Though it’s possible to be forced into bankruptcy by your creditors, such instances are rare whether you live abroad or not. Instead, most individuals file for bankruptcy voluntarily because bankruptcy gives them an opportunity to eliminate certain debts and get back on their feet financially. If you choose to file for bankruptcy protection, federal laws allow you to file even while you live outside the U.S.
Moving abroad does not alter your responsibilities to pay your debts, and your creditors can force you into bankruptcy even if you live overseas. If you have fewer than 12 creditors, it only takes one to force you into bankruptcy; if you have more than 12, three must agree before you can be forced into bankruptcy. Involuntary bankruptcy can be initiated only by a creditor to whom you owe an undisputed, fixed amount of money. In addition, you must owe at least $10,000 to your creditor, your debt cannot be secured by collateral, your creditor must make the involuntary bankruptcy petition in good faith, and your creditor must prove you made no attempts to bring your account up to date. While you can object to involuntary bankruptcy, your objection likely will not stop the bankruptcy unless you can show that your creditor does not qualify to file the bankruptcy case against you. Since individual involuntary bankruptcy is typically a Chapter 7 case, a court-appointed trustee controls the sale of your eligible property during involuntary bankruptcy. Property you own in the United States could be sold to pay your creditors, but debts not fully paid by your bankruptcy case could be discharged, or erased, as long as you otherwise qualify for discharge.
Filing While Abroad
Neither Chapter 7 nor Chapter 13 bankruptcy requires you to live in the United States full-time to file. Bankruptcy laws allow nearly anyone to file for bankruptcy as long as they live in or own property in the states. If you live abroad, you generally must own property located in the U.S. in order to file, such as land, a bank account or a vehicle. If you do not own any property in the U.S., filing for bankruptcy may prove unnecessary since it would likely be difficult for creditors to come after your foreign assets to pay U.S. debts.
Where to File
Bankruptcy must be filed in a U.S. Bankruptcy Court regardless of where you live, but not every bankruptcy court is the appropriate venue, or location, for your case. If you live in the U.S. or have recently moved away, you generally must file your bankruptcy case in the court that covers the area where you lived for the majority of the previous 180 days. For example, if you lived abroad for 100 of the last 180 days and lived in the U.S. for the other 80 days, you would typically file in the state where you lived while you were in the U.S. However, if you have lived abroad for more than 180 days, you must generally file in the court that covers the area where your assets are located.
Appearing in Court
A lawyer can handle many aspects of your bankruptcy case without the need for you to travel back to the U.S. However, you will have to attend a 341 meeting in person, also known as the Meeting of Creditors. The court can excuse you from appearing if you have a medical problem or military obligation, but the cost and inconvenience of travel is typically not considered a legitimate excuse for failing to appear at the 341 meeting. If you don’t want to take on the expense or trouble of traveling back to the U.S., you may want to weigh those considerations against the benefits of discharging your debts in bankruptcy before you decide to file.