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The Automatic Stay Applies to Non-Dischargeable Debts

Posted By admin || 8-Jun-2009

We've mentioned previously that certain debts are non-dischargeable in bankruptcy.  But just because a debt is not dischargeable in bankruptcy does not mean it is not subject to the rules of a bankruptcy automatic stay. For example, there are many debtors who have divorce decrees with language stating that the obligations outlined in the divorce are not dischargeable in bankruptcy.

This however does not mean that those "non-dischargeable obligations" are not subject to the automatic stay.  In other words, once a debtor files bankruptcy all creditors (hold dischargeable or non-dischargeable debts) must cease all collection actions against the debtor in bankruptcy.

Once the bankruptcy case is filed creditors with interests in non-dischargeable debt (and those that would be dischargeable) are prohibited from filing lawsuits, garnishing wages , seizing bank accounts or taking any other action to collect the debt.  This doesn't mean that debtor will never need to repay these non-dischargeable debts.

A bankruptcy court will determine which debts will be discharged and which will be non-dischargeable.  If a creditor violates the automatic stay, even if the creditor has interests in non-dischargeable debts, they could be sanctioned by the court.  If you considering bankruptcy and have non-dischargeable debt please contact a bankruptcy attorney to find out you rights and obligations.

Categories: Bankruptcy
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