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.

Swedish Law – SAAB Reorganisation - New Prolongation

The Vänersborg City Court announced this morning its decision that the SAAB reorganisation shall continue until August 20, 2009.