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Bankruptcy - What is a Bankruptcy Estate?A bankruptcy estate includes all property that is owned by the debtor at the time that the bankruptcy case is filed. This includes anything that falls under the jurisdiction of the bankruptcy court. There are very few exemptions in a bankruptcy estate since the definition found under Section 541 is so extensive that it leaves very little to claim an exemption against. Exceptions may include 401K plans, educational trusts and pension funds. These types of exceptions are not considered property of the estate. The debtor is responsible for claiming property exempt from the start of the bankruptcy process. These exemptions may or may not be challenged by a trustee and potentially disallowed. Under Chapter 7 the bankruptcy estate is liquidated and is used to pay for the administration of the bankruptcy case and to pay the claims of the creditors according to their precedence in the case The description above is not a comprehensive legal definition but rather an informal description of the term and how it may be used in a case involving bankruptcy.
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