Filing for Bankruptcy From Outside the United States

08 Oct Filing for Bankruptcy From Outside the United States

Can you file for bankruptcy in the United States if you live in Canada…or England…or Costa Rica? The answer, at least in Maryland, is “Yes.”

A recent decision by Maryland Bankruptcy Judge Nancy Alquist in a case I argued, In re Baker, held that Mr. Baker, a US citizen who was a resident of Costa Rica, could file in Maryland. This was so even though his only tie to Maryland was a $100 bank account opened for the purpose of giving the Maryland Court venue over his case. Why did Judge Alquist reach her conclusion and why is this case important?

Mr. Baker’s case was a “no asset Chapter 7.” This is a type of Chapter 7 case where either there is no equity in the debtor’s assets, or all of the assets are exempt. And his case would have been a no-asset Chapter 7 regardless of which state the case would have been filed in. In other words, it didn’t matter which state Mr. Baker filed in or which state’s exemptions were used, his creditors would not receive anything and all of his debts would be discharged.

Judge Alquist held that 28 USC § 1408, which governs venue in bankruptcy cases, governed. This statute states:

“[A] case under title 11 may be commenced in the district court for the district…in which the…principal assets in the United States, of the person or entity that is the subject of such case have been located for the one hundred and eighty days immediately preceding such commencement, or for a longer portion of such one hundred and eighty day period….”

Although the US Trustee argued that the $100 bank account was too tenuous a connection with Maryland to allow venue, Judge Alquist noted that § 1408 contains no minimum amount that must be present in the US, so long as it was the debtor’s “principal asset” for the 180 days before the case was filed. As she stated, “This statute does not contain any quantification of the type of property that is sufficient, and one court has held that ‘a dollar, a dime or a peppercorn’ located in the United States will suffice. In re McTague, 198 B.R. 428, 432 (Bankr. W.D.N.Y. 1996).”

In denying the US Trustee’s Motion to Dismiss, Judge Alquist noted the fundamental entitlement of a debtor to file for bankruptcy, stating:

“Having the right to file for bankruptcy protection, is Mr. Baker to be denied a remedy based on venue? The Court does not believe that this result comports with notions of justice or with a fair and plain reading of the venue statute.”

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Brett Weiss, a senior partner at Chung & Press, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11 and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his law partner, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute, the Bankruptcy Bar Association of Maryland, and the Civil Justice Network. He has been recognized as a “Super Lawyer” every year since 2007 for Maryland and the District of Columbia, and in 2011 received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, The United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.
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