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Filing Bankruptcy While Living Outside the United States

On a bankruptcy forum website, one debtor recently posed a question about filing bankruptcy while living outside the United States.

The debtor blogged: “I am a dual citizen of the United States and Germany, who (now) lives in Germany. I went through some personal problems in 2008 and accumulated so much debt on my American credit cards, that in 2008/2009, all my creditors canceled the credit card contracts. I know my only option is to file bankruptcy. I don’t know though, how to do that from Germany at a United States Bankruptcy Court. I am still a student, I neither own any property, nor do I have any assets. Is filing even possible without being an American resident?”

Every American citizen has the right to file for bankruptcy protection, but the filing comes under the jurisdiction of bankruptcy laws. Filing for bankruptcy protection while living outside the United States has a legal basis found under Title 11 in the United States Bankruptcy Code, section 109- Who may be a debtor. Part (a) of this law states: “Notwithstanding any other provision of this section, only a person that resides or has a domicile, a place of business, or property in the United States, or a municipality, may be a debtor under this title.”

The debtor’s question of being able to file bankruptcy while living outside the United States poses an interesting scenario. Based on 11USC109(a), two possible answers were submitted in the blog by one of the moderators:

  • If a debtor living outside the United States has property or a domicile in the United States that fits the description of this portion of bankruptcy law, the debtor can file for bankruptcy protection in the bankruptcy district court closest to where their property is located within the United States. The debtor does not necessarily have to be present for the 341 meeting if the debtor can convince the court of the necessity of being abroad. This task has proven to be hard to accomplish in times past, and a bankruptcy lawyer is highly recommended to accomplish it on behalf of the filer.
  • If a citizen debtor is living abroad and does not own property in the United States, the key word in the legal description of 109(a) becomes “domicile.” Bankruptcy law does not define “domicile.” That means various court precedences would be considered by a bankruptcy judge in determining any application by a debtor abroad who doesn’t obviously fit the bankruptcy code description of who may file.

The moderator suggested that if the debtor had parents still living in the United States, perhaps he might consider their home as his permanent domicile. Since the debtor is a student, the concept is not unrealistic. Nevertheless in order to file, the debtor would have to petition the bankruptcy court to accept his parent’s home as a domicile.

Determining whether or not you can file from abroad is a complicated issue. It can be done, but the task will require a good reason for the trouble and a bankruptcy lawyer who has had experience in accomplishing a prior similar task.

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