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 Illinois, as in other states, the commencement of a bankruptcy case results in the creation of a bankruptcy estate, which is governed by federal law under the Bankruptcy Code. This estate becomes the temporary legal owner of the debtor's assets and includes all legal or equitable interests of the debtor in property at the time the bankruptcy case is filed. The estate may also include property that is in the possession of someone else if the debtor has an interest in it. The purpose of the estate is to ensure that the debtor's nonexempt assets are distributed to creditors in accordance with the provisions of the Bankruptcy Code. Exemptions that allow a debtor to keep certain property from being distributed to creditors are also defined by federal statutes and can be supplemented by Illinois state law. The specific exemptions available may vary, and debtors in Illinois can choose between state and federal exemptions. An attorney can provide guidance on the exemptions that best suit a debtor's situation and how the formation of the bankruptcy estate will affect their property and the repayment of creditors.