If you have moved abroad but are struggling to pay outstanding debts in the UK a Debt Management Plan (DMP) could be the answer.
In this article:
- Can you start a DMP if you live abroad?
- Can you get help to set up the Plan?
- The affect on your local credit rating
- Is using a DMP better than ignoring your debt?
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Can you start a Debt Management Plan from Abroad?
A Debt Management Plan can be used if you have moved away from the UK and are now living abroad. Because it is an informal agreement there is no legal requirement for you to be living in the UK when you set up the Plan.
You can approach your creditors at any time after you have moved and ask them to accept a reduced payment proposal. It does not matter whether you moved recently or a number of years ago.
A DMP is the only debt solution available to you if you left the UK more than 3 years ago. Other solutions such as an IVA or Bankruptcy normally need to be implemented before you leave the UK (although there are some exceptions).
You may need to transfer money to the UK on a regular basis to pay your DMP. Remember to include an amount in your living expenses budget to cover exchange charges and transfer costs.
Can you get Help to set up a Debt Management Plan if you live Abroad?
If you are living abroad there is nothing to stop you setting up a Debt Management Plan yourself. However negotiating with each creditor can be difficult and expensive expecially if you are in a different time zone.
For this reason it is often easier to use a debt management provider. They carry out all the negotiations on your behalf. You also get the benefit of only having to manage a single monthly payment which they then share between your creditors.
You will normally need to use a commercial provider who will charge a monthly management fee. Free providers such as Step Change are generally unable to work with people who are living outside the UK.
The easiest way of setting up a debt management plan when you live abroad is to to use a debt management provider.
Will a UK Debt Management Plan affect your Local Credit Rating?
Starting a Debt Management Plan will mean that your UK credit rating becomes poor. However your credit rating in the country where you live now is unlikely to be affected.
Credit reference agencies do not tend to keep cross boarder records. As such the problems recorded on your UK file will not show up on your local file.
In addition it is highly unlikely that anyone in your local country will be able to gain access to your credit records in the UK when carrying out a credit check against you. As such you should be able to get a bank account and apply for credit in the same way as any other local person.
Your credit rating in the UK will not start to improve until your debts are paid in full or until 6 years from the date that your creditors issue default notices against you.
Is using a Debt Management Plan better than Ignoring your Debt?
If you are now living abroad one of the options that may have crossed your mind is whether you can simply ignor your debt in the UK. Given the amount you owe is relatively small the risk your creditors will chase you overseas is probably low.
However if you are planning to move back to the UK keeping your creditors on side by using a debt management plan may well give you peace of mind.
Where you are planning to stay away from the UK for more than 6 years ignoring your debts might be an option. On your return it is possible they may have become statute barred and thus unenforceable. However there is no guarantee of this.
Generally speaking if you are planning to return to the UK ignoring your debt is not a good idea.
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