Friday, May 29, 2009

Swedish Bankruptcy Law – US Domiciled Swedish Debtor

I received the following comment/question to one of my posts on "Swedish Law – Company Reorganisation":

I'm not sure this is the right place to post this....I came across your blog doing some internet research on Swedish bankruptcy laws...

My husband is a Swedish citizen who took out a loan to start a photography business (I think it is actually a personal loan though). He met me in the US and we have been married here for a year now, struggling to make payments on just the interest alone as finding work for him here has been difficult. He could not afford the union dues for having his business open in Sweden so we closed that earlier this year.

This weekend our apartment was broken into and $7,000 of camera equipment that he used the loan to purchase was stolen. We do not have renter's insurance. He owes over twice that amount still ($17,000) on the loan, and now has no way of making money without his camera. We are considering filing bankruptcy in Sweden for his debt, but we are not sure how that works now that he is a resident here (still a Swedish citizen and the loan is Swedish). My income is barely enough to pay rent and buy groceries.

So it goes.

I would be incredibly grateful for any advice. If we go through with this, I am assuming we will need a lawyer to assist?


As the above question highlights an important difference between US and Swedish bankruptcy law I give my answer here as a separate blog post.

First of all I think it is very important to note that a private person is not released from his or her debts through bankruptcy proceedings according to Swedish law. This means that there is normally no reason for a private person to apply for bankruptcy in Sweden.

As your husband is domiciled in the US, I base the following short answer to that situation. Special rules apply to debtors domiciled in the Scandinavian countries and in an EU state.

A Swedish citizen domiciled in the US could be subject to an application for bankruptcy by a creditor. Such an application could be made with reference to the Swedish Code of Judicial Procedure, Chapter 10, Section 1, which reads:

A person with no known residence in or outside Sweden may be
sued at the place where he is sojourning. If he is a Swedish citizen
and sojourning outside the Realm or at an unknown place, he may
be sued at the place within the Realm where he last resided or

If he is declared bankrupt in Sweden, according to Swedish law, the bankruptcy estate will encompass, at least formally, all of his assets irrespective of whether such assets are in Sweden or outside. However, to what extent the Swedish bankruptcy receiver will get any cooperation from any state or federal authorities in the US in order to gain control of his US assets is a question for these authorities.


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Anonymous said...

Thanks so much for responding. I am just a little confused. Does this mean he cannot file, only the bank can if he starts to default on the loan? (We have not done that thus far). He has no assets really. We don't own property other than a bed, dresser, some clothes, and a car that is 15 years old.... who knew this is where graduating from college would lead us!

lucas law center said...

Can I add too my post on your directory?


KBz said...

Yes please do, if you think your clients may find it helpful!

Unknown said...

Thank you for explaining the difference between filing bankruptcy in Sweden and the US. I would like to receive your advise on a situation my wife and I find ourselves in with a bank in Sweden.
My wife has not lived in Sweden for 12 years, since she was 18, and she has now been a US citizen for the past 4 years. A few months ago she received a notification from a collection agency in Sweden stating she owed over 18,000 SEK in fees for a student loan from CSN. Needless to say, my wife was completely shocked to this and had no clue there was outstanding fees. Her father had arranged this student loan for her when she was 18 to attend flight training in the US.
My wife explained that she had no idea what she was signing at that time but she signed the loan documents based on her father's guidance.
After she signed the documents, she never once received any statements from CSN, instead these statements went to her father for payment. A few years ago her father told her that she did not need to worry about the loan, that he would take care of everything. Well I guess he didn't. We are guessing that they tracked my wife down after her father changed his life insurance policy to reflect my wife's new address. Once he did that we started to get numerous letters from CSN. According to them there is a remaining balance of almost $19,000 USD and no fees hav been paid since 2005.
We have asked for all documents from CSN, and when we received the loan documents my wife's signature was the only one on the document, her father's was no where to be found. She doesn't understand how she got a $25,000 student loan all by herself at 18.
So we are in dire straits, we had to take our a loan to pay the collection agency, 18,000 SEK. Now CSN is saying that we have to start paying them 1300 SEK a month. We have filed to have the loan cancelled based on our current economic struggles, we cannot afford to make these payments.
It seems that everything with them is black or white. For 12 years my wife never received anything from them, thinking that her father had taken care of the loan (they no longer have a relationship and we do not know where he is leaving), now we are expected to take care of it now. We have been working with them for the past 3 months now. CSN says that if we do not agree to pay the 1300 SEK they will send the debt to the collection agency again. Additionally, the collection agency has threatened us several times with sending the outstanding debt to an American Collection Agency.
We are not sure what to do, we are already paying a loan that we took out to handle the collection agency, now we are being told that we need to make additional payments. What are options for us? We thought about bankruptcy but I guess it does not work the same as in the US.

KBz said...

Unfortunately I cannot give you any legal advice here but only comment as follows:

If you wife is no longer a Swedish citizen I cannot see that any bankruptcy proceedings could be opened in Sweden (at least assuming she has no assets here).

At the age of 18, you are entitled to manage your own financial affairs in Sweden e.g. to enter into debt.

Whether filing for a US bankruptcy is a solution I do not know. It is a question for a lawyer in your home state.

Canogagirl said...

We, too, are in a horrible mess with CSN. I so agree that they are black and white and have no idea what to do with financial situations outside of the realm of what can happen in Sweden. My husband is a Swedish citizen and has lived here for almost 14 years. He took a loan with CSN to go to school here. But, with the recent issues with the economy, we have lost everything and filed for bankruptcy. We have been trying everything to get CSN to understand that we cannot pay the loan right now, as we have no money: Even buying food and paying rent is close to impossibel right now. All they do is transfer us around the country and then continue to send us statements with post giros, which do not even work in the US.

Who can we talk to in Sweden about what to do in our situation? CSN doesn't seem to get it, so we are wondering if you have any suggestions for anyone/any place else to turn to try and get them to understand it is not that we don't want to pay, it is that we can't right now? Our attorney has sent them our federal Chapter 7 dismissal from bankruptcy court, but apparently, they don't know what to do with that, either. Thanks!

KBz said...

Dear Canogagirl,
I would like to help you. Please give me your email address to enable me to put some questions to you. Mail to: krister (/dot\) bruzelius (/at\) wallaw(/dot\) se

Louie James said...

Problem about bankruptcy it's not just so easy. We're just putting ourselves in the midst of fire. To be able to solve with it, we have to hired a certified bankruptcy lawyer for us to solved the problem quickly and completely.

loan bankruptcy said...

Thanks for the information..I really like your post..I need some help related to bankruptcy!
I have consistently paid on my chapter 13 to the courts for about 1-year now. However, I am still behind on some properties I own and need to refinance everything I have. Any ideas? No the bankruptcy has not been discharged. As any private investors out there who will take a chance on a guy who wants to turn it around and wants to start over?

Anonymous said...

My nephew died in Sweden age 48leaving a debt is my sister who is a British citizen or his brother who lives in Sweden liable for it?

KBz said...

The heirs are not responsible for the debts of the deceased according to Swedish law.