When a debtor, the bankruptcy court imposes an automatic stay that prevents most creditors from taking collection action against the debtor.
But an automatic stay will be lifted when:
- The bankruptcy case is closed –If a bankruptcy case is closed by the debtor or the court, creditors can resume collection activity against the debtor.
- The bankruptcy case is dismissed – If the court dismisses the debtor’s bankruptcy case for any reason, creditors will no longer be restricted by the automatic stay and will be allowed to resume collection activities.
- The debtor is either granted or denied a bankruptcy discharge – If the debtor is granted a discharge, creditors who are exempt from discharge will most likely pursue the debtor for repayment (i.e. child support, student loans, alimony). And if the discharge is denied, all creditors can resume collection activities against the debtor.