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Legal Glossary


adversary proceeding
A lawsuit arising in or directly related to a bankruptcy case, which is born by filing a complaint with the court.

An agreement to continue performing duties under a contract or lease.

automatic stay
An injunction that automatically suspends lawsuits, foreclosures, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed.


A legal procedure for dealing with debt problems of individuals and businesses; a non-technical term for a legal state of failure or insolvency.

bankruptcy administrator
An officer of the judiciary serving in the judicial districts of Alabama and North Carolina who, like the U.S. trustee, is responsible for supervising the administration of bankruptcy cases, estates, and trustees; monitoring plans and disclosure statements; monitoring creditors’ committees; monitoring fee applications; and performing other statutory duties.

bankruptcy court
The bankruptcy judges in regular active service in each district; where cases under the Bankruptcy Code are litigated.

bankruptcy estate
Broadly speaking, the property which belonged to the bankrupt (or where the bankrupt held an interest in it) prior to being declared bankrupt.

bankruptcy petition
The document filed by the debtor or by his or her creditors which opens the bankruptcy case.


chapter 7
The chapter of the Bankruptcy Code providing for “liquidation,”(i.e., the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors.)

chapter 9
The chapter of the Bankruptcy Code providing for reorganization of municipalities (which includes cities and towns, as well as villages, counties, taxing districts, municipal utilities, and school districts).

chapter 11
The chapter of the Bankruptcy Code providing (generally) for reorganization, usually involving a corporation or partnership. (A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11.)

chapter 12
The chapter of the Bankruptcy Code providing for adjustment of debts of a “family farmer,” or a “family fisherman” as those terms are defined in the Bankruptcy Code.

chapter 13
The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. (Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.)

chapter 15
The chapter of the Bankruptcy Code dealing with cases of cross-border insolvency.


dischargeable debt A debt for which the Bankruptcy Code allows the debtor’s personal liability to be eliminated. disclosure statement A comprehensive document prepared by the chapter 11 debtor/plan proponent that provides information to creditors to enable them to evaluate the chapter 11 plan of reorganization.


The value of a debtor’s interest in property that remains after liens and other creditors’ interests are considered.

exemptions, exempt property
Certain property owned by a debtor that cannot be recovered by creditors.


insider (of individual debtor)
Any relative of the debtor or of a general partner of the debtor; partnership in which the debtor is a general partner; general partner of the debtor; or a corporation of which the debtor is a director, officer, or person in control.

insider (of corporate debtor)
A director, officer, or person in control of the debtor; a partnership in which the debtor is a general partner; a general partner of the debtor; or a relative of a general partner, director, officer, or person in control of the debtor.


joint administration
Two or more separate businesses or individuals who pool their resources, hire the same professionals, etc. Oftentimes, the cases of these entities are jointly administered.


The right to take and hold or sell the property of a debtor as security or payment for a debt or duty.

The dissolution of property with the proceeds to be used for the benefit of creditors.

liquidated claim
A creditor’s claim for a fixed amount of money.


motion to lift the automatic stay
A request by a creditor to allow the creditor to take action against the debtor or the debtor’s property that would otherwise be prohibited by the automatic stay.


nondischargeable debt
A debt that cannot be eliminated in bankruptcy. Examples include a home mortgage, debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for restitution or a criminal fine included in a sentence on the debtor’s conviction of a crime.


prebankruptcy planning
Prebankruptcy planning transfers nonexempt assets into exempt assets, allowing the debtor to take maximum advantage of exemptions.

proof of claim
An official written statement and verifying documentation filed by a creditor setting out the reason the debtor owes the creditor money.


Detailed lists filed by the debtor along with (or shortly after filing) the petition showing the debtor’s assets, liabilities, and other financial information. (There are official forms a debtor must use.)

small business case
A special type of chapter 11 case in which there is no creditors’ committee (or the creditors’ committee is deemed inactive by the court) and in which the debtor is subject to more oversight by the U.S. trustee than other chapter 11 debtors. The Bankruptcy Code contains certain provisions designed to reduce the time a small business debtor is in bankruptcy.

statement of financial affairs
An assortment of questions the debtor must answer in writing concerning sources of income, transfers of property, lawsuits by creditors, etc.


Any mode or means by which a debtor disposes of or parts with his/her property.

Court-appointed agent who manages property of debtor for the benefit of the unsecured creditors.


U.S. trustee
An agent of the Justice Department appointed to supervise the administration of bankruptcy cases, estates, and trustees; as well as monitor plans and disclosure statements, creditors’ committees, fee applications, and perform other statutory duties.

unscheduled debt
A debt that should have been listed by the debtor in the schedules filed with the court but was not.

For more information and a full list of legal terms, please visit the United States Courts website at  uscourts.gov.

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Law Office of Sean Patterson
232 Court Street
Reno, NV 89501