The bankruptcy estate is one of the basic tenets of bankruptcy law. When a bankruptcy case is initiated, then a “bankruptcy estate” is created. The estate then becomes the owner of almost all of the assets and properties of the debtor. The properties that become a part of the ‘bankruptcy estate’ remain under the bankruptcy court’s control. When the court takes over these properties, they are controlled by a ‘bankruptcy trustee.’ The debtor’s assets can avail benefits of the bankruptcy proceeding like the ‘automatic stay’ provision.
The 11 U.S Code S. 541 mentions the different kinds of properties that are to be included in a ‘bankruptcy estate.’ They include:
- Property that is acquired within 180 days of filing for bankruptcy, such as inheritance.
- The debtor’s properties in possession of another person/entity such as security deposits or items kept in storages or vaults, etc.
- The funds and salary that the debtor is yet to receive like wages and tax refunds.
- Revenue generated from debtors properties such as rental income.
- The appreciated value of the assets of the estate.
The section also mentions some properties that can be excluded from the estate. These properties are:
- Social security deposits.
- The property is secured as collateral for a loan taken from a creditor.
- Funds that are saved for education.
- Federal pension benefits.
- Property rights are enjoyed as part of a trust.
The assets that are excluded from the bankruptcy proceedings are not under the control of the bankruptcy court. The assets included in the estate can come back under the control of the debtor if the ‘bankruptcy trustee’ deems that the property’s value is too minimal and unsuitable for the court to maintain control over.
If you have questions about the property you have that may be taken by the court during bankruptcy, contact a Fort Worth bankruptcy attorney to find out how to keep as many assets as possible during your case.