A New Deal for Debtors: Providing Procedural Justice in Consumer Bankruptcy

Abstract

Across the criminal and civil justice systems, research regarding procedural justice — feeling that one has a voice, is respected, and is before a neutral and even-handed adjudicator — shows that people’s positive perceptions of legal processes are fundamental to the legal system’s effectiveness and to the rule of law. About a million people file bankruptcy every year, making the consumer bankruptcy system the part of the federal court system with which people most often come into contact. Given the importance of bankruptcy to American families and the credit economy, there should exist a rich literature theorizing and investigating how people’s perceptions of consumer bankruptcy’s procedures advance the system’s goals. Instead, bankruptcy’s procedures have received strikingly little scholarly attention. This Article begins to fill this significant gap by combining procedural justice and related research with what is known about the people who file bankruptcy to craft a theory of consumer bankruptcy’s procedural deficiencies. If consumer bankruptcy is procedurally bankrupt, as this Article posits, then the “fresh start” delivered to struggling households is not nearly as fresh as presumed, which will hamper people’s return to their communities and to the credit economy. As such, the Article proposes two sets of changes to the consumer bankruptcy process — one modest and one more drastic. Both of these new deals for debtors promise to enhance people’s perceptions of bankruptcy’s procedural justice and thereby the legitimacy of the system.