When you contact a bankruptcy law firm regarding what assets of yours may be protected when you file bankruptcy, your attorney will be able to tell you what assets will be part of your bankruptcy estate and if any will not be part of your bankruptcy estate.
Property of the bankruptcy estate is defined in the U.S. bankruptcy code under 11 USC section 541. The law excludes certain assets of a debtor, while other assets may be property of the estate at first, but later be excluded because they are abandoned by your bankruptcy trustee, redeemed by the debtor, sold, or claimed as exempt by the debtor.
When a debtor files for bankruptcy bankruptcy, it will make a difference if property is considered to be property of the bankruptcy estate or not. If certain assets are property of your bankruptcy estate, the Bankruptcy Court and your bankruptcy trustee has jurisdiction to administer it. If not, they don’t. The “Automatic Stay”, which comes from section 362, only applies to property of the estate. The automatic stay prohibits creditors from taking any action against property of the estate, and can be a very important protection. Anybody who takes property of the bankruptcy estate may face severe damages imposed by the bankruptcy court.
Money considered to be a ”trust fund”, such as taxes collected for the IRS or state sales tax, is not considered to be property of the estate. As a result, payments by a debtor to the taxing authority before filing for bankruptcy are not recoverable by the trustee as a preference.
It is a violation of the automatic stay for a creditor to go after, or try to go after property of the estate. A “willful violation” of the stay is punishable by actual damages and possible punitive damages pursuant to section 362(k). If you have already filed a bankruptcy case, be sure to let your bankruptcy lawyer know if any creditor threatens to go after your property after you have filed.
If you have additional questions please schedule a free consultation with Symmes Law group today by calling 206-682-7975