A bankruptcy estate is automatically created once a Chapter 7 petition is filed. 11 U.S.C. § 541(a). The estate consists of all types of property, including anything of value that a debtor owns at the time of filing. The US Trustee is appointed and controls all the property of the estate and can liquidate (sell) any of the property for the benefit of unsecured creditors. However, a bankruptcy debtor can claim an exemption under 11 U.S.C. § 522(b), property that is exempt under Wyoming state laws passes out of the bankruptcy estate and is unavailable to the US Trustee and therefore can not be liquidated (sold).
The definition of "property of the estate" is extremely broad, it includes property "whenever located and by whomever held;"
- All legal and equitable interests of the debtor in property as of the commencement of the case
- Certain interests of the debtor and the debtor's spouse in community property as of the commencement of the case (This doesn't effect Wyoming residents because Wyoming is not a community property state. However, if a person is filing bankruptcy and they don't meet the residential requirements for using the state of Wyoming's exemptions then they may need to apply the former resident's state exemptions, this can trigger community property issues for people who lived in Idaho then moved to Wyoming prior to filing bankruptcy)
- Any interest in property that the trustee recovers under enumerated provisions of the Bankruptcy code
- Certain interests in property acquired by the debtor or an entitlement that arises within 180 days after filing (common examples are inheritances, life insurance policies, divorce decrees, property settlements, death benefit plans)
- Proceeds of any of the above, except post-potion wages in the case of a Chapter 7 case
- Property that the estate acquires after the commencement of the case.
"Wherever held" can mean not just property in the US but also property held in a foreign jurisdiction.
Property that becomes part of the estate is subject to the automatic stay. This has consequences for creditors that have interests in the estate property because they are precluded from trying to collect those debts once the petition is filed and the property passes into the estate. For more on that see automatic stay.