Virtually all consumers of member states of the European Union (EU) are not aware of a number of surprising perks that European Union membership provides in terms of personal insolvency. Those features are rooted in the basic principle of the unbridled migration of labour that European Union citizens enjoy within the European Union and are most definitely significant for those who are loaded down by individual liabilities and are often confronted with hostile insolvency actions in certain member states of the European Union.
There are extensive differences in bankruptcy legislation amongst individual member states of the EU. Great Britain is often praised as a shining beacon of enlightenment insofar as it has developed a substantial structure of personal insolvency law. This presents any financially troubled citizen with a a number of remedies for their difficulty. The wide selection of solutions and options on offer are neither draconian nor punitive. What they provide is acknowledgement of every citizen's right to a second opportunity - a new start in fact. The fundamental vision could be termed pro-entrepreneurial similar to the entrepreneurial business environment in the United States. When compared to several other member states of the European Union, British system is extremely attractive. In Great Britain insolvent debtors are able to experience the opportunity to rehabilitate themselves, whilst in many other EU member states the present legal and national culture will seek to discipline the insolvent consumer. So how can the insolvency system in the United Kingdom provide unexpected benefits for European Union citizens who are not UK citizens?
European Union regulations permit the insolvency legislation of one EU member state to apply in another, subject to certain provisos. One of the features of cross-border insolvency is that debtors may seek to open insolvency proceedings in a state of the EU, other than the state in which they reside and work. Furthermore, they may choose any member state in which to exercise this right and it is only to be expected that they would choose a state which has enacted insolvency legislation more favourable to their particular circumstances than that which prevails in their own 'home' jurisdiction. This phenomenon is sometimes referred to as "forum shopping". As a result of this right, an insolvent debtor who lives in any member state may be able to put forward an Individual Voluntary Arrangement (IVA) or petition for bankruptcy or indeed pursue some other legal solution to their debt problems in the UK - provided that the UK is their "centre of main interests". The definition of the term "centre of main interests" or COMI is of course key to the matter. The relevant EU Regulation states that "the centre of main interests should correspond to the place where the debtor conducts the administration of his interests on a regular basis and is therefore ascertainable by third parties".
The usual understanding of this statement is that the COMI will be the state in which the consumer for the most part performs their business, occupation or self-employment. Where the debtor doesn't trade or carry on with an occupation, the COMI is generally looked upon as the country where he or she lives. If the borrower lives in one nation and trades in another, the COMI is the nation in which the person trades. Where the person's only association with a nation is that they work in that location on a non self-employed basis (quite possibly commuting from a nearby country), then the COMI will normally be in the country in which they reside and as a result pay bills, manage a bank account, purchase goods and so on.
In the eventuality of bankruptcy proceedings, the COMI is determined at the date the petition is presented and not where, in the past, the relevant activity was carried out. Therefore the locale of creditors and the country where debts were incurred aren't pertinent matters in ascertaining a COMI. Apparently, although not relevant to individual insolvency is that with regards to a company, the COMI is the registered office, without substantiation to the contrary.
What about an IVA? To take an example: a serving member of the Armed Forces who is working overseas and who can be stationed offshore for prolonged periods of time may go into an IVA in the UK. The very same may well pertain to anybody who is for example being employed in an EU member country but whose property and assets are located in the United Kingdom. In a similar way, anyone who is employed in the merchant navy may enter into an IVA, even though they may perhaps be in foreign countries for much of their working lives, provided their "centre of main interests" is in the UK. Obviously there are various scenarios which may affect the debtor's capacity to conform to the terms of an IVA. They could feature properties and assets held or obtained in another country or the likelihood of incurring liabilities abroad in the course of or just prior to the term of the offered IVA. Even so, lenders will usually consent to this type of IVA provided they are satisfied with the debtor's capacity to adhere to the terms. It should be kept in mind that an IVA in the UK is limited to England, Wales and Northern Ireland. For Scotland the generally comparable insolvency option is a Trust Deed.
There are extensive differences in bankruptcy legislation amongst individual member states of the EU. Great Britain is often praised as a shining beacon of enlightenment insofar as it has developed a substantial structure of personal insolvency law. This presents any financially troubled citizen with a a number of remedies for their difficulty. The wide selection of solutions and options on offer are neither draconian nor punitive. What they provide is acknowledgement of every citizen's right to a second opportunity - a new start in fact. The fundamental vision could be termed pro-entrepreneurial similar to the entrepreneurial business environment in the United States. When compared to several other member states of the European Union, British system is extremely attractive. In Great Britain insolvent debtors are able to experience the opportunity to rehabilitate themselves, whilst in many other EU member states the present legal and national culture will seek to discipline the insolvent consumer. So how can the insolvency system in the United Kingdom provide unexpected benefits for European Union citizens who are not UK citizens?
European Union regulations permit the insolvency legislation of one EU member state to apply in another, subject to certain provisos. One of the features of cross-border insolvency is that debtors may seek to open insolvency proceedings in a state of the EU, other than the state in which they reside and work. Furthermore, they may choose any member state in which to exercise this right and it is only to be expected that they would choose a state which has enacted insolvency legislation more favourable to their particular circumstances than that which prevails in their own 'home' jurisdiction. This phenomenon is sometimes referred to as "forum shopping". As a result of this right, an insolvent debtor who lives in any member state may be able to put forward an Individual Voluntary Arrangement (IVA) or petition for bankruptcy or indeed pursue some other legal solution to their debt problems in the UK - provided that the UK is their "centre of main interests". The definition of the term "centre of main interests" or COMI is of course key to the matter. The relevant EU Regulation states that "the centre of main interests should correspond to the place where the debtor conducts the administration of his interests on a regular basis and is therefore ascertainable by third parties".
The usual understanding of this statement is that the COMI will be the state in which the consumer for the most part performs their business, occupation or self-employment. Where the debtor doesn't trade or carry on with an occupation, the COMI is generally looked upon as the country where he or she lives. If the borrower lives in one nation and trades in another, the COMI is the nation in which the person trades. Where the person's only association with a nation is that they work in that location on a non self-employed basis (quite possibly commuting from a nearby country), then the COMI will normally be in the country in which they reside and as a result pay bills, manage a bank account, purchase goods and so on.
In the eventuality of bankruptcy proceedings, the COMI is determined at the date the petition is presented and not where, in the past, the relevant activity was carried out. Therefore the locale of creditors and the country where debts were incurred aren't pertinent matters in ascertaining a COMI. Apparently, although not relevant to individual insolvency is that with regards to a company, the COMI is the registered office, without substantiation to the contrary.
What about an IVA? To take an example: a serving member of the Armed Forces who is working overseas and who can be stationed offshore for prolonged periods of time may go into an IVA in the UK. The very same may well pertain to anybody who is for example being employed in an EU member country but whose property and assets are located in the United Kingdom. In a similar way, anyone who is employed in the merchant navy may enter into an IVA, even though they may perhaps be in foreign countries for much of their working lives, provided their "centre of main interests" is in the UK. Obviously there are various scenarios which may affect the debtor's capacity to conform to the terms of an IVA. They could feature properties and assets held or obtained in another country or the likelihood of incurring liabilities abroad in the course of or just prior to the term of the offered IVA. Even so, lenders will usually consent to this type of IVA provided they are satisfied with the debtor's capacity to adhere to the terms. It should be kept in mind that an IVA in the UK is limited to England, Wales and Northern Ireland. For Scotland the generally comparable insolvency option is a Trust Deed.
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