If you’re planning to move abroad, you may be wondering how any unpaid debt you have will be dealt with and, more importantly, whether you can still be chased for payment after you move.
However, there’s no law preventing you from moving abroad with debt and there are various solutions available to help you deal with your debt from another country.
This guide will explore the implications of moving abroad with debt so you can know what to expect.
It will explore what can happen if you move abroad with unpaid debt and what solutions are available to help you deal with your debt before relocating.
How does debt affect my life?
Being in debt can affect various areas of your life – not just the financial side of things – and it’s important that you consider certain factors before making any long-term plans to move abroad. Here are some of the ways debt can affect your life:
Your mental health
Being in debt can take its toll on your mental health – especially if your balance is rapidly increasing and you’re starting to neglect your other financial responsibilities, like rent or bills.
This can trigger feelings of stress, anxiety, and depression, which can make dealing with debt more difficult than it already is.
Your physical health
One of the most common physical side effects of debt is poor sleep and, in extreme cases, insomnia.
This can have a knock-on effect on your overall health and wellness and lead to problems with your diet, work, relationships, and exercise.
Your credit history
Debt can affect your credit history in various ways. In most cases, an unpaid debt will be listed on your credit report for six years, making lenders wary of lending to you in case you don’t repay what you owe.
This can make it difficult to get approved for most forms of credit – from a mortgage to a loan – for several years.
Your relationships
Debt can put a strain on the relationships you have with the people closest to you, including your partner, family, and friends.
For couples, in particular, money is one of the leading causes of divorce.
The key to preventing debt from having a negative impact on your relationships is to be open and honest about your financial situation.
Opening up about your debt can be scary, but it can ensure you have a support system in place and allow you to deal with it together and feel less alone.
“No fuss, just simple, honest advice. Communication is good and they make the process as easy as they can.”
Can you move abroad with debt?
In the UK, non-payment of debt is not a criminal offence. This means that there is nothing legally stopping you from moving abroad, regardless of your debt level or how many people you owe.
It’s important to note that moving abroad won’t make your debts disappear and you’ll still be responsible for ensuring the people you owe (your creditors) are repaid. Even if you’re living in another country, there can still be serious consequences for ignoring your debts.
For example, if you go bankrupt in the UK and move abroad, you may need to apply to a local court to ensure your bankruptcy status is recognised in the new country.
However, if that country has no agreement with the UK, you won’t enjoy the same protections as you did in the UK and your creditors may still be able to take action against you.
The rules also differ depending on whether you have secured debts, such as mortgages or car loans, or unsecured debts, such as personal loans and credit cards. Generally, as long as you inform your creditors of your new address and remain committed to repaying what you owe, you should have no problem moving abroad with debt.
Can creditors or debt collectors still chase me abroad?
The short answer is yes, but the approach they take will likely depend on how you’ve dealt with the debt so far and your relationship with your creditors.
For example, if you’ve been open and honest with your creditor or debt collection agency and have informed them of your new address, they may not pursue the debt as aggressively as they would have if you had moved without telling them.
However, if you’ve ignored your debt so far and moved abroad in an attempt to avoid dealing with it altogether, you could be subject to legal action, such as a County Court Judgment (CCJ), at your last known UK address.
This prevents your debt from becoming statute barred (no longer legally enforceable), which means that you’d still be responsible for the debt if you were to return to the UK at any time and would be ordered to repay it as instructed by the court.
What happens if I ignore my debts from abroad?
Moving abroad can give you a false sense of protection from your debt, but while living in another country can make it more difficult for your creditors to find you, they can still take action against you in the UK.
Some countries even have agreements with the UK that allow them to chase and take enforcement action against unpaid debts.
That means that, depending on the size of the debt, a creditor in the UK could sell your debt to international debt collection agencies in the country you now live in and they could start chasing you for payment.
Furthermore, if you have any assets back home in the UK, such as stocks or property, a creditor can apply a ‘charging order’ against them, turning them into secured debts.
This can be done at any time and means that, if you were to sell the asset at any time, you would need to give the proceeds directly to your creditor.
Remember, moving abroad won’t automatically put a stop to your debt and interest and charges will likely continue to amass while you’re out of the country.
If you were to return to the UK down the line, your financial situation is likely to be much worse than when you left.
Can I repay my debts while living abroad?
In most cases, you should still be able to repay your debts while living abroad as long as you keep in touch with your creditors and inform them of your change of circumstances.
However, depending on your new country of residence, you may encounter problems if you want to pay with your usual bank account. IBAN transactions can be used for overseas payments, but there may be fees involved and certain bank accounts have restrictions that block transfers if they suspect fraud.
If you intend to continue paying your debts as normal while abroad, you must ensure you have a plan in place and keep your creditor informed if your circumstances undergo any further changes.
Can credit scores be affected by moving abroad with unpaid debt?
If you have unpaid debt in the UK, it will be listed on your credit file and your credit score will be affected for several years.
This makes it difficult to access most forms of credit, including a personal loan, bank account, phone contract, and mortgage.
However, credit reference agencies usually only collect information about your credit activity in a particular country due to each country having different data protection laws.
This means that, if you were to move to another country, your credit file would essentially start from scratch.
Should I deal with my debt before moving abroad?
If you’re planning to move abroad but have no immediate plans or deadline by which you need to leave the country, it’s recommended to deal with your debt – or at least make an agreement for how you’re going to deal with it – before moving.
Even if you can’t afford to repay the debt in full before you move, knowing you have a plan in place can give you peace of mind while you’re in another country.
Keeping in touch with your creditor can also go a long way to ensuring the repayment process runs as smoothly as possible.
There are no laws in the UK stopping you from moving abroad before dealing with your debt and while it can be a viable option if you maintain open and honest communication with your creditors, it’s not advisable.
If your creditors can’t get in contact with you in your new country of residence, they’re likely to initiate legal action against you in the UK, complicating things if you were ever to return home.
Debt help tailored to you
From writing off a large portion of your debt, to readjusting your budget, we’ll find a solution that suits you.
How should I deal with debt before moving abroad?
Depending on your circumstances, there are various debt solutions that might be able to help you deal with what you owe before moving abroad.
We’ve outlined some common methods of resolving debt below:
Individual Voluntary Arrangement (IVA)
An Individual Voluntary Arrangement (IVA) is a formal agreement between you and your creditors to repay what you owe through manageable monthly payments based on what you can realistically afford.
Once you come to the end of your IVA, any remaining debt will be written off.
IVAs are only available in England, Wales, and Northern Ireland and you must have a minimum of £6,000 in debt and owe money to two or more creditors to qualify.
Debt Management Plan (DMP)
A Debt Management Plan (DMP) is an informal arrangement designed to help you better manage your non-priority debts by coming to an agreement with your creditors over how to repay them. It can be used to deal with overdrafts, utility bills, and credit card debt.
Like IVAs, DMPs work by splitting your debt into monthly payments based on what you can comfortably afford.
Debt consolidation
Debt consolidation is the process of combining multiple debts into a single monthly payment. This can make it more manageable to manage your debt and, in some cases, you might benefit from a lower interest rate.
By streamlining your debt, you can reduce the likelihood of missing monthly payments and potentially speed up the repayment process, making for an easier journey overall.
Conclusion
In the UK, it’s not a criminal offence to have unpaid debts and you should be able to move abroad with debt without any consequences.
However, it’s recommended that you deal with any outstanding debt before you move abroad – especially if it’s high-priority debt or secured debt as these types of debt can carry bigger consequences.
It’s important to note that living abroad doesn’t absolve you of the financial responsibilities you had before you moved. In most cases, you should be able to deal with your debts from your new country as long as you maintain open communication with your creditors.
