Overseas bankruptcy and cross border insolvency cases can be very complex. Various factors can influence bankruptcy and how the bankruptcy will be dealt with. The main criteria that can affect this is the country that the person now resides in, and the amount and value of any assets within the UK or your new country of residence.
When you declare yourself bankrupt while living overseas the bankruptcy is, in most cases, contained within the United Kingdom. The bankruptcy is UK based and the bankruptcy will show on your credit record within the UK for six years from the start date of the bankruptcy.
The bankruptcy can impact upon your new life overseas if you have assets in your new country of residence. If, for example, you owned a property outright in your overseas country this will be considered an asset in your UK bankruptcy. If the Insolvency Service is aware of this property then the bankruptcy proceedings can be transferred overseas and “secondary proceedings” are opened in your country of residence.
If secondary proceedings are opened in your new country of residence then any creditors that you have in the overseas country would also be dealt with as well as the creditors that you have in the UK. Any funds left over from the asset after the overseas creditors have been paid would be returned to the Insolvency Service in the UK and split between the UK creditors.
NOTE: if the property that you declare as part of your bankruptcy has low equity, then the property may be dealt with in a different manner via a trustee that is appointed by the Official Receiver.
There are various countries around the world that now have an agreement to help each other when it comes to Cross Border Insolvency cases. The model law surrounding this reciprocal agreement is known as UNCITRAL law.
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UNCITRAL Law and Cross Border Insolvency
What is UNCITRAL Law?
In basic terms UNCITRAL law is the model law adopted by many countries worldwide to help deal with Cross Border Insolvency cases.
This law was developed by the United Nations Commission on International Trade Law in the 1990’s and adopted on the 30th of May 1997. The United Nations encouraged the use of this law as a standard that can be used in Insolvency and Bankruptcy cases where assets are located in different countries.
Since then various countries worldwide have adopted this law. It was eventually implemented in Great Britain on the 4th of April 2006.
One of the ideas was to standardise the way that individual countries work, and in cases where co-operation is required the idea is that the countries will recognise each other and provide assistance where required. One of the slight problems that occurred is that individual countries are entitled to modify the Model Law to suit their own Insolvency Laws and circumstances.
The UNCITRAL law means that foreign office holders and creditors will have access to the Court system in a country where the model law applies and is recognised. This is designed to reduce costs and the overall time that these complex cases can take to deal with.
Insolvency Advice for people living abroad
If you are thinking of declaring yourself bankrupt in England or Wales and you are living overseas then it pays to take specialist advice. As seen above, bankruptcy can affect you, even when you’re living in a different country, if you don’t correctly resolve it.
Our company provides a free initial consultation to explain all of the options that are available to you. If you are a British Expatriate that is looking for Bankruptcy advice or an assisted bankruptcy service from overseas, then either email us or complete our short enquiry form – we can help!