Conclusion

A fundamental goal of bankruptcy is to give debtors a financial “fresh start” from overwhelming debts. This goal is accomplished through discharging debts, which releases the debtor from liability from specific debts and prohibits creditors from undertaking collection actions against the debtor. However, bankruptcy may lead to unfavourable outcomes. It negatively impacts a debtor’s credit history and impacts an individual or business’s ability to obtain a loan or build up assets again. Businesses also run the risk of liquidation and business closure, even if the intention of initiating bankruptcy was to reorganize. Before filing for bankruptcy, a businesses and individuals should carefully consider and examine all options to see if there are better alternatives available to manage and pay off their debt.