What happens to a person's assets when they file for bankruptcy?

When a person files for bankruptcy, their assets become subject to the jurisdiction of the Bankruptcy Court. This process is designed to ensure an equitable distribution of the debtor's assets among creditors and to provide the debtor with the opportunity to reorganize their finances or have certain debts discharged.

Upon filing, a bankruptcy trustee is appointed to oversee the case, which includes reviewing the debtor's assets and liabilities. The trustee's role is crucial in determining which assets can be exempt (retained by the debtor) and which will be used to satisfy creditor claims. The Bankruptcy Court must approve any major decisions regarding asset management, ensuring that all transactions comply with bankruptcy laws and the rights of creditors are respected.

This judicial oversight helps maintain fairness in the bankruptcy process, as it prevents the debtor from indiscriminately handling their assets while in bankruptcy proceedings. Thus, the assets are not solely managed by the individual nor do they remain completely under their control; instead, they are within the court's purview, reinforcing the necessity for a structured process that balances the interests of all parties involved.