Thinking of moving away from the UK? Before you do, it’s time to work out if your debt can follow you abroad.
Lucky you, you’ve finally left behind the grey skies and the permanent scowls of the morning commuters in the UK and are living your best life on a white sandy beach sipping on a coconut.
But don’t kick back and relax just yet.
Yes, we apologise for reminding you of something I’m sure you’d rather ignore but failing or forgetting to deal with your UK debt could cause you more hassle than a mosquito bite.
Not to worry though, this article will help you assess your options in dealing with any debt you may have left behind.
Let’s get straight into it…
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Can Credit Card Debt Follow You Abroad?
Whilst consumer lenders, such as credit card or bank providers do not have the same influence abroad as government departments in reclaiming tax, they still have their pesky ways of ensuring that any debt is paid back.
StepChange Debt charity stresses the importance of maintaining an honest and open attitude with the creditors before leaving the UK.
The best thing to do is be upfront with the creditor and leave a forwarding address to your new home abroad.
Moreover, if you decide to leave a forwarding address then legal action against unpaid debts can only be started in the country you are currently living in which could cause complication for the lender (unfortunately if the debt is owed to an international bank who operates in your new country it will be much easier for them to chase you with legal action).
If, however you are trying to avoid the debt altogether or simply vanish with no forwarding address, the creditor is entirely within their rights to open a county court judgement (CCJ) at your last known address.
If you’re also leaving assets behind in the UK, the creditor could also apply for a charging order which would place the debt against the property.
So, what is a CCJ exactly?
Essentially, after a creditor applies to the court for a CCJ, the court will decide whether there really is a debt to be paid.
If there is then the CCJ shall be issued to your last known address and will explain how much is owed to the creditor and will offer you options for payment.
Also included will be an Admission Form which is your chance to argue your side of the story: if you ignore it then the CCJ may well be issued anyway by default.
Unless there is a dispute over the debt the court will decide if you owe the money, and if they agree with the creditor then the CCJ shall be issued stating that you must repay the debt.
If you refuse to pay, then the creditor could return to the court to enforce its judgement which could mean more hassle and cost to you.
You will also be placed on the Register of Judgments, Orders and Fines which record CCJs for up to six years.
This could be tricky for you if you decide to return home as banks and lenders are unlikely to offer you a mortgage or a loan if you appear on this register with a CCJ.
The good news is that if you de repay then the CCJ will be removed from the register, which if you decide to do so will make your return to the UK smoother and less of a hassle.
Expats should be wary that some debt collection agencies have international operations, making it even harder to escape old unpaid debts.
Even if your debt collection agency doesn’t have a sister company abroad, your debt can still be ‘sold’ to another agency. This gets even more complicated as these new agencies will attempt to collect your debt in accordance with the laws of the country you are now residing in.
You may still be reading this with your fingers crossed hoping that if your creditor can’t find you then you have nothing to worry about, however that isn’t entirely correct as the internet and social media have made it easier than ever to track someone across the globe, and the chances are that you’re using social media to stay in contact with the friends and family you left in the UK.
Yes, you may be able to go ‘underground’ and off the grid completely in order to evade debt collectors, but who wants to spend their new expat life like that?
Can Tax Debt Follow You Abroad?
In retrieving debt from abroad, HM Revenue and Customs has the longest reach, and with an agreement called Mutual Assistance in the Recovery of Debt (MARD) they will work with the local tax jurisdiction of the country you’ve moved to in order to recover your tax debt.
A HMRC spokesperson stated that, “We can ask the local tax jurisdiction the debtor has moved to get UK money back off the debtor”. They continued to explain that any tax debt will remain outstanding until its paid and noted that the tax debt will continue to accrue interest and penalties.
HMRC’s rigid policy essentially means that it’s best for you to pay it back as quickly a possible, as running from it could eventually cost you a lot more in the long run.
What About Student Loans?
Unfortunately, your student loan won’t just disappear either, and if you decide to ignore them then penalties could be incurred.
Those of you reading who have moved abroad for a period longer than three months should complete an overseas income assessment form so that the Student Loan Company (SLC) can accurately calculate how much of the loan you have left to pay and set a timeline for the repayment.
Don’t worry if you’ve moved to a country where the earnings threshold is much lower than that of the UK’s, as the SLC will base the repayment plan on the earnings threshold for your new country.
A spokesperson for the SLC said that failure to inform them of your move abroad will place your account in arrears and it may start accumulating penalty charges.
It really is in your best interest to inform them of your plan as if you do not keep them updated on your living situation then your repayment schedule will be arbitrarily set by the SLC and “in most cases these payments will be much higher than expected, approximately double the average income for the country they are currently residing”.
Unfortunately, without going off the grid completely and living like Bear Grylls in the Sahara Desert, it’s unlikely that you are going to be able to avoid your UK debts, and any attempts to do so will likely result in extra charges and expense, or even legal action taken against you.
The best thing you can do is let your creditor, bank, HMRC or the SLC aware of your plans to move abroad and adjust your repayment plan to suit your new expat life.
While you may be able to run away from the terrible UK weather, your UK debts are just going to keep running after you.
Any questions on ‘can your debt follow you to another country’?