How to File for Bankruptcy in the UK from Abroad- Is returning Important?
That moment you realize that you’ve gone bankrupt is one of the most distressing moments of your life. All those outstanding debts piled up, creditors breathing down your neck, and no financial ability to pay off the debts on time or in the nearest future really puts a burden on you.
Then, some avenue opens up abroad, you jump on the opportunity, and jet out of the UK, leaving your debts behind in the UK.
But, of course, your debts do not disappear. They are lying in wait, and your creditors have somehow traced, or will possibly trace, your new location abroad. One of these days, if it is yet to happen, the local debt collectors may just be at your new door step, and the reality of your debts will stare down at you again.
And unfortunately, some miracle money that can help you clear your debts has not fallen from the high heavens.
So, what do you do? Because you need to do something.
You can either endure the embarrassing cold calls of your creditors and the possibility of lawsuits OR you can grapple with the option of filing for bankruptcy (PS: Filing for Bankruptcy is not an easy option, but it can help eliminate or reduce the burden of paying some of your debts. Resort to it only when you are sure that you do not have a better alternative).
If you do settle for filing bankruptcy, the next thing to decide on is – ‘whether you should file for bankruptcy in your new location’, or ‘whether you should file for bankruptcy in the UK from your new location’.
These options are different. If you decide to file in the UK from your new location, then it is apparent that you should know how to file for bankruptcy in the UK from abroad.
But there are a few things that you need to consider before proceeding to file for bankruptcy in the UK from abroad.
So, here is a quick highlight of things you’ll need to consider:
- What country do you reside in presently?
- How much debt do you owe?
- Do you need to return to the UK to present your bankruptcy application?
- What is the cost of bankruptcy fees in the UK?
We’ll examine these highlighted points in order to help you fully understand why they are necessary.
What Country do You Reside in Presently?
For the purpose of filing bankruptcy in the UK from abroad, the word ‘abroad’ covers countries which are not European Union (EU) member States. So, if you currently reside in the EU, you cannot file for bankruptcy in the UK from there.
How Much Debt Do You Owe?
If you’ve passed the first hurdle, the next item to consider is how much debt you owe.
Your debt level determines whether you really need to file for bankruptcy in the UK from abroad, or whether you should file bankruptcy at all.
For example, if your debt is below £5000, having to file for bankruptcy in the UK from abroad is not a cost-effective way to deal with this amount of debt. This is because, you can easily set up a debt management program with your creditors for this level of debt, which will greatly reduce the cost you may incur as additional expenses for filing your bankruptcy from abroad.
Where your debt is above £10,000, then your situation really comes within the realm of considering the option of bankruptcy. Whether it should be filed from abroad will depend on a holistic consideration of other factors that will be discussed below.
Do you need to return to the UK to present your bankruptcy application?
Whether or not you need to return to the UK to present your bankruptcy application depends on the length of time you have lived abroad.
If you have lived abroad for a period of less than three years, you do not need to return to the UK to present your bankruptcy application. You can simply file your bankruptcy in the UK from where you currently reside.
However, if you have lived abroad for more than three years, you cannot file for bankruptcy in the UK from abroad. What you will be directed to do is to file your bankruptcy application (in respect of your UK debts) in the country you now reside in. You’ll also be directed to include your UK debts in your application. Through this, your application covers your UK debts. If this is not in your best interest, then you will have to return to the UK to present your bankruptcy application.
In other words, if you have lived abroad for more than three years, you either return to the UK to present your bankruptcy application, or your bankruptcy application in respect of your UK debts will be filed and processed in the country you now reside in.
What is the Cost of Bankruptcy Fees in the UK?
Currently, the bankruptcy fee is £680 for each individual. If a married couple wishes to file a joint bankruptcy, they’ll still pay £680 each i.e. £1,360.
So, how do you file Bankruptcy in the UK from Abroad?
After considering the points earlier discussed, you’ll realize that successfully filing a bankruptcy from abroad is open to those who have lived abroad for less than three years.
So, this is how the filing process works:
- You’ll need to Complete and submit your online application
- You’ll pay your application fees
- An interview will be set up for you by a designated Official Receiver. This is usually done through the phone.
- You’ll have to disclose to the Official Receiver, truthful details about your local income and living expenses, and any assets you own abroad.
If you decide to engage the services of a bankruptcy company, the company will handle this process together with you.
Do You Really Need to Engage the Services of a Bankruptcy Company?
Filing for bankruptcy from abroad seems relatively simple. It looks like all you need to do is simply fill out your online application, attend to a couple of interviews, and the process is concluded. But it can be more complex than that.
The paper work required, the sort of questions to answer at the interview, the forms to sign and return, and other legal requirements, make it desirable for you to engage the services of a professional, who will give you the needed guidance, advice and assistance.
Furthermore, the need to negotiate and seal a favourable income payment agreement also makes its desirable to engage professional services.
So, if you do not have the requisite legal experience in bankruptcy filing, you have to consider engaging the service of a bankruptcy company. And because you’re filing from abroad, you have to get the services of a bankruptcy company that has the experience in this type of bankruptcy application.
Even though this will come at an extra cost to you, it does come with good advantages, especially if your debt level is high. An experienced bankruptcy expert knows the many pitfalls of the process which can easily be avoided. Also, with its expertise and experience, a bankruptcy company can help you negotiate and secure better payment agreements, or a better outcome in general.
This decision will save you the extra thousand pounds you are likely to incur if you decide to undertake the process on your own and end up with an unfavorable income payment agreement.
This is not a form of discouragement against filing your bankruptcy application on your own. But, considering the reasons we have discussed above, a little cost will save you from a lot of harm, especially if you have no knowledge and experience on how to handle the details required of you.
To help you better appreciate the pitfalls in the process, the following are some of the problems that you are likely to encounter:
- The Official Receiver may dispute the amount you declare as your living expenses. This is because, the Official Receiver will usually have a predetermined set of allowances (usually used by the Insolvency Service). A bankruptcy company will know how to handle such situation.
- The Official Receiver will usually ask that you enter into an income payment agreement for a three-year period. Usually, the Income Payment Agreement is very high. If you lack the expertise, or experience, you may be unable to negotiate the terms of the agreement, and you may end up being obligated to pay very high monthly amounts for the agreed period.
- Since you are required to list out the assets you have abroad, your high valued assets are at the risk of threat of possession or sale. The Official Receiver can apply to the court in the country that you reside, and obtain the assistance of such court to possess or sale your property. So, in essence, your assets abroad do not enjoy any immunity from bankruptcy proceedings.
As stated earlier, with the help of an experienced bankruptcy company, some of these pitfalls (including those not mentioned here), can be better handled and managed to your best interest.
Does Filing Bankruptcy in the UK from Abroad Affect Your Credit in Your Country of Residence?
Technically, the answer is no. Your bankruptcy application only affects your credit rating in the UK and hopefully remains there.
However, if your bankruptcy is not handled correctly, it really can have an impact on your credit rating in your new country of residence.
Also, in the course of handling your bankruptcy application, the Official Receiver is usually required to make contacts with certain companies and organizations within your country of residence. Whether or not such contacts will affect your credit rating in your place of residence is a matter which your bankruptcy company can help you determine.
How Long Does the Bankruptcy Last?
Normally, if your bankruptcy application is handled correctly, your bankruptcy last for a period of twelve months. This is the standard duration for bankruptcy in the UK. Where an extension is necessary, your bankruptcy period can always be extended.