Britain: A Holiday Hotspot for Bankruptcy Tourism
Bankruptcy Tourism is essentially the term for moving to a country with the sole intent of exploiting their more lenient insolvency laws, writing off your debt, then returning home debt free.
In comparison to the laws surrounding debt and bankruptcy in their own countries, the indebted of Germany, Austria, France and Ireland view the insolvency laws in the UK as temptingly lenient. Southern England, particularly Kent, proves to be a real holiday hotspot for the debt dodging holidaymaker. Recent figures suggest that the number of foreign debtors travelling to the UK in order to take advantage of our easy route to bankruptcy has risen by more than 20 per cent.
Since 2002, when European insolvency legislation came into force, making cross-border bankruptcies between member states easier to complete, the number of foreigners seeking this service has ballooned. It’s not just for individuals either. This piece of legislation also facilitates for corporate insolvencies. However, not only is it made easy to switch country for more lenient treatment, it is also possible to shop around the EU to find the most welcoming bankruptcy procedure.
It is hard to see where else you could find the exemplary treatment on offer in the UK though. Our insolvency laws allow visitors to live in Britain, file for bankruptcy and then leave again with their financial slate wiped clean. All within a matter of 18 months.
This makes the debt laws in other European countries seem positively Dickensian. In Germany for instance, an individual will remain bankrupt for a period ranging from 7 to 9 years. In Ireland, an indebted individual will remain “undischarged” for at minimum period of 12 years.
The Insolvency Service has confirmed that it has identified dozens of cases in which people from all over Europe are filing for bankruptcy after having been resident here for less than 12 months. Naturally, the vast majority of their debts are owed to creditors who are outside the UK.
The procedure has become so commonplace that there are now agencies that specialise in this international insolvency dodge. The German company Insolvenz Agentur has set up shop in Kent, thanks to its proximity to mainland Europe and easy access from cross channel links. From this base, they help debt plagued, continental Europeans relocate to the UK. Part of this service sees the company arrange for accommodation and even the provision of a British driving licence.
UK accountants recognise this growing trend but freely admit that it may have its benefits for Britain. The reason for this is that the majority of people who are coming to Britain to file for bankruptcy also seek employment while they’re here and so contribute to the UK economy. Essentially, no matter how you feel about the process ethically, there is no denying that it is 100% legitimate. After all, UK residents often travel abroad for dental or other medical procedures.
So, if the shoe were on the other foot, wouldn’t you?