A bankruptcy case begins by filing the petition and schedules with the bankruptcy court. Filing of the paperwork creates an estate, which becomes the temporary legal owner of everything in the debtor’s possession and control.
The bankruptcy estate is technically the legal owner of all of the debtor’s property and consists of all legal and equitable interests that the debtor has in property when the bankruptcy case is filed. Income that the debtor earns after the date of the petition is not included in the bankruptcy estate. Typical assets are part of your bankruptcy estate: property in your possession, money or property you are expecting to inherit but have not received, etc. Typically, pensions and educational trusts do not become part of the bankruptcy estate. It is important to be aware of the assets you own and which will become part of the bankruptcy estate, and which will not!
The 341 meeting of creditors is when the trustee will ask you questions about your assets and the property listed in your bankruptcy. The bankruptcy trustee will assume control of your property if it is non-exempt. The trustee is assigned to administer the estate. In a chapter 7 bankruptcy, the trustee is primarily responsible for liquidating any unprotected assets and distributing the sale proceeds to your creditors. In a chapter 13 bankruptcy, the trustee manages your payment plan, which distributes proceeds to your creditors.
Assets that are listed in your bankruptcy may be protected from the estate by claiming exemptions allowed by the code. Exemptions are protections of certain assets from your creditors, generally limited to a certain dollar amount. During our review and sign appointment, we discuss your assets and the appropriate exemptions—we also discuss the assets that may not be afforded an exemption from the code and how to go about keeping them. Once the exemption has been properly claimed, that protected asset is removed from the estate and legally, becomes yours again. Sometimes, the bankruptcy estate may abandon assets if the trustee determines the asset to have little value.
Are you worried about the things you own, but need to file bankruptcy? Contact www.kainscott.com for a free consultation with one of our knowledgeable attorneys so we can best help you!