Bankruptcy is the wiping clean of your debts and the liquidation of any assets you possess, notably your home, your car, bank accounts and investments; you are then given a period of supervision, which in the UK is 12 months, and after that you are free and clear to get on with the rest of your life. The process in the UK has become streamlined and shortened and the 12 month supervision period is now very short compared to France and Germany, where nine years is normal.
Insolvency practitioners have seen a dramatic increase in “Insolvency Tourists” with several companies specializing in assisting German residents come to the UK and declare bankruptcy under our legal process.
It is not as difficult as it seems!
For the UK court to recognise your bankruptcy petition, you must be resident in the UK and demonstrate that your Centre of Interest (more commonly referred to as COI) is in the country for the last three months prior to filing. COI is demonstrated by having a job, paying UK taxes, registering with a doctor and being physically resident in the UK.
The sums involved are not small, with typical debts being eradicated in the range of £80,000 to £4 million!
The issue becomes how to get the UK bankruptcy order recognised back in their home country; Germany only requires a COI to be in the UK for 6 months and the order will then be recognised – this means a German declaring bankruptcy in the UK is only under supervision for 12 months compared to 9 years.
While some observers are claiming this is an abuse of the system it does highlight just how advantageous the UK bankruptcy system is when compared to pretty much anywhere else. The UK has implemented many aspects of the bankruptcy process which are seen in the United States where bankruptcy is not seen as a means of punishment but as a means to get people back on their feet as quickly as possible. It also means that entrepreneurs are able to take business risks with much lower financial implications for themselves personally if the gamble does not pay off, and in times of deep recession such as the current economic crisis, entrepreneurs are where new job creation is going to be found.
Bankruptcy is also only one of several options available to UK residents when dealing with their financial issues; bankruptcy is a cathartic and last gasp measure for dealing with insolvency and it is important that qualified and experienced advisers are used as soon as is practical. The sooner professional advice is taken, the better the outcome is going to be in practice for the insolvent individual.
Measures which can be used short of bankruptcy include, consolidation loans, insolvency voluntary arrangements (IVA’s) and simple arrangements and negotiated settlements with creditors without using the courts at all.
While German and French insolvency tourists may be taking advantage of the UK bankruptcy process, in no way is this something which is going to impact upon you. It simply demonstrates just how easy and simple the UK process is and that it compares extremely favourably with the any other system in use on the continent.
Author Resource:
Jensen Carlyle writes for Talk About Debt - the premier debt relief and advice centre in the UK - Click Here for http://talkaboutdebt.co.uk
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