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I am an American citizen who moved to Canada 10 years ago.

 
HCLegal's Avatar
  • Answered by:HCLegal
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Customer Question

I am an American citizen who moved to Canada 10 years ago. I find myself in serious financial difficulties and have filed for bankruptcy in Canada. I owe approximately 60000$ in unsecured credit card debt to US creditors (cards that I obtained when I used to reside in the US). Prior to filing for bankruptcy (several months ago), I negotiated special terms (low interest, 5 year repayment plans) with each US creditor. My Canadian bankruptcy trustee is telling me to cease repaying these American creditors. It is my understanding that some of my US creditors may participate in the Canadian process - but can not be certain that they will.

Can anyone advise me of what might happen to me?

I live in Canada and work in Canada. I can not legally make payments to these US creditors as my trustee's role is to ensure equal treatment among all my creditors.

What is the likelihood of a US creditor "playing ball" in the Canadian bankruptcy system?
If a US creditor does not recognize the Canadian process, what can they do to me?
Can they sue me?
Can they harass my parents (who still live in the US?)
Can they tack on exorbitant fees or interest and balloon the debt that I owe?

My trustee states that I can resume payments to these US creditors after my bankruptcy has been discharged in Canada (which will likely be 21 months from now). What sort of mess might I be facing at that time if I wish to travel to the US for any reason?

 

Optional Information:
State/Country relating to question: United States

Already Tried:
Consulted with a bankruptcy trustee in Canada

Submitted: 331 days and 8 hours ago.
Category: Bankruptcy Law
Value: CA$69
Status: CLOSED

Accepted Answer

Expert:  HCLegal replied331 days and 8 hours ago.


HCLegal : Hello and thank you for your question...
HCLegal : You asked several questions so I will try to address each one individually.
HCLegal : 1)It is my understanding that some of my US creditors may participate in the Canadian process - but can not be certain that they will. Can anyone advise me of what might happen to me?
HCLegal : Most US credit card companies are not going to recognize your Canadian bankruptcy.
HCLegal : The debt was incurred in the US and there is really no advantage for US credit card companies to recognize your Canadian bankruptcy.
HCLegal : The US credit cards cannot do anything to you while you are out of the country. They cannot sue you.
HCLegal : The balances will continue to grow with the interest being added.
HCLegal : They can call your parents but as long as your parents were on signors on the credit card accounts there is nothing that can happen to them. They can't sue your parents.
HCLegal : Can they sue me?
HCLegal : No, not while you are out of the country... But the statute of limitations, which is how long they have to sue you, is tolled while you are going...meaning the time clock stops and will not restart until you return to the US.
HCLegal : Can they harass my parents (who still live in the US?)
HCLegal : They can call them, but that is it... Your parents can send a cease and desist letter to make the calls stop.
HCLegal : Can they tack on exorbitant fees or interest and balloon the debt that I owe?
HCLegal : Yes... And they will... The interest will continue to accrue.
HCLegal : What sort of mess might I be facing at that time if I wish to travel to the US for any reason?
HCLegal : Travelling back to the US for visits will not be a problem. If you move back, then eventually you will have to deal with the debt.
HCLegal : If you move back, that is when they can sue you.
Customer :

This is a good answer. Thank you.

Customer :

I have a few follow ups

HCLegal : Sure...
Customer :

I have been advised by my trustee to call these creditors

Customer :

essentially to explain to them that I am bound by Canadian law NOT to repay them "preferentially"

Customer :

My trustee recommends I explain that they can recuperate some moneys from assets which I have in Canada (I have no assets in the US to dispose of)

HCLegal : You can do that, but it will not stop them from adding interest and other fees. It may reduce the phone calls though. So it won't hurt.
Customer :

do you think that there is a likelihood that they will participate by sending in a claim to my trustee?

HCLegal : I would not tell them about any assets you have in Canada.
Customer :

Yes but they are entitled to a share in my assets

Customer :

Canadian law will treat them equaly

Customer :

but there is no reciprocity, I understand that

HCLegal : If you want to try to get them to participate in your Canadian bankrutpcy then you can tell them and that might get them to participate.
Customer :

I guess I am trying to reduce my risk in the future

HCLegal : Realistically, I do not see any of the US creditors going through the hassle, especially since it is US debts.
HCLegal : I have had clients with sizable assets overseas and the US creditors don't bother to try and get it them.
Customer :

I have no intention today of returning to live in the US - but I also have no idea what the future holds (family etc) - I wonder why these creditors would go through the hassle of suing me / waiting for me to return to the US (how would they know if I come back in 15 years from now)? etc

HCLegal : Unless I am required by law, I do not like giving creditors any information about my clients assets.
Customer :

what you are saying makes sense

Customer :

however my goal is to have a fresh start and get these debts taken care of

Customer :

not waiting for me down the road (and perhaps ballooned to unreasonable amounts)

HCLegal : They won't know when you get really. I predict that the US debt will just go away and you won't hear from them.
HCLegal : I understand your deliema.
Customer :

So in other words, it is likely that they will harrass me like crazy but then eventually not be able to do anything and they might give up within a few years

Customer :

I do not expect to return to the US for at least a decade

Customer :

your instinct is that they will abandon my case?

HCLegal : Yes... Especially with you being gone that long.
HCLegal : That is what I predict.
Customer :

OK well thank you for your very fullsome answers

HCLegal : My pleasure...
Customer :

I really appreciate speaking with a professional who can give me some insight

HCLegal : You are welcome.
Customer :

they can not sue me while I live in Canada? that seems odd

HCLegal :  I hope you found my answer helpful, and if so please do not forget to click ACCEPT or RATE my answers this is the only way that I will get credit for assisting you– I receive no credit for helping you unless you actually press ACCEPT, even if you already have a subscription. If you need more information, please use the REPLY button and I’d be more than happy to answer to your satisfaction. There is no fee for follow up questions before or after accepting, if we continue the conversation. If you feel that I went an extra step to help you, a bonus in the form of another accept or an “add on” (available after you accept) is truly appreciated.Positive feedback is also greatly appreciated.  I leave all my customers feedback and it will only take a second!
HCLegal : They can't sue you because you are not in the US and they do not have any jurisdiction over you.
Customer :

OK that makes sense - thank you

HCLegal : You are welcome

Expert TypeAttorney
Category: Bankruptcy Law
Pos. Feedback: 100.0 %
Accepts: 116
Answered: 6/20/2012

Experience: I have filed over a thousand bankruptcy cases.

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