By definition, bankruptcy estate refers to a debtor’s legal properties that are available for liquidation to pay off creditors. The bankruptcy estate does not just extend to the physical properties that you have but to your property rights as well which the bankruptcy court might find the right to administer. On the other hand, if one or certain properties of yours are not listed in your bankruptcy estate, then the bankruptcy court nor its appointed trustees will be able to touch it.
Exemptions to bankruptcy estate
Because filing for bankruptcy allows you to be discharged of your debts and be no longer liable to pay them, the bankruptcy court – specifically, the trustee’s – deals with your bankruptcy estate and liquidates them to pay a dividend off your creditors.
However, you should take note that there are some aspects of your personal assets and properties are held to exception as a bankruptcy estate. For example, an educational savings account cannot be counted as part of your bankruptcy estate although the definition of the word includes all kinds of money and goods property that a bankrupt debtor has held during the time of filing. Pensions and social security payments are also exempted to be bankruptcy estates as well.
Categories of properties and the bankruptcy estate
Sometimes, it’s easy for you to know which properties would be part of your bankruptcy estate. However, there are times when you do not exactly know which categories of your properties can be include in your list of bankruptcy estate. To remedy that, here is a list of the most common categories of properties that can be included in your bankruptcy estate.
- Properties you own and possess upon filing – whether you still owe money on that car of yours or you still have a standing mortgage on your house, both of them are part of your bankruptcy estate, everything you own and is in your possession is part of your bankruptcy estate as well. But if you possess a property but you do not own it, then it wouldn’t be part of the estate.
- Properties you own but do not possess upon filing – sometimes there are properties that you own but do not have possession of when you filed for your bankruptcy case like security deposits or loaned properties, still they are part of your bankruptcy estate.
- Property you are about to receive – if you have a legal right to something but haven’t yet received like an inheritance, receivable accounts, tax refunds, wages, commissions, or insurance policies, they would still be included in your bankruptcy estate.
- Common law property states – if you are married and you have a joint bankruptcy case filed every property that both of you own will be part of the bankruptcy estate. But if you file alone, only half of the property you own with your spouse and the properties to your name would be part of the estate.
- You should also be aware that some properties like that of a community property, property that generates continuous revenue like book royalties, and properties that appreciates in value like lands are also subject to become part of your bankruptcy estate. If you have a need for a complete list of a bankruptcy estate and you are unsure of which properties to include, a bankruptcy lawyer would be able to help you.