Moving abroad to escape unpaid debts – what happens?

If you are drowning with unmanageable debt, you may be tempted to try and escape this for good by leaving the country. You may be considering a move abroad for other reasons, such as to be closer to family or for better employment opportunities. However, does moving abroad mean your creditors can no longer chase you? Moreover are you even allowed to permanently leave the country if you owe money?

Firstly, it should be known that that non-payment of debts is not a criminal offence; therefore this alone will not prevent you from obtaining a visa or moving abroad. However, leaving the country is not a way of wiping the slate clean financially.

You may have heard that following a period of six years, debts become statute barred meaning that although they will remain, they cannot be legally enforced. However, what you may not realise is that regardless of where you are residing, a creditor can apply to get a County Court Judgment (CCJ) issued against you. It is important to be aware that CCJs can be enforced on your return to your country even if six years have passed. If you leave the country without giving creditors forwarding contact information, legal action will served at your last known address. If you do notify creditors of your new address, legal action can only be started in that country.

Some countries, including Australia and Canada, have reciprocal agreements with the UK whereby debt can be chased and enforcement action taken. Therefore depending on the size of your debt, a UK creditor could sell your account on to a debt collection agency in your new country who will use the usual channels to pursue you for payment. If you have any assets in the UK, such as stocks or property, a creditor could apply for a charging order against these. This can be done even if you are out of the country and would mean that when you came to sell up, you would need to pay the creditor what you owe out of the proceeds of this.

Debts will continue to amass while you are out of the country with fines and interest being added on to the existing balances. If you do then return to the UK after a year or so, you may find your debt problems worse than when you left. Your credit record will also continue to take a hit as the defaults mount up.

If you are considering moving abroad, you may be unconcerned about your credit file here at home. However, in many countries you will find it extremely difficult to obtain credit until you have been a resident there for some time. Consequently you may find yourself relying on your UK banking assets in order to help you buy a car, purchase new furniture etc., when settling into life in your new country. With this in mind, you should try to ensure your UK accounts are well maintained as they may have to support you throughout the early stages of your move.