Believe it or not, individuals considering bankruptcy may now be taking a page out of the playbook of medical tourists. Medical tourists travel from countries with expensive health care systems to countries with cheaper systems for medical procedures. So, a Kansas resident with tonsillitis might travel to India for surgery.
But now, some people may be using a similar strategy for the purpose of filing personal bankruptcy. We doubt there’s any chance of the trend taking off for U.S. residents, but it’s an interesting development to take note of.
One couple, originally from Ireland, owning approximately $1 billion in property assets around the world has filed for bankruptcy in London. London courts tend to process bankruptcies in about a year, whereas it can take Irish courts around 12 years to allow individuals to emerge from bankruptcy.
The reason it seems untenable for most U.S. citizens to think about pursuing such a path is that in order to file for bankruptcy under the laws of the United Kingdom, most of the individual’s assets and business interests must be in that country. For that reason, London courts are questioning the legitimacy of the bankruptcy petition filed by this Irish couple.
One thing the case clearly illustrates is the fact that absolutely anyone can end up needing the protection of bankruptcy laws. Despite the fact that the Irish couple once owned luxury property around the world, one London judge concluded that there is no question that the couple is bankrupt.
Laws around the world routinely encourage people to take financial risks in order to promote business creation and investment. Most governments consider these risks beneficial to their economies. A major piece of legal systems meant to encourage these risks are the bankruptcy laws. In the U.S., these laws protect people from creditors and create a safety net when financial risks do not pay off.
Source: The Guardian, “Irish property pair launch bankruptcy battle,” Rupert Neate, June 14, 2012