Can I file for Chapter 7 Bankruptcy if I live in another country? Which federal district would be the proper venue?

**Disclaimer**: This post is here to explain bankruptcy rules in a general way. It’s not legal advice. Everyone’s situation is different, so don’t use this as a guide for your own case. The examples are just for learning. Please talk to a lawyer about what’s right for you.

Bankruptcy Venue and Exemptions for Debtors Living Abroad.

Picture this: You’re living the good life on a beach in Costa Rica, but you used to call Washington state home. Now, your debts are piling up, and you’re wondering if you can file Chapter 7 bankruptcy back in Washington—even though you’re not there anymore. Can you do it? Where do you file? Let’s walk through it step by step.

Where Can You File? (The Venue Rules)

Let me start off by saying that there is no consensus interpretation among the various circuits and trustees. The 9th Circuit (which includes Washington State) doesn’t necessarily affirm my interpretation, but my interpretation has prevailed when I have had to fight on this specific issue within the 9th Circuit. Make of this what you will. Let’s tackle the issue:

The law that decides where you can file bankruptcy is 28 U.S.C. § 1408. It says you can pick a federal bankruptcy district based on where you’ve had one of these things for the 180 days (about six months) before filing:

- Your residence (where you’ve been living),

- Your domicile (your permanent home, even if you’re not there now),

- Your main business (if you run one), or

- Your main assets (like a house, car, or even a bank account).

You only need one of these ties to the district for most of those 180 days. If you’ve moved around, you can file where you spent the most time in that six-month window.

Why does this matter? The law wants to make sure you file somewhere that’s connected to your life—not just a random place you think might be easier. In other words, you can’t just shop for a district with the best asset exemptions for your situation.

Can You File If You Live Abroad? (Eligibility)‍ ‍

Yes, you can file bankruptcy even if you’re living outside the U.S., but you need some kind of link to the country. The rule here is 11 U.S.C. § 109(a), which says you need:

- A residence,

- A domicile,

- A business, or

- Property in the U.S.

Here’s a big point: Property doesn’t have to be fancy. It could be something as simple as a bank account with a few bucks in it or even a cherish peppercorn (apparently). In re McTague. Speaking of which, in In re McTague, 198 B.R. 428 (Bankr.W.D.N.Y.1996), a U.S. bank account in the district was enough for a person to file in said district. So, if you’ve still got an old account in Spokane or Kennewick, for instance, you’re likely good to go.

In re McTague:‍ ‍

“Nonetheless, $194 in a bank account is clearly ‘property,’ and at least two courts have held that such an account is property ‘in’ the district in which the deposit account is located…” id at 198 BR 428.

…

“[T]he statute does … have such a plain meaning as to leave the Court no discretion to consider whether it was the intent of Congress to permit someone to obtain a bankruptcy discharge solely on the basis of having a dollar, a dime or a peppercorn located in the United States.

“Therefore, the Court concludes that in light of Congress's use of the phrase "property . . . that is of inconsequential value" in 11 U.S.C. § 554(b), the language of § 109(a) is clear, and the Court does not have discretion to look behind the language and declare that the quantity of property in the United States will be decisive of eligibility to be a debtor under the Code. Garcia v. U.S., 469 U.S. 70, 75, 105 S.Ct. 479, 482, 83 L.Ed.2d 472 (1984) ("When we find the terms of a statute unambiguous, judicial inquiry is complete, except `in rare and exceptional circumstances.'" (citations omitted)). id at 198 BR 428.”

Is It Worth Filing From Abroad?‍ ‍

If you’re in Costa Rica with no stuff left in the U.S., you might ask, “Why bother?” U.S. creditors would have to track you down overseas, which isn’t easy or cheap. For small debts, they might give up. But if you ever want to move back to the U.S. or earn money there later, those debts could bite you. Filing now could prevent a future headache.

Good news: Most bankruptcy meetings happen over Zoom these days, so you probably won’t need to hop on a plane. Ask the court to be sure. In Eastern District of Washington, all bankruptcy cases are administered online, from the filing to the meetings and hearings.

Now let’s dive into some hypotheticals.

What You Can Keep (Exemptions)‍ ‍

Bankruptcy lets you keep some stuff—like your car or house—through “exemptions.” But here’s the twist: Exemptions don’t depend on where you file. They’re based on where you’ve lived for the last two years, according to 11 U.S.C. § 522(b)(3)(A).

- If you lived in Washington for those two years, you use Washington’s exemption rules or federal ones.

For example, say you lived in Washington for 20 years, then spent a few months in Kentucky before filing. You’d still use Washington’s exemptions because that’s where you were for most of the two years.

The Big Points to Remember

- You can file from abroad if you’ve got a U.S. tie, like a bank account.

- Where you file depends on where you lived, worked, or had stuff for most of the 180 days before filing.

- What you keep depends on where you’ve lived for the last two years—not where you file.

Bankruptcy’s a big deal and can get complicated fast. This post just gives you the basics. If you’re thinking about filing from overseas, get a lawyer who knows this stuff inside out. They’ll figure out what’s best for you.