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Query - Alan Thomas 2010-07-29 11:41:59
 
Hi,
I am moving to Australia shortly. I owe about £11,500 to one bank (loan & credit card) and aprox £6000 to another bank (credit card).

I am planning on getting settled in Australia, getting a job then taking out a loan over there to pay of the UK debt. I have no intention of not paying it back.

The question is though... what happens if i don't get a job? can they chase me in Australia and legally enforce the debt?

Thanks

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Re:Query - simon wiggins 2010-07-29 19:07:18
 
Hi Alan. Your query is a box standard one Alan in that you have good intonations before leaving but doing so without dealing with the debts first may be a mistake as many hundreds of my past clients will attest to when moving down under.

I am assuming here that things don’t go to plan and you either cant raise the finance down under because you have no credit history there on which lenders can rely or you don’t gain employment which provides sufficient income to live and repay your UK debts. Simply because you went abroad does not mean that the creditors to whom you owe money would have simple given up or wait for you to make contact but each and every one of them will put any debt or debts into their individual recovery cycles which can take anything from 3 to 4 months to complete for the fastest to almost 6 years at the other end of the scale. Each sends the debt through a variety of debt collection agencies, debtor tracing organisations and solicitors firms who each have a set period of time in which to make contact and either get the debt repaid or instalments arrangements put in place. These cycles are all unique, are almost constantly changing and not public knowledge so its impossible to predict at how long this may take to reach re each debt you have save to say it will at some point.

Its only after they have exhausted these processes that a decision has to made about what to do next. Basically the options are to go to court in your absence and obtain a court order before the statute of limitations comes into effect 6 years after you defaulted, to sell the debt in its entirety either to a UK based firm or a similar organizations where you then live, or to write the debt or debts off. Over 95% of all unsecured credit debts are taken through the court recovery process and judgements obtained so its only a relatively small number of cases in which the debts become statute barred & this can include being made bankrupt in your absence if needs be. For the lucky few where this is the case most then agree some sort of full and final offer often for a fraction of the debts face value just to be rid of the stress and repeated requests for payment. After all if any offer made is refused they can’t force the debtor to pay more or anything at all in fact. The only real change when a debt is statute barred is that the debtor can no longer be forced to pay. Remember debtor tracing went virtually global many years ago so unless you are living in a rain forest or similar it wont take very long to locate you

The UK has what’s known as formal reciprocal recovery arrangements in place with many countries in the EU. This means for example that if a creditor obtains a CCJ in the UK and the debtor was living in say Germany (as well as Australia)then the local German legal system could be used to enforce that judgment against them. If you are resident in a country where no such arrangement exists then the creditor will sell the debt to a local firm who can then use the local legal system and recovery options against you directly. So if you move and then cant pay doing so does not mean that you get away with it or that they will simply leave you alone but will have at best delayed matters. Its immaterial whether a reciprocal agreement exists or not to be frank with you If it does the creditor can use the legal system down under against you and if not the debt will be sold in its entirety to a local company that can. So it would not be much of a fresh start if anything and anything you earn of amass in your new life could at some point be at risk when your located the only question being when. Of course if you provide your new details then only make a few payments before the money runs out then long term this speeds the process up as they already know your whereabouts so remember this. In essence When they have used up all the no cost of cheep recovery options (as most debt collection firms and solicitors work on a no result no fee basis) then tracing agents are employed which does have a cost attached but usually locates someone anywhere in the world within 1 month or so. The delay is caused by the fact that no creditor wants to pay for this charge in a multiple debt cases and hopes another will in effect locate you for free and they then jump on the bandwagon for almost no cost at all. So I would guess that you which in your UK financial world you are able to pay and have always paid so not paying may be pretty alien to you The fact is your not moving to a certain job and if you get one at all given the recession hit Australia pretty hard on the job front it may not be at a salary level which will allow you to repay these debts as you have been used to in the past. Similarly is it wise to provide them with your new details when you don’t know if you can maintain payments which would bring everything down on you far more quickly if the worst as you see occurs.

Many people choose to wipe the debts out before they leave perhaps by using UK insolvency legalisations this has no impact on visas' etc or right to travel or work where you please. Those who don’t and are only forced to face up to their problem having moved and been located many return to the UK just to do the same in the high court offices in the strand before flying back home afterwards You have this option open to you until the point that you have lived abroad for 3 years. After that even this option is closed to you.

There is an enforcement agreement in place between the two countries on various level from child eminence enforcement to driving licence info but the lost relevant in your case is Statutory Instrument 1994 No. 1901
The Reciprocal Enforcement of Foreign Judgments (Australia) Order 1994. Whether a creditor would bother to take direct action is of course another matter In my experience debts are usually sold on and then owned by a local company who can then make use of the local legal system to recover it. You have to remember that I’ve dealt with hundreds of people who have moved down under over the years only for their plans at the outset (which were like yours i.e. to pay) ruined because things did not pan out as planned and then having started to build some of life faced it all being taken from them a few years later which of course turned out to be not the fresh start they were looking for.

What would I do? Given I had no job to go to and no real idea if I would have any means of paying these debts I would not want any risk of them following me down under. So at the very least would not divulge even the country that I had moved to or any info until I was able to pay if indeed that ever occurred. However given the very short nature of UK insolvencies and the very limited effect down under I would wipe it all out first rather than being face with returning to do so at some point down the line before the 3 year limit was reached. I'm not sure given their credit reference agency system is quite separate from ours and that having no credit history is far worse than caving none how you believe you will be able to refinance these debts within a reasonable time scale but I wish you good luck with your plans As they say for warned is forearmed so you now know what may occur if you end up not being able to do as you plan. Best wishes

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