file bankruptcy while living overseas

How to File Bankruptcy While Living Overseas

There are many reasons you might file bankruptcy, whether you’re living in the United States or abroad, but the process becomes more complicated internationally. There are different rules in place to qualify for Chapter 7 or 13 if you’re living off US soil, and especially if you don’t possess American assets. The decision-making process of whether bankruptcy is right for you needs to take into account many factors. Here are a few essential points to be ware of when you’re considering bankruptcy proceedings.

 

Understanding Your Position to File Bankruptcy

There are two determining factors about whether filing bankruptcy is both necessary and/or applicable if you’re an American living abroad, and this is based on whether you have assets in the United States. In fact, in order to file for Chapter 7 or 13, most of the time you must actually own property, such as a vehicle or real estate, or have financial assets, such as a bank account, in the US in order to qualify to file bankruptcy in the first place. If you’re living overseas and owe debt, it may not be necessary to file at all, especially since creditors won’t come after your foreign assets since it’s not worth their while. Not only that, but creditors will also be required to file suit in a foreign country. This is not only costly, but also very time consuming, and is an investment that the majority of US-based creditors won’t bother with.

 

Requirement of an In-person Hearing

One of the biggest drawbacks to filing Chapter 7 or 13 is that you’ll be required to attend an in-person hearing to complete a judgment. Debtors seeking to file for bankruptcy are legally required to attend the hearing, which can pose a problem for people who are living abroad since travel expenses or other associated costs may not be worth it. This will depend heavily on where you’re living. For example, if you’re residing in an adjacent country like Canada or Mexico, and you’re close to where you were living in the US originally, attending a hearing filed in the same geographical location may not pose a problem. On the other hand, if you’re living overseas and getting back to the US requires a nine hour international flight, then it may not be worth it. The best thing to do is ask your attorney for expert advice.

 

filing bankruptcy

When and How Creditors File Suit

The biggest equalizer that determines if the process to file bankruptcy is worth it is whether or not you hold assets in the US. The actual likelihood of being sued by a creditor which requires an international suit to be filed is slim to none, since it’s generally too costly and too much of a chance for companies to take. However, the fact still remains that they can go after any assets held on US soil or in accounts with success. Ignoring debt will also cause serious damage to your credit rating in the US, so if you ever do return, you’ll be in worse shape than when you left because your that figure will inevitably take a serious hit. On the flipside, if you’re trying to establish credit in the current country in which you’re living, it’s unlikely that creditors will research your credit beyond their own borders. Once again, it’s simply too expensive and time consuming for creditors to do so if you’ve already started to establish a track record as a responsible borrower outside the US.

 

Establishing Eligibility for Bankruptcy Protection

Bankruptcy law interprets the term “domicile” in potentially different ways, which basically means that the debtor has some kind of claim to establish that they’re eligible for bankruptcy protection in the US. If you don’t own any assets in the US, though, then the term domicile in the bankruptcy legalese is open to interpretation by a judge. This is more important if you’re planning on returning to the US one day, even if you don’t when that will be, or if you have American assets you want to protect. This also factors in when it comes to discharging debt, since Chapter 7 allows you to discharge certain types of debt, but it may not be that easy if you’re living abroad and can’t claim any domicile that fits within the bankruptcy code. This is where a qualified lawyer comes in.

 

why you shouldn't wait to file bankruptcy

Why You Shouldn’t Wait

Whether you’re living domestically or overseas, the same time limits still apply to file bankruptcy. Filing for Chapter 7 in a timely manner can halt litigation filed by creditors seeking to collect a debt, avoid a bank levy, and can put off foreclosure if you own real estate. This is especially important if you have assets in the US and want to protect them. On top of that, if a suit is filed when you’re still living on US soil, and then you move, the lawsuit can proceed in your absence. This means that control over any assets will be remote and you stand to lose everything from money to real estate. Dragging your feet on making the decision of what to do with your debt and how you want to manage your assets is never advantageous, and will only result in damage to both your personal finances, as well result in an even bigger mess of legal questions.

 

Filing  Bankruptcy While Living Overseas

The bottom line is that if you do find yourself in another country and have left behind excessive debt in the US, in some cases, you won’t even qualify for Chapter 7 if you don’t have American assets. However, that doesn’t mean that you should leave your debts unattended or that you’ll stay abroad forever. Even if you intend to remain in the country in which you’re currently living, burning bridges is never a good way to go. If you can work out a way to face your debt head-on or file bankruptcy without completely defaulting on sums you owe, it’s better in the long run.

While it’s unlikely that creditors will follow you to another country to try and file suit in that country’s court system to regain lost monies, there are other consequences that can haunt you later. The best thing you can do is talk to a qualified American attorney who’s dealt with international bankruptcy filings before, whether it’s in-person or a phone consultation. Only then can you make an informed decision.

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About Chad Van Horn

Chad T. Van Horn, Esq. is a South Florida business leader and founding partner attorney of Van Horn Law Group, P.A. Through a combination of dedicated philanthropy, spirited entrepreneurship and legal expertise, he applies his resources and network to helping people. Learn more about Chad Van Horn