Upon filing a Bankruptcy Petition, a stay of proceedings is entered by the Bankruptcy Court protecting property of the Estate from creditors. Pursuant to 11 USC 362(c)(1), that stay remains in effect until the property is no longer property of the estate. Property is longer part of an estate when the case is closed or dismissed, or if the case was filed under Chapter 7, the request for a Discharge is granted or denied. If the debt is discharged, creditors can no longer attempt to collect. However, if a discharge has been denied, or the debt is nondischargeable, the creditor is free to collect the debt as soon as the stay is lifted. This means even after filing for bankruptcy protection, debtors with nondischargeable debt can expect creditors to take legal action against their real and personal property to collect the debt. Knowing this, it is important to be aware of what type of debt is nondischargeable and Plan accordingly.

Types of debt that are nondischargeable include certain taxes, domestic support obligations, student loans, debts not listed in debtors’ schedules, debts incurred by fraud and debts that have been formally reaffirmed. The last type, debts which have been formally reaffirmed, can be particularly dangerous because it can leave a Debtor facing legal action for recovery of a debt that could likely have been discharged. This is the reason is it important to think long and hard before reaffirming a debt. When giving or receiving bankruptcy counseling, it is important to not only look at the immediate future and the benefits of bankruptcy, but long term financial stability.