Bankruptcy

Can I File Bankruptcy in Georgia if I Live Outside the United States

By Susan Blum

I was recently contacted by a potential client who wanted to file bankruptcy but lived outside of the United States. He lived and worked overseas, but owned property in Georgia.

The simple answer is YES, he would be eligible to file bankruptcy in the U.S.   But the bigger question remains:  does he really need to file bankruptcy from a foreign country? It might not be necessary for a debtor to file bankruptcy in the U.S. if he lives abroad and plans to remain overseas.   Filing bankruptcy here would protect his assets and income from domestic creditors by discharging the debts.  However, a Georgia bankruptcy may or may not protect his assets in the foreign country, depending on that country?s laws.

What if our prospective client does nothing?  Often, because of time and cost factors, credit card lenders and other American creditors will not spend the time and money to search for and litigate to go after assets in a foreign country.   If one plans to remain overseas and has no assets (such as real estate or bank accounts) doing nothing may make the most sense.

The federal Bankruptcy Code allows any person to file bankruptcy in the U.S. if they reside, have a domicile, place of business or property here. In this case, the debtor owns a home in Georgia. But even having a simple bank account would be sufficient.   Practically, it would help to have a U.S. mailing address in order to receive mail, although this is not a legal requirement.

But where in the U.S. is the debtor eligible to file bankruptcy? Federal venue laws require that his case be filed in the district where he has resided, has domiciled, or has his principal asset(s) or business for the majority of the 180-day period prior to filing. Here, since the debtor has lived outside the U.S. for more than 180 days, there is no definite answer, and some bankruptcy experts believe that he could file anywhere in the U.S. (although Georgia exemption laws would still apply in this case).

One other caveat, our debtor most likely cannot be excused from the 341 hearing and would have to appear in person.  Only on rare occasions does a judge excuse a physical appearance for a 341 hearing, such as medical necessity or military obligation.   A debtor living in a foreign country would also be subject to all the document production rules applicable to any other debtor.    Now he must determine if the cost of travel would be prohibitive and outweigh the advantages of filing bankruptcy.

Full post as published by The BK Blawg on May 11, 2009 (boomark / email).