Like the article? Share it with friends.

Why Bankruptcy Can Be a Good Thing

According to, there were about 12.8 million consumer bankruptcy petitions filed in the federal courts over the 12-year period between October 1, 2005, and September 30, 2020.  Filing for bankruptcy is never an easy choice – you’ve probably worked hard throughout your life, purchasing one of the houses among the Calgary homes for sale or somewhere else, hoping to settle down and enjoy a good quality of life.  Things go great, but then suddenly you get laid off from your job, there’s a medical emergency or something else unplanned that throws a wrench into it all. It can make you feel as if you’ve failed, but oftentimes it’s just a streak of bad luck. Bankruptcy might actually be the best solution – here’s when it can be a good thing.

Why Bankruptcy Can be a Good Thing

Protecting Your Business

Embarking on a business venture is inherently accompanied by risks, as it may face challenges stemming from economic fluctuations, market downturns, partnership issues, or a myriad of other factors. The aftermath of a business failure often involves substantial debt and a lack of income to settle these financial obligations.

For struggling business owners, opting for Chapter 11 bankruptcy might serve as a lifeline. This legal recourse facilitates the reduction of debts, enabling owners to regain control and explore innovative strategies for profitability. Alternatively, filing for Chapter 13 can be a salvation for overstretched small businesses. This avenue allows owners to restructure their debts, collaborating with the court to devise a plan for repayment over three to five years.

Why Bankruptcy Can be a Good Thing

Ending Torturous Collection Calls

When facing overdue bills and the relentless pressure of collection calls, the financial toll can be overwhelming. Experts suggest that once individuals fall significantly behind on their debt, particularly with at least one account 120 days or more overdue, the financial challenges often intensify. This escalation may involve court judgments, accounts sent to collections, and other detrimental consequences.

For those who opt to file for bankruptcy, there is a crucial advantage in the form of the automatic stay. This legal provision effectively halts nearly all collection efforts, including wage garnishments, lawsuits, and similar actions. Bankruptcy, especially Chapter 7, offers relief from specific debts, wiping out financial obligations such as medical bills, credit card debt, personal loans, business debts, overdue utility bills, rent, and civil judgments—excluding instances of fraud.

Why Bankruptcy Can be a Good Thing

Improving Your Financial Footing

There's a common misconception that filing for bankruptcy will irreparably damage your financial standing. However, in reality, it can serve as the initial step toward regaining financial stability. Contrary to those who allow debts to accumulate without taking action, individuals who file for bankruptcy often find themselves in a better position to access credit.

Completing bankruptcy proceedings increases the likelihood of being approved for new credit within approximately a year and a half, compared to those who fall 120 days or more behind without filing. While it's true that the credit limits granted initially may be low, and the credit score won't fully recover for another 10 years, especially in the case of Chapter 7 bankruptcy which drops off credit reports after a decade, it's crucial to recognize bankruptcy as a proactive step toward financial recovery. Waiting to address mounting debts may lead to a more prolonged and challenging road to recovery.

Make the Gig Economy Work for You

We hope you enjoyed Simply Amazing Living's “Why Bankruptcy Can Be a Good Thing” post.


Why Bankruptcy Can Be a Good Thing Pin


Like the article? Share it with friends.