Help needed from Brit in Canada with UK debt!

BritinCanaa

Wondering if anybody has any useful advice:

I moved to Toronto from London (England) in October 2008, after I was headhunted for a job over here. I have about £18,000 debt on UK credit cards in the UK, a lot of which has until now been on a 0% balance transfer deal, but a lot of it also accrued in the first month of moving to Toronto. Now I'm starting to get charged interest on the balance transfer, and first monthly interest charge is close to £300, and even to pay off the interest will be a struggle, so the debt will only keep increasing unless I do something. Most of the advice I've found for expat credit card debt has been to do with whether they'll ever catch up with you if you skip out on the debt, but this is definitely not my style and not an option.

Now shortly before I left the UK, I took out a £15,000 loan to pay for renovations I had to do to my flat in London in order to rent it out. I'd bought as a project, and it was unrentable in its (then) current condition. I didn't want to sell the flat as I would have lost a lot of money, having bought it at the market peak in 2006, and I need a base to come back to if things don't work out in Canada. I'm paying this loan off over a 5-year period. Initially I was also having to supplement the rent to cover the mortgage as it was £300 short each month, plus I have to pay the service charges and work done to the building, meaning I was originally losing about £800 a month. Even now if I sold my flat, I would get £50,000 less for it that it was worth 2 years ago plus the renovation costs, so selling it until the market recovers (probably in 3-4 years) is apparently not an option as I would have negative equity.

My problem is that where it used to be a simple task to transfer balances at 0% on my existing credit cards, these offers have dried up in the current climate; the interest is starting to accrue faster than I can pay it off, and I cannot get another loan in the UK – partly because I already have a loan I’m paying off in the UK, and I am not currently resident or employed in the UK.

A large part of the debt is because when I moved to Canada I had to put down rental deposits, car downpayments (inflated because of my new resident status, as is the interest rate), put down a deposit for a bonded credit card (because of my new resident status) buy new furniture, and all without any Canada-based capital. Finance/bank charges were also higher because I have no credit history here. My company had agreed to pay moving expenses, but this did not cover buying furniture, or having to replace things which could not be shipped or would not work over here (electrical appliances, furniture etc), and every cost had to be justified and claimed individually. So, because I’ve only been here for 7 months, I’m still dealing with the financial aftermath of all that, plus now I have the £18,000 to pay off much more urgently than I’d anticipated.

All I can think of is to try to get a loan here and use it to pay off the credit cards in the UK. However, my Canadian bank won’t even give me an overdraft because I have a Temporary Work Permit, and this means that my Social Insurance Number begins with 9, which immediately limits options for you. Through some string-pulling (which cannot be repeated), I did manage to get hold of a credit card here which I am paying off in full every month to establish my credit history, so it should hopefully have improved slightly.

I’m actually earning a decent salary for Toronto, but the situation back in the UK has got me in a bit of a pickle. Haven’t been able to sleep for the last two nights and I’m exhausted! I realise that some people will think that I only have myself to blame for the predicament, but you don’t know all the circumstances surrounding this situation, so please no judgemental comments – I’m looking for constructive advice on how to manage this type of debt bearing in mind that getting another 0% balance transfer or a loan is going to be pretty much impossible considering I am not currently living or employed in the UK.

Any help gratefully received!

Thanks

BritinCanada

Tixy

Hi BritinCanada.

Sorry I can't think of any useful advice but thought I'd bump your thread up so other people can see it.

Horace

One thing I will advise is not to take out another loan to pay off the loan and credit card debt that you already have as that will compound the problem. Is there a way of increasing the rent on the property that you have in the UK? What have you done with all your UK furniture - is it in the flat or in storage? If its in storage, do you have a trusted relative who can sell it for you to raise some funds to pay the cards. Maybe it is better to take the hit on the flat - I know it is hard but everywhere is in negative equity at the moment and that isnt likely to change anytime soon as thanks to the spend spend spend attitude of the current government we are in the worst recession since WW2 and every child born in the UK at the mo has a £22500 debt again due to our goverments spend spend spend attitude:mad:

I don't think that there is anything else I can suggest because I have no experience of having debt over here whilst living in another country.

Good luck though and hope you manage to sort it out.

insideinfo

Hi

I'll keep it brief. If your creditors remain unhappy with any payment offers that you may make to them, they have only one course of action. Although a grey area (whilst you are overseas) they could ultimately resort to Court Action to secure the debts by way of county court judgment. This poses a problem as papers need to be served by post and there is usually a 14 day return limit (19 if issued by Northampton Bulk Processing Centre). In theory they could serve papers on a Brit resident abroad. There may be a case for you to seek leave of the court for more time to reply. Anyhow, the courts are all very very busy here and there delays in processing most court claims.

So if a court were made aware of your temporary status they may proceed to process the application , this now gets complicated, very complicated. In order to enforce the CCJ against you the creditor would have to gain jusrisdiction over the debt in Canada. Canada have signed the reciprocal agreement Reciprocal Enforcement Foreign Judgments Act 1993 which still stands...

Therefore the Federal Court of Canada and any Court of British Columbia, Manitoba (all other provinces) could receive an application to enforce or collect the agreed amount of monthly installment order made or agreed against you.

Now the court in the UK may hear from your creditors of the difficulty and extra cost of reclaiming this debt. There is little case law to support the following but they could try it.

They could ask for a judgment in default which basically means that the whole sum (s) are payable forthwith (immeadiately). If they succeed and would only push for this if they know about your UK property, they could apply for an interim charge. Leading to a legal charge over the property in the UK. This is especially problematic as a court has to hear a defence to the charge at an oral hearing, a court can consider a written defence but these are much weaker as you are not present to defend yourself verbally against the creditor. Telephone conversations are not admissable defences.

As your property in the UK is not your main residence or place of shelter it is much harder to defend an action for an order for sale, your property could be at risk.

However, if you can provide a reasonable monthly sum in terms of repayment of the debt then none of this may be necessary. You are at liberty to seek the advice of CCCS et al who could help you with an opinion. Please note that most of the agencies in the UK are weak in terms of overseas residents.

I am a debt counsellor and specialise in advice to ex pats. I rarely have time to come on line but I'd ask others to comment on the above.

If, and a big IF, any of this happens then the following could be considered. Think about agreeing to a voluntary charge with no interest added and no order for sale as you INTEND to return to the UK soon. This is very risky but it can work and has worked for many that I have advised. You have nothing to lose. If this idea works, yes you have a charge on the property, the debt is arrested in terms of added interest and without further applications and hearings in court they cannot make you sell your property.

If it fails, the creditor only gets what they were going to get anyway. Please get some advice regarding what you could offer your creditors.

90% of collections staff know ziltch about enforcing debt overseas, the last thing you want is for the process to go ahead without you receiving your post and end up with an order for sale.

Do not let any of this worry you, I have been honest and pragmatic. Any situation can be handled and defences/mitigation filed. One thing that worries me is that you left so soon after taking the loan out. If it can be shown that this was your only option in order to improve your financial position and service your debt, then you have an excellent mitigation.... I'm exhausted typing this !

Best wishes

insideinfo

Q1

Are your creditors in contact with you in Canada?

Q2

Is your Canadian Bank connected in anyway to your UK Creditors?

Q3

Have you thought about making an offer to your UK creditors and seeing if they will accept it. They are ALL - Squealing like pigs and feeling the "crunch", you never know, it just may work. I should'nt say this but, if they do not know about your UK property then they may never find out. Unless you have had dealings with them at or about the purchase of the property they may never know. Many of the debt collections agencies couldn't do a Land Registry Search let alone find their ***hole with two hands and a torch.