Often, bankruptcy cases are filed in a court which is termed as bankruptcy estate. Here the equitable interests and legal interests of the debtor are considered. An estate becomes part of the jurisdiction of bankruptcy court in such cases and a trustee who is appointed by the court will review the same. The creditors’ interests are upheld by the trustee in such a legal case. When the bankruptcy estate proceedings are held the intangible and tangible assets of an estate come under scrutiny. The trustee appointed by the creditors can sell off the assets of a bankruptcy estate in order to pay off as much as possible of the outstanding debt in question.
Features of bankruptcy estate cases
The laws regarding bankruptcy estate are varied and can have different significance under different jurisdictions. For instance, in certain cases, bankruptcy estate does not only include interests of the debtor, but also any community property that might belong to the debtor and his or her family members like a spouse.
Usually, all the tangible assets that a debtor owns need to be considered. Hence, a piece of land that might be owned, artwork collections, car and other aspects are all considered part of the assets owned by the debtor or that which comprise the assets of his or her bankruptcy estate.
When such a case is being started, all assets of an estate need to be disclosed by a debtor. These become part of the bankruptcy schedule for the case. Assets which are not exempted are subject to sale, which the trustee has the right to execute. The proceeds from such sales go towards paying the proceedings of the case as well as paying off the creditors.
Certain assets might be removed or exempted from being considered as part of the bankruptcy estate and open to a sale. For instance, a debtor might get the right to exclude savings plans, investments in trust funds and any qualified retirement plans that he or she might have invested in. The statutes applicable in such cases will dictate the assets or categories of the same which can be excluded from consideration. When assets are exempted they are beyond the reach of the creditors or the trustee who is appointed in such cases.