Even more on bankruptcy. What is a Bankruptcy Estate?
Even more on bankruptcy.
What is a bankruptcy estate?
The "bankruptcy estate" is a term that comes up a lot in bankruptcy, because it is the most essential part of any bankruptcy case. It is all the property rights, "the stuff" that the court can control during the bankruptcy case. When the petitions field (the papers that start the bankruptcy case) the "estate" is created. like when someone dies, what they leave behind is the estate, but here no one is dead.
The estate is everything the debtor has a right to, whether he has control o it when he files or can get control over it later, so it is pretty broad as to what it contains. There are lots of disputes over what is and what is not part of the estate- is a lawsuit that is not filed, or even unknown at the time of filing, part of the estate? If your uncle died and left you money but you haven't received it yet, is that part of the estate? That's stuff bankruptcy judges decide. Big problems come up when more than one person owns something, but only one files bankruptcy. those are some more bankruptcy judge questions.
Once the property is part of the estate, it will stay part of the estate unless a judge says otherwise, and being part of the estate means that no creditor can take that property. It is protected by the automatic stay, which is a bankruptcy term that will be covered in a later blog.
Most debtors will be able to exempt (keep) all of their property. Exemptions are another thing to be covered in another blog installment. The idea though, is what is not exempt, is part of the estate, so it is protected from creditors no matter what.