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Bankruptcy

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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 Rhode Island, as in other states, the commencement of a bankruptcy case results in the creation of a bankruptcy estate, which is governed by federal bankruptcy law. 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. This encompasses not only property directly owned by the debtor but also property held by others in which the debtor has an interest. 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 used to pay creditors are also defined by federal law, with some variations allowed by Rhode Island law. Creditors are generally paid from the nonexempt assets of the estate, and the distribution follows the priority established by bankruptcy law.

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Bankruptcy

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Bankruptcy

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