Filing for bankruptcy issues an automatic stay from most action against the debtor from things like a foreclosure, lawsuit and even garnishments. The stay was enacted to keep the debtors property protected but the stay is not permanent. If you are a creditor they try to get relief from the stay by going after the debtor they must consult the judge assigned to the case first. There may be a hearing that the creditor must show cause as to why they wish to collect before the discharge of the bankruptcy.
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A creditor that is seeking relief from the stay in order to go ahead against the debtor the property of the debtor must be able to proof to the bankruptcy judge during a hearing that there is enough cause for granting the relief or lift of the stay. Cause may be proven by showing that the interest of the creditor is not really protected or by showing the judge that the debtor has no real equity in the property and the property itself is not needed in order for reorganization through Chapters 11 and 13.
Most commonly it is the secured creditor who is out to get relief for foreclosure stay or car repossession. The creditor can often get relief from the stay in order to foreclosure on real estate when the debtor has no equity put into it. When the equity is small in a property the debtor make have to make something called protection payments so that the creditors cannot get the property.
When a relief is granted, it does not automatically mean that the creditor gets the property it just means that it is fair game and a creditor can call and do what they can within reason to get their property back. Creditors are the only ones who want the relief of a stay and you need a good lawyer to fight a stay. Once a judge grants a stay you have to have a real good case as to why the judge should take it off.
As we mentioned a stay is only temporary when a bankruptcy case is being filed, once a claim has been discharged or dismissed then the stay is then lifted. But if a bankruptcy is discharged under Chapter 7 then assets will be liquidated and give to creditors so collections should not be an issues for Chapters 7. Chapter 11 and 13 have 5 years to repay and since an agreement in court will be made then unless you don't make those payments on time then a creditor can call you and there is nothing you can do.
The same is said if a bankruptcy is dismissed then a judge did not find a bankruptcy was proven. In a case like this unless there is some type of fraud happening mostly all bankruptcies are discharges but in the case of a dismissal then a debtors credit is fair game again and there is nothing you can do about it, except maybe try credit counseling.
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