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 Pennsylvania, 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 property, encompassing all legal or equitable interests of the debtor in property at the time the bankruptcy case is filed. This includes not only property directly owned by the debtor but also property held by others in which the debtor has an interest. The estate is managed by a bankruptcy trustee, who is responsible for liquidating any nonexempt assets and distributing the proceeds to creditors according to the priorities established in the Bankruptcy Code. Exemptions allow the debtor to keep certain property out of the estate, protecting it from liquidation, and these exemptions can be based on federal or state law. In Pennsylvania, debtors may choose between federal exemptions and those provided by Pennsylvania state law, which are designed to protect specific assets or amounts of equity in those assets.