Creditor vs. Debtor

Escaping debt if leaving the UK permanently…

More and more people are fleeing the UK for many reasons, but one trend appears to be to escape debt.

People who have run up credit cards or their businesses have ceased trading or are in substantial debt feel that a fresh start abroad is the solution.

However, this is not as clear-cut as people think and it bears a lot of risk. Creditors can still enforce their debt claims against you abroad, particularly if you are living in an EU country and should you wish to move back to the UK your bridges may have been burned. Beware creditors have more control over the enforcement of their debts than ever before.

Creditors, how do you recover your debt?

Some countries have reciprocal agreements with the UK, such as Canada. This enables you to track down your debtor and enforce your claim in that country. There are many countries where this is possible and you should check this before enforcing the debt.

It is also now possible to file a claim form in England and serve this on the debtor abroad. Once judgment is received enforcement action can be taken in the debtor’s country of residence. If the Debtor cannot or does not dispute jurisdiction at the start and/or file a defence the creditor has a direct route to enforcing the judgment regardless of the fact the debtor is outside the UK. Also if you as a debtor have moved to a member of the European Union and your country falls within the Council Regulation (EC) No 44/2001 of 22nd December 2000 then permission to serve the claim form outside of the UK is not even required. This makes a claim against you for the outstanding debt relatively simple and cheap for the creditor. We have seen these types of claims increase over the last few years.

Finding the debtor

The ability of a creditor to now trace a debtor is far more advanced and vast due to the growing number of debt collection resources and agencies being made available. There are many ways to trace a debtor, from hiring a private investigator, to internet checks to simply going to the last known address and talking to the neighbours, friends or relatives.

Traces can also be made of a debtor’s ATM or credit card, which may also be available to UK credit agencies. This can follow a debtor’s movements from country to country.

How long does the creditor have to find you?

Some people will get away with it unless action is taken by the creditor quickly. A creditor has only 6 years from the date of the debt becoming outstanding or an agreement being met to recover the monies. However, if a claim or other form of legal action is taken then the debt can be legally recoverable indefinitely and the creditor can continue to actively search for the debtor beyond this period. This can lead to debtors acquiring assets, a new business or income and then years later their old debts come back to haunt them and the creditor can now have take the benefits of those assets along with the accruing interest.

Debtors beware – Creditors don’t give up there maybe assets for you out there

What is the Best Thing to do as the Debtor?

Resolve your debts before you leave or resolve them so you do not need to leave. Disputing the debt now may be safer in the long run

Speak with an independent party in confidence and have them outline the options and solutions available to you. We can negotiate a payment plan with your creditors to enable you to pay off your debts or negotiate a substantial discount; maybe bankruptcy is the best option and will cut all ties with your debts and allow you to move on unencumbered; maybe you feel the debt is yours, but in fact it’s your company’s and as such placing this into liquidation can avoid any problems with you directly; There are also companies such as FCL Debt Clinic (www.debtclinic.co.uk) who offer free financial assessment and advice.

Our advice is prevention rather than treating the problems. If you are a business get on top of your debtors to avoid trading or cash flow problems, take legal advice or instruct a firm to do this at an early stage and this will help avoid the problems later on; if you are a sole trader speak to us about setting up a limited company to avoid any personal liabilities; there are firms like ours that will act as company secretary and do all your administration for you; maybe we can negotiate payment plans with your creditors at the very onset of a problem to avoid any need for them to enforce the debts in one lump sum. Speak to us for further details about debt recovery or dispute debt.

What should you do if you are a Creditor and the Debtor has fled abroad?

Manipulation of the resources should be done immediately to trace the debtor’s new place of residency or business. We frequently use an array of sources for this including private investigators. Next we advise you to Issue a claim in the UK courts (seeking permission if required) and then serve this on the debtor’ new domicile (through the high court foreign office) and if they do not respond obtain judgment and seek advice on enforcing it in the debtor’s country. Please note the rules of enforcement vary from country to country and advice should be taken. We offer this service for our affiliated countries and have employed associates to deal with other countries in the EU.

For more information contact us…

0207 426 0382

enquiries@acitylawfirm.com