When you file for bankruptcy, your property goes into an estate that's managed by the bankruptcy trustee.
All of the property you own when you file for bankruptcy, except for most pensions and educational trusts, become part of what is known as your "estate" when you file for bankruptcy. The bankruptcy trustee—the official responsible for overseeing your matter—will assume control of the property in your bankruptcy estate throughout your case.
The following assets will be part of your bankruptcy estate:
- property in your possession
- property in someone else's possession (for instance, an item you've loaned to a friend)
- property you've recently given away
- property you haven't yet received but are entitled to
- proceeds from your property (such as rental income or dividends)
- certain assets you receive within 180 days after filing (for example, an inheritance or lottery winnings), and
- your share of marital property.
(If you'd like more details about specific property types within each category, you can find it by reading Property in Your Bankruptcy Estate.)
However, filing for bankruptcy doesn't mean that you'll lose all of your property. You'll be able to protect (exempt) the assets that you'll need to maintain a job and household. But it's not up to you to choose the property that you'll keep—it's up to your state.
To determine the type and amount of property that you'll be allowed to exempt (and take out of the bankruptcy estate), you'll look to your state's exemption rules. They'll set forth what you'll be entitled to keep. (For more information, go to Nolo's Bankruptcy Exemptions by State topic page.)
What will happen to assets that you can't exempt (nonexempt property) will depend on the bankruptcy chapter that you file. If you're interested in learning more about nonexempt property, you can find out by reading What Is Nonexempt Property in Bankruptcy?
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