I have previously written about returning to the UK and leaving debts in other countries, and also about going bankrupt in the UK from abroad and having debts in other countries included in a UK bankruptcy.
These topics have proven to be very popular and also have got people to comment and ask various questions regarding theirs or someone else’s situation.
These are topics that are cropping up more and more, in part due to people travelling, living and working around the world.
It is a natural thing when someone moves to another country and lives and works there, that they would immerse themselves in all aspects of that country and culture, and banking and financial matters are no different.
However, the laws regarding banking, borrowing money, and the collecting of loans does vary and is different amongst other countries.
Here in the UK, we have what many feel are very lenient insolvency laws, even allowing a UK resident the ability to include a non-UK debt in their UK bankruptcy. We will discuss this in more detail shortly.
Even with writing and explaining how non-UK debts can be collected in the UK, and how a person can go bankrupt in the UK from abroad, there still seems to be some slight confusion over a few key points. Of which I want to highlight here.
Is Leaving Debt in Other Countries a Crime?
In most countries, being in debt is not a crime.
Fraudulent activities can be viewed as a crime, but not just owing money.
Travel: For the majority of countries across the world, there are no travel restrictions if you are in debt or owe a bank money. So if you owe money in the UK and want to move outside the UK, you can do so.
The few countries that may restrict travel if you owe a debt are few, and there can be a lag time for this to be known, giving a person time to leave.
In most instances if someone owes money, for example in the UAE and loses their job, they would then lose their Visa to stay in the country, and want to return to the UK or elsewhere anyway.
Visa’s: Getting a Work Visa, Spousal Visa, and many other Visa’s for many countries do not require any financial fitness test. There are some changes here in the UK that raises the income threshold for non-EU workers to stay when their Work Visa’s expire.
However, for some Visa’s and in some countries they do look at your income, money in the bank. Most countries do not look at credit history.
However, here in the UK, if someone has a CCJ/County Court Judgement, or other civil penalties or unpaid tickets, it could impact them receiving a Leave of Indefinite Stay Visa. The Border Agency does ask about these on the application.
* Being in debt itself is not a crime.
* There are no travel restrictions in the majority of countries if you are in debt.
* Some countries may ask about your financial status in order to be approved for a Visa.
What Can Happen If I Do Leave Debts In Other Countries?
If you move from one country to another country, leaving debt(s) behind, the bank or lender is going to try to collect the account, just the same as if you were still in that country. The issue here is, do they have the authority to collect the account outside their own country.
In the majority of instances, the bank or lender or collection agency, has no authority to collect a debt outside their own country. However, there are exceptions, and here is where a lot of confusion lies.
The main exception here is the agreement between the EU and the UK.
If a CCJ has been obtained in the UK for a debt in the UK, and the debtor moves to the EU, the CCJ can be enforced in the other country.
A few points need to be made here:
* CCJ’s can only be issued against UK residents. So if no CCJ is in place and you move to the EU, a CCJ usually cannot be obtained, unless the creditor has no new address, and uses your old one.
* Even without a CCJ some debts can be enforced in the EU due to a European Payment Order, which allows cross-border debt collection.
So yes, UK debt can be collected in the EU, and it can also be without all these agreements or a CCJ.
If the collection agency has a partner firm in that EU country they can use that firm to collect the debt.
This is important to know:
If a debt is sold to a collection agency in another country, they can collect the debt in accord with the laws and rules of that country, they now own the debt. This is important as a UK debt or a debt that originated in another country, could be sold to a collection agency in the country you now reside.
If you move to the USA, UAE, Australia, outside the EU, or (insert country here), there are two ways a debt could be collected in another country:
* By selling the debt to a collection agency in that country.
* If the terms and conditions for the loan have a “non-exclusive jurisdiction” clause. This means that the bank or lender can use assign the debt to someone to collect in the other country.
* UK debts can be collected in the EU.
* A debt from anywhere in the world can be collected in another country if the debt is sold to a collection agency in that country.
* If the terms and conditions for a loan have a non-exclusive jurisdiction clause, and if the debt is assigned to an agent in another country, it can be collected in the other country.
What Are My Options With Debts In Other Countries?
OK, here is where we get to the good news, at least here in the UK.
If you reside in the UK, and can show the majority or centre of your main interests here in the UK, you can go bankrupt here.
This means that you work, bank, live, pay taxes, etc all here in the UK. Then you can make use of the insolvency options we have here in the UK.
* IVA/Individual Voluntary Arrangements
* DRO/ Debt Relief Orders
So if you have left debts in another country, and are being chased for those debts in the UK, you are afforded all the rights and rules we have here in the UK. And those creditors or banks chasing you here, either by an agent of the bank, or even if the debt has been sold to a collection agency here in the UK, they have to abide by the laws here in the UK.
However, one caveat:
The protection afforded you to discharge or repay the debt(s) only covers you in the UK and EU. So if you were to move back to the country where the debt originated, the bank or lender could still try to collect it.
You have debt in the USA and move back to the UK and go bankrupt. The creditor cannot collect the debt from you in the UK, even if assigned to an agent. However, if the debt has not been sold, and the lender still owns the debt, and you move back to the USA, they can then attempt to collect the debt.
But again, there are no travel restrictions and you will not be stopped or detained just for debt alone.
* As a resident and if you can show the centre of your main interest in the UK, you can make use of the insolvency laws.
* The protection you get from the UK insolvency laws only pertains to the UK and EU.
It is hoped that by trying to expand and highlight certain areas, it will clarify some of the concerns and issues travellers may be faced with.
,I have previously written about returning to the UK and leaving debts in other countries, and also about going bankrupt in the UK from abroad and having debts in other countries included in a UK bankr