SA Can UK Personal Loan Debt Affect Me in Australia?

[richard300]

My wife and I moved to Australia seven months ago on 189 Permanent residency visas.

We both have individual personal loans and have been struggling to pay them due to my wife's job falling through, and my only just having found fulltime work.

About 3 months ago my wife stopped being able to pay her loan in the UK, I have been continuing to pay mine, but it's got to the point now where I am faced with a dilemma - continue paying my loan and risk our life in Australia, or stop paying it, and giving my family a fighting chance at our new life.

Even though I witnessed the banks make a very good friend of mine (and his wife and three children) homeless and destitute when his business failed in 2009 - I still struggle with the moral decision of "They were willing to loan me this money, I should pay it back".

But immediate self preservation is leading me to stop paying this debt, focus on making things work here in AU and taking my chances.

I do see many conflicting opinions about how (in Australia) such a decision could haunt me, with reciprocal legal laws being in place between the UK and Australia.

If this the case, then what is the likelihood of being chased and the consequences?

As it stands, I would be owing a personal loan of about £13000 and a UK high street bank overdraft of £750 and credit card of £750. I believe my wife owes something along the lines of £18000 to her high street bank in the form of a loan. These are not insignificant amounts and so I would imagine the companies would look to minimise their loss.

I'm not proud of my situation.

 

[Tracy B]

Hi Richard300,

Theoretically, the bank in the UK, as a creditor, can bring a debt judgment order against you in the UK. They can then seek enforcement of that debt judgment order in Australia by applying for an enforcement order in Australia. With an Australian enforcement order, they can then place caveats on your property (home, car), contact your bank and your debtors to direct money to them in satisfaction of the enforcement order, hire a bailiff to assess valuables in your home. I say "theoretically" because this whole process is quite costly and time consuming and many creditors will just give up and write your debt off as a bad debt. However, if they do wish to pursue it, they can.

It's great that you and your family are trying to start over. It may help to see a financial advisor here in Australia. Most community legal centres offer free financial advice services that can help you assess your spending habits, earning capacity and advise you on a finance plan suitable for your situation. You can locate your nearest community legal centre here.

Best of luck and welcome to Australia.

 

[richard300]

Thank you for your very informative reply, Tracy..... I will go and see someone at the community finance centre.
I note that you say that 'theoretically' and i guess a lot would depend on the amount owed? In theory i guess they wouldn't go to all the time and expense of perusing things for a few hundred pound, but probably would for hundreds of thousands of pounds - I have no idea what it would cost a UK company to pursue me for any debt. £13000 is a huge amount of money for me, it could (hopefully) be an acceptable loss for the bank?

Do the UK companies simply not sell the debt to Australian companies, and then the Australian companies come knocking at the door?

 

[Tracy B]

Hi Richard300,

Even if the UK company sells their debt to an Australian company, the Australian company will need to get a judgment order. Depending no the specifics of the debt, the Australian company could seek this directly from an Australian court, or may need to get an UK court order first.

It's really impossible to say whether the bank is likely to pursue your debt through the court system or not. This is really a choice for the bank, depending on internal policies, the bank's own financial position, whether the bank wants to "make an example out of you".. nobody but the bank itself can tell you this.