Bankruptcy estate

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A bankruptcy estate is the property of the debtor who filed bankruptcy. The estate includes all property in which the debtor has an interest, even if it is owned or held by another person - like obvious and tangible assets, or intangible things: stock options, the right to inheritances received within 6 months after the bankruptcy is filed, tax refunds for prepetition years, and intellectual property like copyrights, patents and trademarks. The exception would be certain pensions, educational trusts and the assets that the debtor will need to maintain a job and household.

When a bankruptcy case is filed, all of the debtor’s property moves into the estate. All payments to creditors come from the estate. The bankruptcy trustee appointed by court to administer debts will assume control of the property in the debtor’s estate throughout bankruptcy case. Meanwhile, the Bankruptcy Code gives the trustee the right to recover property that was improperly transferred away by the debtor or that was taken by creditors shortly before the case was filed.

However, there are bankruptcy exemptions of the estate in Chapter 7 of the Bankruptcy Code; including child support, alimony, social security, court fees and penalties, educational trusts and the assets that the debtor will need to maintain a job and household, etc..

[Last updated in July of 2021 by the Wex Definitions Team