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 Massachusetts, as in other states, the commencement of a bankruptcy case results in the creation of a bankruptcy estate, which is a central concept in bankruptcy proceedings. 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 is not just limited to property directly in the debtor's name; it also encompasses property that others may hold but in which the debtor has an interest. The purpose of the estate is to gather the debtor's assets to allow for the orderly distribution to creditors. Creditors are generally paid from the nonexempt assets within the estate. Exemptions are specific assets or values in assets that the debtor is allowed to keep; these are governed by both Massachusetts state law and federal bankruptcy law. Debtors may choose between the state or federal exemption schemes based on which is more advantageous for their situation. The process is overseen by a bankruptcy trustee, who administers the estate and ensures that creditors receive as much payment as the law allows.