I Have Debts in the UK But Have Moved Abroad - Can I Do an IVA?
If you have debts in the UK but have now moved to a different country either for work or because you have returned home, we consider whether you can still resolve your debt problem using an individual voluntary arrangement.
There are many reasons why you may want to move away from the UK. These may be because of a work opportunity in a different country or perhaps you were living in the UK temporarily and have now decided to move back home or somewhere else.
One of the factors affecting your decision to move could be how to manage the personal debts that you have built up in the UK.
Of course, you may simply be able to continue paying the required monthly payments towards your debt by transferring money to the UK. However, if after moving your income is likely to fall this may be impossible. You should then consider using an individual voluntary arrangement (IVA).
Debt free in five years
An IVA will allow you to pay what you can afford to your creditors and after five years whatever has not been paid will be written off allowing you to move on with your life debt free.
Even if you have already moved away, you can still start an IVA as long as you have not been outside of the UK for more than three years. One of the advantages of the IVA solution is that you do not have to return to the UK to start it. Everything can be done over the telephone and e-mail.
To make an IVA work you need to pay a set amount based on what you can afford back to your creditors.
The amount you have to pay will depend on how much debt you owe and what you can afford. However you will need to be able to prove that you have a sustainable income. Normally this involves producing wage slips or a letter from your employer confirming your income.
You also need to consider exchange rate costs and fluctuations. Your IVA will have to be paid in pounds so if the exchange rate changes, this may mean that the amount you have to pay in your local currency will increase slightly. You therefore need to make an allowance for this when setting your income and expenditure budget.
Getting credit
If you carry out an individual voluntary arrangement, your credit rating will not be affected in the country where you have moved to. As such you will be able to apply for credit there.
However, your credit rating will be made worse in the UK. This poor credit record will last for six years. After this time, the record of your IVA will come off your credit file and your credit rating then has the opportunity to improve again.
Of course, if you are living outside of the UK, your UK credit rating may well not worry you. And if you want to return to the UK, after six years you will be able to build up a good credit rating once again.
Can't I just ignore my debt in the UK?
Once you have moved abroad, unless your debts are extremely large, then it is unlikely that your creditors or a debt collecting company working on their behalf will try to trace you and collect their debt.
For this reason you might consider simply forgetting about your debt in the UK and not paying it.
If you do not plan to return to the UK, then this is an option. However, if you plan to come back to the UK to live at any time in the future, it is likely that your creditors will eventually locate you and start to take action against you to collect their debt.
It is therefore always best to act to resolve your debt while you are out of the country so that by the time you return, the slate really is wiped clean.
What about going bankrupt?
As alternative to an individual voluntary arrangement, you can certainly consider bankruptcy.
The advantage of bankruptcy is that you will not have to pay anything towards your debt in the UK at all unless you can afford to do so. If you can afford to make payments to your creditors, these will last for three years rather than five in an IVA.
In the same way as an IVA, you must make sure you go bankrupt within three years of leaving the UK.
However, you will need to declare yourself bankrupt in the High Court in London and it is recommended that you travel back to London to attend the court in person. The cost of this added to the £625 court fee for declaring bankruptcy puts many people off from using this option.
Get expert advice
If you are considering moving abroad or have already done so but still have unpaid debt in the UK, then using an IVA to settle your debts can be a very sensible solution.
Do not be mislead into thinking that after a number of years of simply ignoring your debt it will just disappear. It will not. If you are planning to return to the UK in the future or if not but you simply want to resolve your debt problem, you should consider the IVA solution so that your debts can be settled in a sensible managed way.
Whether an IVA is suitable for you or not will largely depend on your circumstances. As such, before deciding on the best solution to use, speak to an expert debt adviser who can talk through all the options open to you and their advantages and disadvantages.
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