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Can You File Bankruptcy If You Live Outside the USA?
By Mark Markus | June 27, 2008
Over the years I have had many clients who live outside the United States of America that need to file bankruptcy here. This is a tricky and, to the courts and many trustees, a confusing proposition, but I assure you that if you meet the requirements, it is perfectly legal.
A full legal treatment of this subject can be seen in my article published in the Central District Consumer Bankruptcy Attorneys’ Association newsletter.
Do you Need to File your Bankruptcy From a Foreign Country?
The first question one must ask in this circumstance is whether it’s even necessary to file a bankruptcy case in the United States if you live abroad and plan to remain outside the USA. Filing bankruptcy in the USA basically protects your assets and income in the USA from your creditors by discharging the debts. It may or may not protect assets you have in foreign countries, depending on their laws. In most cases, US creditors are not going to come after your assets in a foreign country and, if they did, you can always avail yourselves of that country’s bankruptcy laws.
But, there are times when it is necessary, such as if you do still have assets in the USA or receive income from a US company, or plan to return in the near future. So then, the questions become A. Can you file bankruptcy in the USA and, if so, B. WHERE in the USA can you file?
Are you Eligible to be a Bankruptcy Debtor?
My article covers this in detail, but to summarize:
11 U.S.C. 109 allows any person to file bankruptcy in the USA if they reside, have a domicile, place of business OR property in the USA. What constitutes sufficient “property”? That depends on the court, but for most, even a simple bank account will suffice. Sometimes merely depositing funds into an attorney’s trust account meets the requirement. In other words, in most cases almost any asset here in the USA will make a person eligible to be a debtor in bankruptcy. (what chapter you’re eligible for is another matter altogether). For practical purposes, you also must have a mailing address in the USA where you regularly receive mail. This is not a legal requirement, but is practically necessary.
Where in the United States Can you File Your Bankruptcy Case (VENUE)?
The next question becomes WHERE in the USA you can file bankruptcy. Typically, federal venue laws require that your case be filed in the district where you have resided (or domiciled or have your principal assets or business) for the greater part of the 180 day period prior to filing your bankruptcy case. But what happens if you’ve lived outside the USA for more than 180 days? There is no definite answer to this, but my opinion (and one I have successfully argued in numerous cases) is that in this situation you can file your bankruptcy case ANYWHERE in the United States! This does not, by the way, affect which state’s exemption laws will apply to your case but it does affect where you will have to appear for your mandatory meeting with the Trustee.
Ultimately, the need to appear for the 341a meeting and the costs associated therewith, may outweigh the benefits to filing the bankruptcy. In some cases, depending on the reasons why, the US Trustee’s office or the court may excuse physical appearance at the meeting, but this usually requires a showing of medical necessity or military obligations.
Topics: General Bankruptcy Issues |
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