30 Mar Bankruptcy Basics: What Is An Estate?
When someone files for bankruptcy, an “estate” is created. Yup, an estate. Almost as if you had died. The bankruptcy court appoints a trustee (in some states, this is called an administrator) to oversee your estate. So, what is in your estate? Your estate consists of everything that you own or have an interest in, both at the moment of filing for bankruptcy and, in some cases, within 181 days of filing bankruptcy. Your dog or cat? Part of your estate. Your ratty old jeans? Part of your estate. Your mom’s car that she lets you drive? Not part of your estate unless you own part of it. Your tax refund? Yep, part of your estate. All that you own or can say “this is mine,” must be listed on the bankruptcy schedules and disclosed to the bankruptcy court/trustee. The trustee examines the list of property and determines whether your “stuff” is more valuable than the amounts you are allowed to have under your state’s bankruptcy law. If your stuff is more valuable than allowed, your case has just now become an “asset” case. Depending on the amount, the trustee may offer to let you buy back your stuff from the estate in a Chapter 7 case. In a Chapter 13 case, your payments into the plan must be at least that amount (over and above secured creditor payments). Sometimes, being an “asset” estate can seem unfair, but it is the law.
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