Does Chapter 7 apply to foreign creditors (do they have to follow our laws?)

[ineedhelp201]

I have a few gambling debts with creditors from Costa Rica.

I did not include them in my paperwork because I forgot about them, but they have surfaced and have started calling me about my debts. I know I can re-open my case and have them added to schedule B. But, would it do any good anyway?

I'm worried they are going to send goons to hurt/kill me or my family . I owe one $2500 and hte other $1700. They are reputable websites, but any time gambling debts are involved one has to worry.

[bcohen]

I would assume (and someone can correct me if I'm wrong) that bankruptcy will discharge the ability of a foreign creditor to use the court system, etc. here to try and collect from you. Of course, if you go back to the foreign country, the creditor can and will pursue you for the debt to whatever extent is permissible under the laws of that country. Discharging the debt here won't protect you from collection action and/or prosecution overseas.

That being said, if you owe a debt to some criminal organization which is known to use force/threats of bodily harm in order to collect, do you really think that the permanent discharge injunction is going to protect you from that? I mean, let's face it--if that was the case, then you would think that drug dealers would BK the debts owed to their suppliers rather than risk death, torture, etc, when they can't pay.

[justbroke]

If they are going to send goons and hurt your family, I would not expect them to recognized any Bankruptcy Treaty that the United States may have with Costa Rica anyhow (not that Costa Rica has one anyhow). It may not hurt to re-open and amend your schedules, but I wonder why you'd add this to Schedule B (Personal Property) and not Schedule F (Unsecured Creditors). It's illegal anyhow, so they have no legal recourse, but maybe giving them notice would stop them from even bothering you anymore.

(bcohen basically wrote the same thing. Would a criminal organization care about the law? Anyhow, unless you owe, maybe, tens of thousands, it isn't worth pursuing even for criminals. They are making millions with online gambling.)

[tobee43]

as most of us who have gone through bk, under article I, section 8, of the United States Constitution authorizes congress to enact "uniform Laws on the subject of bankruptcies." under this grant of authority, congress enacted the "Bankruptcy Code" in 1978. the Bankruptcy Code, which is codified as title 11 of the United States Code, has been amended several times since its enactment. it is the uniform federal law that governs all bankruptcy cases, even those that apparently include foreign creditors.

United States Court of Appeals,Ninth Circuit:

IN RE: William Neil SIMON, Debtor. HONG KONG AND SHANGHAI BANKING CORPORATION, LIMITED, Plaintiff-Appellant, v. William Neil SIMON, Defendant-Appellee

this case dealt or was based on the following : "This appeal concerns whether a foreign creditor is subject to bankruptcy court sanctions for pursuing foreign collection of a debt discharged in a domestic bankruptcy in which the foreign creditor participated.   We conclude that a bankruptcy court may sanction the foreign creditor for violating a court injunction, and affirm the district and bankruptcy courts."

this is a very interesting case to read. worth a glance as to whom this would apply to and why, although not applicable directly some or part of that decision could be applied.

http://caselaw.findlaw.com/us-9th-circuit/1350360.html

[HHM]

Interesting case, but probably a little off point.

Bankruptcy applies to ALL creditors, no matter where located. However, the reach of bankruptcy is only within the borders of the U.S. absent some treaty between the U.S. and the country in question about recognizing BK. (not sure we have any such treaties with any country...but I don't really know). So, if you receive your BK discharge, the Costa Rican creditors couldn't employ any "legal" method of collection within the U.S. If, for some reason, you leave the U.S. all bets are off and you are fair game.

There is also the issue with whether the gambling debts, in general, are dischargeable. That is a bit more sticky of an issue; sometimes they are, sometimes they aren't. It is even more sticky since the gambling debts arose out of a foreign jurisdiction. It is arguable that if Costa Rica has no provision for elimination of gambling debts (and assuming some sort of full faith and credit treaty), the debts may not be dischargeable. Generally, gambling debts that arise in NV are non-dischargeable if the debts have been submitted to the District Attorney for collection, unless your state of residence's constitution forbids the use of judicial process to enforce such debts. So, this is a sticky problem.

Given the amounts involved, I wouldn't worry about it too much. Defaults are an inherent risk to these sorts of businesses. Also, since the websites are accessible in the U.S., the operators do fall within the U.S. Jurisdiction...so the BK would apply...but again, as pointed out, only within the borders of the U.S.

[malf1204]

I would stay out of Costa Rica. It is my understanding that you can be prevented from leaving the country if a civil lawsuit is filed against you for unpaid debts.

[bcohen]

There is also the issue with whether the gambling debts, in general, are dischargeable...Generally, gambling debts that arise in NV are non-dischargeable of the debts have been submitted to the District Attorney for collection, unless your state of residences constitution forbids the use of judicial process to enforce such debts.

I don't gamble (don't believe in it) but I would assume that any website or business which allows for gambling would accept cash or credit cards only, and that any "bet" would be charged or authorized in advance. So how, exactly, would anyone even have a "gambling debt" in the first place?

[HHM]

I don't gamble (don't believe in it) but I would assume that any website or business which allows for gambling would accept cash or credit cards only, and that any "bet" would be charged or authorized in advance. So how, exactly, would anyone even have a "gambling debt" in the first place?

Casino markers and advances.

Sort of like trading on margin in a brokerage account. Casinos and gambling website will advance credit to its patrons to gamble. If the gambler loses, the gambler owes a debt to the casino for the amount advanced.