Moving Abroad

Kay, the laws differ in each country. You should check in the country's government website and know the laws relating to debt. Some companies have their network outside in order to continue the collections. I am not sure if moving out of London will drop this debt forever.

Both the UK and Italy are in the EU and I think a judgment is one EU country is automatically enforcable in another. I lived in Belgium for a few years and, although I am not an expert on EU law, it seemed like there was very little legal difference from one country to the next - open borders, common economic market, same currency and even the enforcement of criminal laws seemed common to everything. I can't say for certain that this held true in civil matters, but you want to be sure that if the British lender got a judgment they couldn't garnish your wages or seize your assets in Italy. If that's true, and they won't compromise the debt, bankruptcy may be a viable option if you truly cannot make the payments anymore.

Thanks guys for your advice. Just for the record though I'm not running away from the debt, just found love in another country! But I think I'm still not understanding the bankrupcy laws! You say that if I can't make the payments anymore then head for bankrupcy? What if I have no assets to hand over? What then? :?:

My experience with bankruptcy is all in the U.S. and all pre-2005 amendments, so please don't assume what I say applies to your situation. I'm just going to stay general and you'll need an attorney from either Italy or the UK (depending where you file) to give you real legal advice. (Not sure if you'd use a solicitor or a barrister in the UK. I guess it depends on the procedures.)

Basically, in a bankruptcy you calculate all of your debts both in terms of their individual value, their type (see below) and the overall total.

These debts fall into certain categories - secured (car loans, most leases, mortgages, etc.), unsecured non-priority debts (most credit cards, medical bills, payday loans, etc.) and unsecured priority debts (taxes, student loans, etc.) There is another category called executory contracts that usually applies only in corporate bankruptcies as well as separate treatment, in corporate cases only, for debts owed to insiders (usually principals, executives and their immediate families.) Most individuals only need to worry about the first two categories.

With secured debt you either have to give up the item that's liened (ex. a leased vehicle) or "re-affirm" the debt (keep the payments current and let the debt survive the bankrutpcy - with full disclosure to the court) if you're liquidating the debt. (Commonly known as Chapter 7 in the U.S. Bankruptcy Code) If you're restructuring the debt (or, "doing a Chapter 13") you can even catch up on back mortgage or car payments and keep the vehicle. If you do return the property, the difference between what the lender gets at auction and what you actually owe is just unsecured debt.

Now, here's where your assets come into play. First off a lot of your property is exempt. There are many categories of exemption under federal law, i.e., ($15,000 in home equity, $2000 in car equity, etc.) but individual states can offer exemptions too and if these are better you can elect these. For example Texas and Florida offer huge homestead exemptions. If something is exempt, it does not need to be liquidated to pay your creditors. (For the more sophisticated out there, I know I just oversimplified the exemption process but this is meant to be a very general overview.)

Whatever is leftover gets sold off and the proceeds go to your creditors according to the "order of operations" in the bankruptcy code. In consumer cases, it's usually all unsecured non-priority at this point so everyone gets their proportionate share. For example, if your Citibank Mastercard represents 30% of your overall debt, they get 30% of the liquidation "pot". It's usually just pennies on the dollar (if there is anything at all) and it's all they get. You owe no more money once the Court grantsa discharge.

If you go the Chapter 13 restructuring route (in the old days this was only if you were saving a house, car or some other big asset that would be lost in a 7; now it's pretty much required for anyone earning more than $40,000 a year) you make monthly payments over 3-5 years, but you only pay your unsecured creditors whatever they would have gotten in a Chapter 7 liquidation. (At least pre-2005 amendments it worked that way. Now it might be different)

I can't tell you much about the new procedures since I haven't filed a personal bankruptcy for a client since before the code was amended and my knowledge is not really up-to-date. But this shouldn't matter much, since U.S. procedures aren't what you'll follow in Europe. This was only meant to give you a general idea.

Hope this helps.

Thanks everyone for your help! Since your posting I have spoken with someone professional and everything is getting sorted out once and for all!! I just didn't like the idea of the debt hanging over my head! Thanks again for your help. This website has been a great help and good luck to anyone with similar situations.. all I can say is keep your chin up and say a little pray.. k :o