Bankruptcy tourism

What is bankruptcy tourism?

Bankruptcy tourism is a phenomenon that has come to light in recent years.

It entails individuals who are in financial difficulties, commonly from Ireland, moving to the UK in order to take advantage of more favourable bankruptcy laws.

How does bankruptcy tourism work?

Bankruptcy tourism works by the individual relocating to the UK, usually only temporarily, and setting up a ‘centre of main interest’. This entails showing that the person has relocated to the UK, whether permanently or temporarily, by acts such as:

  • Setting up in the UK for work
  • Registering a home address
  • Registering on the electoral roll

However, creditors can still pursue you for a debt no matter where you are living. It will no doubt be more difficult for a creditor to keep pursuing a debt in another country and therefore sometimes they may just give up.

Nonetheless, it is always recommended to seek legal advice prior to making the decision to live elsewhere.

Why are the UK bankruptcy laws more favourable?

The UK bankruptcy laws are more favourable than some other countries’ bankruptcy laws. In particular, Ireland’s bankruptcy laws are quite harsh.

In Ireland, someone who has been made bankrupt remains so for a period of 12 years, which can make it very difficult for them to piece their life back together. It is also more difficult to obtain bankruptcy in Ireland in the first place than it is in the UK.

Do you have to stay in the UK once bankrupted?

To take advantage of UK bankruptcy laws, you generally have to stay in the UK for a period of time prior to and following your application for bankruptcy.

You are usually not restricted from travelling outside of the UK for holiday, although you will have only limited funds available to do so during your period of bankruptcy. Most bankruptcy tourists maintain their bank account in the UK, as it can be difficult to open a bank account in Ireland as a bankrupt.

How do you apply for bankruptcy in the UK?

The process of applying for voluntary bankruptcy in the UK is not without some complexity.

You need to submit a petition setting out your reasons for requesting bankruptcy, along with several other forms to your local court.
A detailed statement of affairs, setting out all of your assets and debts, and the details of each of the creditors, must be submitted. You will have to pay court fees and a deposit. Many people choose to use a bankruptcy lawyer for this process.

If you would like some more detailed information on voluntary bankruptcy, see our information page.

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