A “bankruptcy estate” is an artificial entity created by federal law consisting of a bankruptcy debtor’s legal and equitable interests as of the commencement of the bankruptcy case. The property of a bankruptcy estate is liquidated to repay creditors in a Chapter 7 case. § 541 of the Bankruptcy Code lists property that is included in and excluded from a debtor’s bankruptcy estate.
Various provisions in § 541 list property that is excluded from the bankruptcy estate. Any power that the debtor may exercise solely for the benefit of a person or entity other than the debtor is not property of the estate. Also, any interest of the debtor as a lessee under a lease of nonresidential real property that has terminated at the expiration of a term as stated in the lease before the commencement of the bankruptcy case, and ceases to include any interest of the debtor as a lessee under such lease during the case, is not part of the debtor’s bankruptcy estate.
Some funds placed in an education individual retirement account are excluded from the bankruptcy estate. Also, funds used to purchase a tuition credit or certificate or contributed to an account in accordance with certain sections of the Internal Revenue Code, not later than 365 days before the date of the commencement of the bankruptcy case, with limitations relating to beneficiaries and amounts are not part of the debtor’s bankruptcy estate.
Any amounts withheld by an employer received from employees or their wages for payment as contributions to an employee benefit plan or under an employee benefit plan which is a governmental plan or deferred compensation plan, a tax-deferred annuity under certain applicable sections of the Internal Revenue Code, or to a health insurance plan regulated by State law are not part of a bankruptcy estate.
A bankruptcy estate does not include any interest of the debtor in property where the debtor pledged or sold tangible personal property, other than securities or written or printed evidence of indebtedness or title, as collateral for a loan or advance of money. This includes tangible personal property in the possession of the pledgee or transferee where the debtor has no obligation to repay the debt, redeem the collateral, or buy back the property at a stipulated price; and neither the debtor nor the trustee has exercised any right to redeem the property in a timely manner as provided under the Bankruptcy Code in § 108(b) and state law.
If you are behind on payments for any outstanding debts, bankruptcy may a solution to keeping your motor vehicle. The experienced Sacramento metropolitan area/Northern California attorneys at the Montefalcon Law Offices are here to help you if your financial position necessitates the consideration of a bankruptcy case filing under Chapter 7, 11, or 13. Contact us online or schedule a consultation at any of our three conveniently located offices. Telephone our downtown Sacramento office at (916) 444-0440, our South Sacramento office at (916) 399-9944, or our Concord office at (925) 222-5929.