Send us an email and we’ll post it.