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 New Jersey, as in all states, the commencement of a bankruptcy case creates a bankruptcy estate, which is governed by federal law, specifically the Bankruptcy Code. The estate is comprised of all the debtor's legal or equitable interests in property at the time the bankruptcy case is filed. This 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 serves as a temporary legal owner of the debtor's assets and is managed by a bankruptcy trustee. The trustee's role is to liquidate nonexempt assets and distribute the proceeds to the debtor's creditors according to the priorities established in the Bankruptcy Code. Exemptions are provided by both federal statutes and New Jersey state law, allowing debtors to keep certain property out of the estate for personal and financial rehabilitation post-bankruptcy. The specific exemptions available to a debtor in New Jersey may depend on whether they choose the federal exemption scheme or New Jersey's state exemptions.