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The DebtFix team.
Jetting off for a new life overseas is a great way to make a fresh start. But that doesn’t mean it wipes the slate clean. If you have built up credit card debt, unpaid taxes, a student loan, or other borrowed and owed money that you have yet to pay, it could follow you to your new home and affect your finances from afar.
Whatever type of debt you have, it is vital that you sort it out before you emigrate, as the consequences for late and missed repayments can be severe. Here is what happens if you leave the country with debt, and what you can do to avoid a nasty surprise in the future.
Key Takeaways
- Moving overseas doesn’t mean your debt will go away. Inform your bank, other lenders and relevant government departments you owe money to that you will be going abroad so they can adjust your payments accordingly.
- Debt collectors and creditors have many ways to recover overdue debt from those who emigrate overseas, such as issuing Letters of Demand and outsourcing to international debt collectors.
- If you have a number of loans, consider consolidating your debt into a single monthly sum so you’ll only have one payment to make.
- If you want to know more about consolidation loans and other ways to reduce debt, contact Debt Fix to see how we may be able to help manage your debts.
Can I Leave the Country If I Have Debt?
Legally, there is nothing stopping you from leaving Australia with unpaid debt, unless the Australian Taxation Office (ATO) issues a Departure Prohibition Order (DPO) against you.
What is a Departure Prohibition Order (DPO)?
It’s an order that prevents a person from leaving Australia is they have persistently:
- Failed to meet their child support liability commitments
- Failed to meet the carer liability commitments
This means that you cannot leave the country until you pay off your tax debt in full or reach a settlement agreement with the ATO.
Since DPOs impose very serious limits on a person’s liberty and freedom of movement, they are rarely used in Australia, and the law has very strict requirements on when the ATO can issue a DPO.
What Happens to My Debt If I Move Abroad?
If you move overseas without managing your debts first, problems can arise. Your creditor or collector may explore other avenues to recover your unpaid debt.
But how far will they really go? That depends on the type of debt you have, how much money you owe, and the relationship between the two countries you are emigrating from and to. Here is what you need to know about the following types of debt:
HELP-HECS Debt
As of 1 July 2017, anyone living overseas and earning more than the minimum repayment threshold must make loan repayments on their HELP-HECS debt.
To do this, you must calculate your income for the financial year and report it to the ATO by October 31. All amounts must be converted to Australian dollars based on the annual exchange rate for the financial year.
Also, if you plan to move overseas for 183 days or more (over 6 months) in a 12-month period, you must notify the ATO by completing an overseas travel notification through the ATO online services.
Credit Card and Tax Debt
If you move overseas with outstanding credit card or tax debt, your creditors and collectors are entitled to try to recover it.
Just like they would if you were still in Australia, collectors may contact you via phone, email, and Letters of Demand.. Failing this, collectors may reach out to their carefully selected network of global partners, and then outsource the task to an international debt collector in your new residence.
Debt collectors may also start court proceedings against you. If they can successfully prove that the debt was made in Australia and is still legally binding, in some circumstances they may obtain a foreign judgement against you.
Can Debt Collectors Chase You Overseas?
Technically speaking, Australian debt collectors cannot literally follow you overseas. But as you just learnt, they have many options. They may try to:
- Contact you personally
- Outsource the job to an international debt collector
- Seek help from local and foreign governments.
For this reason, it is vital that you figure out how to manage your outstanding debts before you move overseas. In most cases, you can still meet your debt repayment obligations through online payment portals. You just need a reliable internet connection and internet-enabled desktop workstation, laptop, or mobile device.
How to Settle Your Debt Before You Travel or Move Overseas
Talk to your creditors, lenders, and collectors about how you can pay off your debt(s) before you travel or move overseas. This will significantly reduce the risk of the other parties taking legal or financial action against you, while giving you the assurance that you will be financially secure abroad.
By negotiating with your lender(s), they may agree to lower the total amount of interest on your debt, reduce or even remove the associated fees related to your debt (i.e. late fees, account management fees), or even establish a more flexible repayment plan that suits your unique circumstances.
You may also be able to consolidate your debts into a single monthly repayment. This means you only manage one single payment each month, not juggle multiple debts and repayment schedules. This way, you’ll have an easier time repaying your debts, and if your circumstances change you will have room to negotiate a new repayment plan.
Consolidating your debts is still an option even if you have bad credit. To learn more about our debt consolidation services and other debt help options, talk to a DebtFix consultant today. Your first consult is obligation free, confidential, and will not impact your credit score. Call 1300 332 834 or enquire online to get started.
FAQs
What happens if I don’t pay off my credit card and leave country?
Leaving Australia with unpaid credit card debt doesn’t erase what you owe. Your creditor can still take action, including hiring a debt collection agency, adding interest and fees, or impacting your credit rating. If the debt is large enough, they might even pursue legal action or recovery through international channels.
It’s important to talk to your lender or seek help from a debt specialist before things escalate. We can help you explore your options.
Can you be stopped at the airport in Australia for having debt?
No, you won’t be stopped at the airport just for having a debt. The only time travel restrictions apply is if there’s a Departure Prohibition Order (DPO) issued against you, usually for serious tax debts, not personal loans or credit cards.
You can still leave the country with unpaid debt, but if you’re going away for a long time or your travel could affect your repayments, it’s a good idea to speak with your creditors first. Being upfront can help prevent the situation from getting worse while you’re overseas.
Should I tell my creditors if I’m moving overseas?
Yes, especially if your move will affect how and when you make repayments. Letting your creditors know in advance shows you’re being proactive, and they may be more willing to work with you to adjust your payment schedule or contact method. Ignoring the debt or going quiet can lead to collection activity or legal action, even while you’re overseas.
What are my options if I can’t afford to repay debt while living overseas?
If you’re struggling to keep up with payments from overseas, you may still be able to access support like debt negotiation, financial hardship arrangements, or formal solutions such as a debt agreement. These can help reduce your repayments or freeze interest. It’s best to get advice from a debt specialist before you fall behind, acting early gives you more options and helps protect your financial future.
