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The bankruptcy estate


The bankruptcy estate consists of all the property belonging to the bankrupt at the commencement of the bankruptcy and certain ‘after-acquired property’ including surplus income.

Property included in estate

The bankrupt’s estate is widely defined and includes the following:

  • Property held abroad
  • Rights to bring legal action including insurance claims and tax appeals
  • A share in a business
  • After-acquired property such as an inheritance, subject to the service of notice by the trustee claiming this. The bankrupt has a duty to inform the trustee of any property of this kind – What a bankrupt must do
  • Income from the bankrupt’s work. The trustee may apply to the court for an Income Payments Order. Such an order will be for such amount that is appropriate and will not be set at a level which would reduce the income of the bankrupt to below the amount required to meet the reasonable domestic needs of the bankrupt and his or her family. An Income Payments Order may continue after the bankrupt has been discharged up to a maximum in total of 3 years. An Income Payments Agreement can be used to avoid the need for an application to the court.
  • The bankrupt’s share in his or her home. This vests automatically in the trustee on appointment. However there is a requirement on the trustee to take action within 3 years to enforce this and failure to do so would lead to the property re-vesting in the bankrupt – see What happens to the bankrupt’s home?

All of the assets in the bankrupt’s estate belong to the trustee and they are to be used for the purpose of paying off the bankrupt’s debt.

Property excluded from estate

Certain items of property are specifically excluded from the bankrupt’s estate. These include:

  • Tools of the trade. These included tools, books, vehicles and other equipment which are necessary for use by the bankrupt in the course of his employment or business.
  • Basic domestic items. Clothing, bedding, furniture, household equipment and such other items that are necessary to meet the reasonable domestic needs of the bankrupt and his or her family.
  • Residential tenancies. Various forms of residential property are excluded from the estate.
  • Personal items. Certain items which relate to the bankrupt’s ‘body, mind or character’ may be said not to be part of the estate.
  • Pension Payments. Most pension plans are now excluded from the bankrupt’s estate.

Items of this nature and certain other specified property cannot be taken by the trustee in connection with the bankruptcy.

Taking legal advice

Legal issues can arise in connection with property claimed to be part of the bankrupt’s estate and  this may have a significant bearing on the outcome of the bankruptcy.  Our solicitors are able to provide advice on the many issues that can arise in this area.

For more information proceed to What happens to the bankrupt’s home?

For more information, please contact our team of experts by emailing insolvency@bankruptcy-solicitors.com or call 020 8308 3610 today.

Meet the The bankruptcy estate team