Bad Stuff for Platycore

[Xanthar]

My son and I argued about the Bad Stuff in the Platycore when I lost my run away roll last night.

I was at level 2 and opted to lose 2 levels (down to the minimum level 1) instead of losing all the cards in my hand at the time. He said that was not right because I didn't have 2 levels to lose, so I should have lost all my hand cards. I said it gives me a choice, and I still got bad stuff applied, so it's legal.
Who was right?

In another example, he said his friend was in the same situation, but in his case he had no cards in his hand (level 6 at the time), so he chose to lose all the cards, not the levels, and nothing happened. My son thought that was unfair and I agree. You should have some consequence from losing if you don't run away, and that if he didn't have any cards he should have lost the levels.
Which is correct?

Sorry if this was answered before. I couldn't find anything on it when I searched.

Thanks for your response.