Leaving the country with unpaid debt may seem like an appealing way to escape financial obligations, but it’s important to understand the potential consequences before making such a decision. This article will explore what happens to your debt when you leave Australia, the impact on your credit score, and the legal implications of defaulting on your debts.
What Happens to Your Debt When You Leave Australia?
Contrary to popular belief, your debt does not simply disappear when you leave Australia. Your creditors will continue to pursue repayment, and your debt will continue to accrue interest and penalties. Creditors may engage in the following actions:
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Phone calls and letters: Creditors will attempt to contact you via phone and mail to request payment.
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Credit report damage: Missed payments will be reported to credit bureaus, negatively impacting your credit score.
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Lawsuits: Creditors may file lawsuits against you to recover the debt. If you fail to appear in court or defend yourself, a judgment may be issued against you, allowing creditors to seize your assets or garnish your wages.
Impact on Your Credit Score
Leaving Australia with unpaid debt will have a significant negative impact on your credit score. Missed payments and defaults will be reported to credit bureaus, lowering your score and making it more difficult to obtain credit in the future. A low credit score can affect your ability to:
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Secure loans and mortgages
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Rent or purchase a home
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Obtain insurance
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Qualify for certain jobs
Legal Implications of Defaulting on Debts
Defaulting on your debts can have serious legal consequences, including:
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Bankruptcy: Creditors may petition the court to have you declared bankrupt, which can result in the liquidation of your assets to pay off your debts.
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Asset seizure: Creditors may obtain a court order to seize your assets, such as your car, home, or bank accounts.
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Wage garnishment: Creditors may garnish your wages, deducting a portion of your paycheck to repay your debts.
Leaving Australia with unpaid debt is not a viable solution to financial problems. Creditors will continue to pursue repayment, and your debt will continue to grow. Defaulting on your debts can have severe consequences, including damage to your credit score, legal action, and asset seizure. It’s crucial to address your debt responsibly and seek professional advice if you’re struggling to make payments.
What Happens to Unpaid Credit Card Debt if You Move Abroad?
FAQ
What happens to my debt if I leave Australia?
What happens if you don’t pay your debt in Australia?
What happens if I leave the country without paying my debts?
What can stop you from leaving Australia?
Can I leave Australia if I owe a tax debt?
The ATO has the power to stop a taxpayer from leaving the country if they owe a tax debt. It can do this by issuing a Departure Prohibition Order . Once the ATO issues a DPO, you cannot leave Australia until the tax debt is fully paid or you reach a settlement with the ATO.
Can I leave Australia if I have a child support debt?
If you have a child support debt we may issue a Departure Prohibition Order. It’ll stop you from leaving Australia until you either: enter into an acceptable payment arrangement. We don’t need a court order to stop you from leaving Australia. If your circumstances change while overseas, call one of our Child Support international lines.
What happens if you leave a country with unpaid debt?
While debt technically won’t follow you abroad, you may suffer several consequences for trying to flee from it: you may be sued and have your wages garnished; your credit score will suffer; you may have to pay taxes on your debt. These are just a few consequences of leaving the country with unpaid debt.
Can the ATO Stop Me from leaving Australia?
The ATO can issue a Departure Prohibition Order (DPO) to stop you from leaving Australia. This is effective until you pay your tax or settle with the ATO.