If you are considering bankruptcy and have been reading about your options, you may have come across the term, “bankruptcy estate”.
What is this… “bankruptcy estate” you asked yourself. A vineyard in Italy?
More likely…you knew that a bankruptcy estate is really just a collection of all the property and rights to property that belonged to the bankruptcy filer that can be legally administered during a bankruptcy case by the bankruptcy Court.
It is created the moment that filer actually….”files” the bankruptcy case. It is simply all of the stuff he or she owns or has the right to own or control.
car, home, stock, cash, community property, personal injury claim, property acquired by inheritance within 180 days of filing the bankruptcy, bare legal title to property etc.
If you can imagine it, then it probably would be part of the “bankruptcy estate”. It is very important in a bankruptcy case to disclose every item that could be considered part of the estate, as a failure to properly do so could result in a denial or revocation of the overall goal of the bankruptcy filing…the discharge of debt.
A few issues arise after the estate is determined.
1. Does the Bankruptcy Trustee have a greater interest in the property then the debtor had in it on the date of filing.
2. What assets are protected from being taken by the bankruptcy trustee for distribution to creditors in a chapter 7 bankruptcy.
The second question is dealt with routinely by bankruptcy judges. Most consumers have few assets that are not protected from creditors both inside and outside of bankruptcy and those that are not protected or “exempt” are often not worth the bankruptcy estate’s time to collect and distribute to creditors.