Does bankruptcy protect me against debts from
other countries?
By David Leibowitz, Illinois and Wisconsin Bankruptcy Attorney on Jun 21, 2009 in General Bankruptcy
Information
Clients frequently face debts from countries other than the United States. If you file a bankruptcy case in
the United States, what is the effect on your debts from overseas?
We tell clients not to worry too much about this. First of all, it takes some effort for a foreign creditor to
make its judgment enforceable in the United States. Some states might allow for “domestication” of
judgments easily and others might not.
Nevertheless, a discharge in bankruptcy will wipe out all judgments against you whether they arose here in
the United States or someplace else. This means that judgment creditor may not collect this judgment
against you in the United States after your discharge. If it does, you could sue them for the violation of the
discharge injunction. You may have other remedies too.
This does not mean that you are “home free.” If you were to move back to the country where the judgment
arose, let’s say Scotland for example, your United States bankruptcy discharge would not affect the validity
of the judgment in Scotland. You would have to seek bankruptcy in the foreign country under the foreign
country’s laws in order to protect yourself there. So, more realistically, if you have claims against you in
neighboring countries like Mexico or Canada, you’d have to address your rights under Mexican or Canadian
bankruptcy law if you planned to move back there to protect yourself against claims arising in your home
country.
This leads us to another important point. You need not be a citizen of the United States in order to file a
bankruptcy case in the United States.