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 Minnesota, 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 limited to property directly in the debtor's possession; it also encompasses property that may be held by others 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 are specific allowances under state or federal law that permit a debtor to keep certain property out of the estate, thus protecting it from creditors. In Minnesota, debtors may choose between state and federal exemption schemes to protect their assets. The bankruptcy trustee administers the estate, liquidating nonexempt assets to pay the debtor's creditors.