Chapter 7 Bankruptcy & Overseas Assets
Many people have assets outside the country. They might own a boat that is docked in Bermuda, or a vacation property in the Caribbean or Mediterranean. Others hold financial assets in a trust that is offshore.
With a Chapter 7 bankruptcy, the trustee is empowered to sell assets you own that you cannot exempt. Your creditors then receive the proceeds in exchange for having your debt erased.
But what about overseas assets? Could you lose those? And what can you do to keep them? Our South Florida bankruptcy lawyer investigates.
Generally, the Trustee Can Take Overseas Assets
The fact that you own assets offshore does not put them beyond the trustee’s reach. He or she can still liquidate them and distribute proceeds to your creditors. You must disclose these assets, regardless of their location, when you file your bankruptcy paperwork.
However, the fact that the trustee can legally take the assets doesn’t mean he will. There are other considerations that go into the analysis that you should discuss with your bankruptcy lawyer.
Can You Exempt the Asset?
You can exempt overseas assets just as you would if they were located inside the United States. However, you need to find an exemption. For example, you might use your wildcard exemption, which in Florida is worth $4,000 if you are not claiming a homestead exemption. If you have a $10,000 boat in Bermuda, you can exempt up to $4,000.
How Valuable is the Asset?
A trustee will only liquidate an asset if it enhances the value of the bankruptcy estate. If the asset doesn’t, then the trustee will probably leave it alone.
For example, you might own real estate overseas. But the mortgage on the property might exceed the value. In other words, it’s underwater and has negative equity. In that case, a sale would not free up any money for your creditors, so a trustee will not liquidate it.
In other situations, there might be equity in the asset—but not much. For example, a parcel of land might be worth $100,000 but have a $90,000 mortgage. The trustee needs to factor in the time and money it takes to locate the property, appraise it, and then sell it. Though the trustee can use contacts overseas to help with this process, the time and expense might make liquidation impracticable.
Of course, it always remains up to the trustee whether to liquidate an asset. And many assets are easy to value and liquidate. For example, offshore investment accounts pose few problems for liquidation.
You Might Choose a Different Bankruptcy
Our clients also have the option of filing for Chapter 13 protection if they want to avoid losing property. However, they will have to pay their creditors an amount equal to their non-exempt property over the life of their repayment plan. So, in that sense, overseas property still comes into play and is something you must disclose when filing.
For help thinking through these issues, contact the Plantation bankruptcy attorneys at Nowack & Olson, PLLC today. We have helped over 20,000 people of all sorts of backgrounds find financial freedom. Call 888-813-4737 today.