Mississippi Consumer Help Blog
A bankruptcy estate is the entirety of assets or property rights that can be administered by the court in a bankruptcy case. The estate is created once a bankruptcy case is filed, and it includes all interests of the debtor in any kind of property.
Essentially this means that when a bankruptcy is filed, a debtor must list all the property they own or have an interest in. They must list assets such as real estate, vehicles, household goods, financial accounts, inheritances, businesses, potential active lawsuits they have against someone else, royalties, income, settlements, insurance funds, retirement accounts, tax refunds, and much more.
A debtor must list all their assets or potential assets in a bankruptcy case to ensure the court is fully aware of all property they own or have an interest in. However, just because the debtor must list all these types of property, does not mean they lose their property.
Bankruptcy has what are called exemptions that are governed by state laws. Exemption is what we refer to as the protections for certain property that a debtor can keep and retain through a Chapter 7. Once a debtor lists all their assets in their paperwork, they get to abide by the laws of the state where they filed and protect certain property from the bankruptcy court and trustee. The exemptions allowed in each state may determine what type of bankruptcy a debtor may file if they want to keep.
You may have heard some Chapter 7 cases referred to as a “no-asset case.” A no-asset case does not mean that a debtor owned or had an interest in nothing. It means that the debtor listed all their assets and interests in their paperwork, but state law helped exempt / protect those assets from being taken by the trustee and used to pay unsecured creditors. In an “asset” Chapter 7, the debtor would have non-exempted / unprotected property that the trustee can take and use to pay towards unsecured creditors that would generally be eliminated (or discharged) by the bankruptcy case.
For example, in Mississippi, your homestead equity, or equity of the home you physically reside in, is protected up to $75,000.00. If a debtor owned a single-family home, that was worth $100,000.00 and they had a mortgage totaling only $25,000.00, they would have equity of $75,000.00 and it would be exempted, and the Trustee could not take it. However, Continue Reading ›