UK Debt Management from Overseas

Debt Management After Moving Abroad

 

Many people emigrate from Britain without having repaid their debts.

 

This article explores your options for dealing with unaffordable UK debt while living abroad.

 

The options available depend upon where you last lived in the UK, where you have resettled, and how long ago you emigrated.

 

For personal debt advice please contact us. As well as providing debt advice we’re an in-house debt management operator.

 

Emigration from England and Wales

 

If you previously lived in England and Wales, there are four main debt solutions that might be available.

 

Personal insolvency procedures include an IVA (individual voluntary arrangement), Bankruptcy, or a Debt Relief Order. Personal insolvency types of debt solution usually result in some (or all) of your debt being written-off.

 

Depending upon which new country you relocated to, these types of debt solution may remain available for three years after leaving the UK.

 

A debt management plan is a non-insolvency process used to repay your UK debts at a reduced and affordable rate. There are no time or location barriers to using this debt solution.

 

Emigration from Scotland

 

If you previously lived in Scotland, a different range of debt solutions are available.

 

Personal insolvency procedures include a Protected Trust Deed or Bankruptcy (sequestration). Personal insolvency generally results in some (or all) of your debt being written-off.

 

Depending upon which new country you relocated to, these types of debt solution may remain available for one year after leaving Scotland.

 

The Debt Arrangement Scheme is a formal type of debt management plan. The regulations state that you must be habitually resident in Scotland in order to qualify to use this debt solution.

 

A debt management plan is a non-insolvency process used to repay your UK debts at a reduced and affordable rate. There are no time or location barriers to using this debt solution.

 

Living in the EU

 

If you have relocated to a country in the European Union (other than Denmark) you cannot use the UK’s personal insolvency debt solutions (unless you return here for a period of time).

 

You’re restricted to using whatever personal insolvency processes are available in the country you now live in. Using a local insolvency process in the EU will address your UK debts.

 

It’s unclear how or whether Brexit might change this status in the future.

 

British expatriates living in the EU can still use a UK debt management plan to repay their UK debts. A debt management plan is not a type of personal insolvency.

 

Rest of the World

 

If you recently relocated to a non-EU member nation (or Denmark) you may still be able to use a UK personal insolvency process to deal with your UK debts (time limits apply).

 

You can also use a UK debt management plan (no time limit applies).

 

In many overseas countries your use of a local personal insolvency process might be recognised by the UK courts and therefore protect you from UK creditors. This is a complex and uncertain area; much depends upon whether the country you now live in has adopted United Nations Commission on International Trade Law model law or has a mutual assistance agreement with the UK.

 

Non-UK Nationals with UK Debts

 

If you moved to live and work in the UK from overseas you may have accrued credit commitments while you lived here.

 

Even if you have since returned to your country of origin (or elsewhere) you may still be able to use UK debt management procedures to deal with your UK debts. The information presented above applies to you as well as to British citizen expatriates now living overseas.

 

Citizenship and Immigration Rights

 

Your financial status may affect applications for citizenship in, or your right to remain in, the country that you have resettled in.

 

For example, you might be asked whether you have used an insolvency process in your country of origin. Host countries may consider your financial situation and stability when dealing with your application.

 

UK personal insolvency gets recorded in online public registers and is therefore easily discoverable (but there is no public register of debt management plans).

 

Every country has its own immigration policies and rules, so get expert local immigration advice if you have concerns about debt and your residential status.

 

Your Credit Rating

 

Individual credit ratings work on a national rather than international basis.

 

Using a debt management solution in the UK will negatively affect your UK credit score.

 

If you live abroad and use a UK debt solution, it should not affect your local credit score.

 

Your local credit rating is however at risk if a UK creditor uses your host country’s legal system to recover a debt from you.

 

Do Creditors Chase Personal Debts Overseas?

 

Some people think it is unlikely that they will be pursued overseas for the repayment of UK debt.

 

This may be correct in some instances, especially for smaller debts that are uneconomic to collect abroad.

 

However, UK credit providers may have arrangements with local debt collection agencies that they can instruct to recover money from you.

 

Depending upon where you live, UK lenders may also be able to use your local legal system to recover debts owed. This could negatively affect your local credit rating and put your local assets at risk.

 

Will My Debts Become Statute Barred?

 

If a lender fails to actively seek or obtain payment from you for six years (five years in Scotland under prescription) your debt might become statute barred. This means that the lender becomes unable to use the UK courts to recover money from you.

 

If you intend to relocate back to the UK in the future, you may be relying on your UK debts having become statute barred while you were away.

 

This is an uncertain approach to take. If a lender obtains a County Court Judgment while you are abroad the debt may remain recoverable when you return.

 

A debt will also remain recoverable if you’ve made any payment towards it, or you have admitted to the creditor that you owe it, within the past six years.

 

Bankruptcy Tourism

 

Bankruptcy tourism is the act of moving to a different country, with a more “relaxed” personal insolvency system, with the intention of declaring bankruptcy before returning home. The same concept can also be applied to other types of personal insolvency.

 

England and Wales have been popular locations for other EU nationals to utilise our relatively relaxed personal insolvency processes.

 

Systems have been tightened to make bankruptcy tourism more difficult and expensive. For example, it’s now impossible to declare bankruptcy in England and Wales unless you can prove your COMI (centre of main interests) has been here for at least six months.

 

Moving Abroad While Using a UK Debt Solution

 

There is nothing to stop you relocating overseas while using a debt management plan or any type of UK personal insolvency procedure.

 

Get Expert Debt Advice

 

If you’re living abroad with UK debt that you cannot afford, please get in touch.

 

We’ve helped many expatriates to identify suitable debt solutions. We currently operate debt management plans for people who live in many different countries around the world.

 

Please note that we can only provide you with UK debt advice. We cannot advise you about debt management solutions that might be available in your new country of residence. We also cannot advise you on financial issues connected to your host nation’s immigration processes. Seek expert local advice on these matters if they are of concern to you.

 

 

Author: Andrew Graveson  – Qualified Debt Adviser & Bright Oak’s Founder

 

Page Last Updated: 27/08/2020