Not content with pinching our sun beds the Germans are now invading the UK to use our insolvency rules to go bankrupt!

In 2002, new European insolvency legislation came into force which made cross-border bankruptcies between member states easier to accomplish. This was not just restricted to corporate insolvencies as the new powers allowed individuals heavily into debt to use other EU regulations and local laws to resolve their difficulties, which is just what the hard up Germans are now doing.

To be successful, all the bankrupt tourist need to do is prove that their main job and residence is in the UK and they then become debt free after one year, possibly earlier.

The favourite places for the invasion are the Kent towns of Tunbridge Wells and its neighbour Greenhithe. They are convenient for travel and already have other German settlements including interpreters and German speaking doctors, dentists etc: This tends to make the duration of the bankruptcy and the need to live in the UK for a year more attractive. 

According to data from the Insolvency Service, in the year up to March 2009, 59 foreign nationals came to the UK and successfully filed for their bankruptcy for debts incurred in other countries. Apparently all of these individuals had resided in the UK for at least one year, albeit under a temporary address. 

So why come to Britain to resolve their debt problems I hear you ask? Well in Germany it can take up to 7 years and in Ireland 12 before the debts are written off whilst here in the UK it only takes between 6 and 12 months before discharge. However in the UK you may be required to make payments towards the administration of your bankruptcy. This normally happens if you have any disposable income after paying normal necessary living expenses and the period in this case isusually 36 months. 

So get used to the term ‘a bankruptcy tourist’ as it is going to become more popular by the day. 

You can find more on bankruptcy including pros and cons, procedure and payment orders by visiting the DebtWizard guide to bankruptcy. 

Debtwizard comment

Although this is legal one has to question why other countries in the European Union have not revised the way indebted consumers cannot resolve their debt issues more quickly.

I note that the numbers are pretty low at the moment, 59 in the year up to March 2009, but this has the potential to get seriously out of hand.

I am also concerned about the cost as I am reading reports of around £7,000 being charged for the service. How does a potential bankrupt raise this money? Hopefully not on their credit cards and one wonders what advice they are receiving in making this payment.

Being economically active includes being employed or having a source of income, owning a bank account, having a national insurance number or paying rent. 

Whether or not you agree with this development you could have a long and difficult argument about its ethics.