Christian Debt Recovery

Debt Trading Definition

June 27th, 2009 |

Author: Gavin

debt trading definition

Handling Personal Debt Issues with Backup from The European Union

Just about all consumers of the member states of the European Union (EU) are unaware of some surprising compensations that EU membership delivers with regards to personal insolvency. Such benefits are grounded within the principle of the free movement of labour that European Union people get throughout the EU and are especially applicable for those people who find themselves overburdened by individual debt worries and are already threatened with tough bankruptcy proceedings in some member countries of the EU.

There are certainly considerable variations in bankruptcy procedures amongst a number of member nations of the EU. Great Britain is often held up as being a shining example of enlightenment insofar as it has developed a wide structure of individual bankruptcy legislation. This presents any financially troubled citizen with a choice of solutions to their situation. The wide variety of solutions and choices to be had are neither draconian nor punitive. What they offer is recognition of every citizen’s right to a second chance – a brand new start in fact. The fundamental philosophy could be described as pro-entrepreneurial much like the entrepreneurial business environment in the USA. When compared to some other member states of the EU, British system is very appealing. In Great Britain financially troubled borrowers are able to experience the opportunity to rehabilitate themselves, whilst in some other European Union member nations the present legal and social culture will look to punish the insolvent person. So how might the insolvency system in the UK furnish unexpected benefits for European Union citizens who are not UK citizens?

European Union laws permit the insolvency regulations of one European Union member nation to apply in another, subject to certain provisos. One of the attributes of cross-border insolvency is that borrowers may try to commence insolvency proceedings in a nation of the EU, rather than the nation in which they reside and work. On top of that, they can go for any member state in which to exercise this right and it is only to be expected that they would choose a country that has introduced insolvency legislation more favourable to their particular circumstances than that which prevails in their own ‘home’ jurisdiction. This exercise of these legal rights is sometimes called “forum shopping”. As a result of this right, an insolvent person in debt who lives in any member nation may be able to put forward an Individual Voluntary Arrangement (IVA) or petition for bankruptcy or indeed pursue some other sort of legal remedy for their debt difficulties 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 obviously key to the matter. The applicable EU Regulation affirms that “the centre of main interests should correspond to the place where the debtor performs the management of his interests regularly and is therefore ascertainable by third parties”.

The most common interpretation of this statement is that the COMI will be the state in which the person generally carries out their trade, occupation or self-employment. Where the debtor does not trade or maintain a profession, the COMI is usually regarded as the state in which he or she resides. If the consumer lives in one country and trades in another, the COMI is the nation where the person trades. Where the person’s only connection with a nation is that they work there on a non self-employed basis (possibly commuting from a adjoining country), then the COMI will most likely be in the country in which they reside and as a result pay bills, manage a bank account, buy goods and so on.

In the eventuality of bankruptcy proceedings, the COMI is set at the date the petition is presented and not where, in the past, the relevant activity was carried out. Hence the address of creditors and also the state wherein liabilities were incurred are not material matters in ascertaining a COMI. Interestingly, although not relevant to personal insolvency is the fact that in the case of a company, the COMI is the registered office, in the absence of substantiation to the contrary.

What about an IVA? To take an illustration: a serving member of the Military who is working offshore and who could be stationed abroad for extended durations may enter into an IVA in the United Kingdom. The very same might affect anybody who is for example working in an EU member country but whose property and assets are located in the United Kingdom. In a similar way, anyone who works in the merchant navy may go into an IVA, even though they can be overseas for a lot of their working lives, so long as their “centre of main interests” is in the UK. Of course there are various conditions which could effect the debtor’s capacity to abide by the conditions of an IVA. They might possibly include properties and assets held or bought abroad or the possibility of taking on debts abroad during or just prior to the term of the offered IVA. Yet, lenders will usually consent to this kind of IVA provided they are satisfied with the debtor’s ability to abide by the terms. It should be mentioned that an IVA in the UK is restricted to England, Wales and Northern Ireland. For Scotland the generally comparable insolvency option is a Trust Deed.

About the Author

Lon Roberson is a Debt Advice Expert. He writes Articles for various websites in order to provide people with answers to their Debt Problems. There are so many Debt Solutions on the Market today, such as The IVA, Bankruptcy, Debt Management etc… that Lon believes, it is good to know every bit of information you can, before

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