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The law is designed to give debtor a break from litigation and protect debtor’s property. Unfortunately, it is not permanent nor absolute. If the creditor can show the bankruptcy judge after a hearing that there is a good cause for granting relief of stay, collector can go forward against the debtor. For instance, the creditor may try to prove that the debtor does not have equity in property. In most cases, it is the secured creditor who wants relief from stay to foreclose on real estate.
In some cases, bankruptcy is dismissed, because the debtor fails to comply with Code requirements. If this happens, creditors can legally pursue any debt collection according to state law. In some cases, case that is originally classified as “no asset” may turn into asset cases where a dividend must be paid.
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