The bankruptcy estate is the total collection of assets that creditors must split upon the bankruptcy of a debtor person or corporation. It is often less than the total amount of the bankrupt person’s debts but splitting it fairly among all creditors is an integral part of the bankruptcy system.
Having a judgment against a debtor is one of the most solid pieces of evidence of a debt that a creditor can produce. However, obtaining a judgment against a debtor can often be a time consuming and expensive process, regardless of where the lawsuit was filed. Therefore, it sometimes is more efficient for the creditor simply to attempt to enforce the debt without first obtaining a court judgment.
When a debtor files for bankruptcy the court needs a way to organize all of the debtor’s belongings so that they can easily be divided up among the creditors. Courts will do this by categorizing all of the debtor’s assets in what is called a “bankruptcy estate.”
In Japan, bankruptcy petitions can be brought by a variety of parties. The most common situation is for the debtor to file for bankruptcy personally as a way to escape payment, but this does not always happen. When a debtor refuses to file bankruptcy, it is often left to the creditor to file for bankruptcy on behalf of the debtor and submit evidence of unpaid debt as proof that the debtor can no longer make payments on debts.