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5 Reasons to Be Thankful for Bankruptcy

November is the month when a lot of people reflect on what they’re thankful for in life, especially if they’re facing financial hardship. Although it may seem odd at first, a lot of people end up feeling thankful for bankruptcy. Despite the social stigma some people feel or the real consequences of filing for bankruptcy, there are also very good reasons to be thankful for it.

1. Bankruptcy Stops Creditor Harassment

One of the worst things people dealing with debt put up with is creditor harassment. These are usually phone calls, emails, and letters from creditors threatening legal action if the borrower fails to immediately pay their debt.

Creditor harassment is scary, annoying, and anxiety-inducing. Every time the phone rings, you aren’t sure whether or not you should pick it up. Each time the mail comes, you dread what might have arrived in your mailbox. Bankruptcy stops creditor actions, including the harassment some use to coerce payment.

2. Bankruptcy Stops Collection Actions

If your creditor threatens or already has taken legal action to repossess or foreclose property or garnish your wages, collection actions like these must cease when you file for bankruptcy. This is possible because of a temporary stay on such actions that the judge will order for the duration of your case. As long as this stay is in effect, you will not have to deal with simultaneous legal affairs concerning foreclosure, repossession, or wage garnishment while you are in bankruptcy.

3. Interest Freezes during Bankruptcy

Again, the automatic stay in your bankruptcy case stops any interest that would accrue while your case is active. The average Chapter 7 bankruptcy case will take four to six months from its filing date to conclude, which means that interest on your debt can freeze for almost half a year. This is particularly good if the judge only grants a partial discharge of your debt, leaving you with some liability for a remainder after bankruptcy.

4. There Is No Limit to the Debt You Can Discharge in Chapter 7

Debt can add up really fast, especially if you lose your income or experience a sudden event – such as an injury – that racks up a lot of medical debt. As long as you owe the right kind of debt, you can get rid of all or most of it in bankruptcy. That includes credit card debt in the tens of thousands or hospital bills in the hundreds of thousands – you may even be able to eject student debt if you meet certain criteria.

5. Bankruptcy Can Provide a Clean Slate

Bankruptcy provides people with the clean slate they need to rebuild their financial lives. Once a judge discharges your debt, it’s gone. Along with it goes interest payments, penalties, and all the other fees associated with your debt that made it all the harder to get rid of on your own.

Yes, bankruptcy can cause your credit score to take a dive and make it harder to obtain new credit for a while – but your credit score can recover over time and bankruptcy will only show up on your credit report for 7-10 years. While this isn’t an insignificant amount of time, it’s not as long as most people think it will be – and it’s certainly not forever.

In fact, the further a bankruptcy is pushed into the past and the more your credit score improves, the more likely a creditor is to trust you with new credit.


If you are someone who’s dealing with overwhelming debt and concerned about the bankruptcy process, know that it doesn’t have to be as bad as people make it seem. There are reasons to be thankful for the fact that bankruptcy exists, like those we’ve provided above.

If you’d like to explore your options in bankruptcy, reach out to Nguyen Law Group online for help.