Commencement of a bankruptcy case creates an estate. The estate technically becomes the temporary legal owner of all the debtor's property. It consists of all legal or equitable interests of the debtor in property as of the commencement of the case, including property owned or held by another person if the debtor has an interest in the property. Generally speaking, the debtor's creditors are paid from nonexempt property of the estate.

In Alabama, as in all states, the commencement of a bankruptcy case creates a bankruptcy estate, which is a central concept in bankruptcy proceedings. This estate is comprised of all the debtor's legal or equitable interests in property at the time the bankruptcy case is filed. The estate includes not only property directly owned by the debtor but also property that the debtor has an interest in, even if it is held by someone else. The estate is managed by a bankruptcy trustee, who is appointed to oversee the case. The trustee has the authority to liquidate nonexempt property—that is, property that is not protected by exemption laws—and use the proceeds to pay the debtor's creditors. Alabama has its own set of exemptions that determine what property a debtor can keep as exempt. These exemptions are outlined in the Alabama Code and can include items like a certain amount of equity in a home, personal property, and tools of the trade. It's important for debtors to understand which of their assets are exempt and which are part of the bankruptcy estate, as this will affect what property they can retain after the bankruptcy process.