subject: Debt Abroad - Lee Byers Practical Expat Solutions [print this page] If you've fallen on hard times abroad and you're an expat in debt or facing repossession of your home overseas, read on to discover how to get out of debt and manage your money abroad.
In recent months we've noticed a worrying trend developing. We've been contacted by some expatriates who have been out of the UK for so long that they have no close family or friends 'back home,' and they have fallen on hard times abroad and basically have no fall back position as a result. These people need to know how to cope now that they are in debt abroad. Whilst in the UK you can't be sent to prison for failing to pay a personal loan or a credit card debt for example, in some countries debt and defaulting on agreed finance is a criminal offence. As a non-domiciled individual living abroad you are seldom eligible for state support even when you're in a crisiswhich makes the plight for expats who fall on hard times perhaps even harder than it is for those who become bankrupt or deeply in debt in Britain.
If you or someone you know is facing debt abroad, this guide to practical expat solutions if you're in debt overseas will hopefully help guide you through these difficult times.
Are You Really Facing up to Your Financial Troubles?
Do you have any idea about how much you owe and to whom, or do you prefer to bury your head and ignore the problem? Are you only meeting the monthly minimum payments on your credit card, and have you even considered borrowing more to service the most pressing debts?
Do you find you have sleepless nights worrying about money? Are you in a position where you have to use credit lines to pay everyday bills? Have you spent all your savings?
If so, you are facing a deepening personal debt crisis but the good news is that you're not alone.
Expatriates often feel alone whenever they encounter a difficulty abroad. There are no friends, family or familiarities to fall back on when things spiral out of control, and as a result it can be a very isolating experiencehowever, it's important to bear in mind that the world is going through an economic shift, and many people are finding themselves in a position of debt. So really, you are not alone
Debt Doesn't Make You a Bad Person!
If debt meant that the defaulter was intrinsically bad, governments and companies all over the world would be the embodiment of evil!
Being in debt is not a judgement on your character or your abilities to manage your life or your money and the sooner you accept this, the better. Once you get beyond any stigma you feel about being in debt, the sooner you will be able to take positive steps to get your life back on track.
Life is about so much more than the material possessions you own, the amount of money in your bank account, the job you do or the colour of your credit report. However, in a fairly closed and consumerist society like the UK, we are all pre-conditioned to somehow equate debt and financial difficulty to failure and embarrassment, which is a) untrue and b) unhelpful!
Dealing with Debt Head-on
For anyone struggling with mountains of unpaid bills, here are 5 top tips to help you get back in the black: -
1) Identify priority and non-priority debts - you have to be committed to getting out of debt to actually get out of debt! So, first things first you have to take a long, cold, hard look at the state of your finances. See what's coming in and look at what needs to go out where.
You now need to prioritise your payments. Keeping a roof over your head and your butt out of prison should be your prioritiesafter that, work your way forward examining what you need to pay to stay safe and comfortable, and which debts can just be written off if the very worst comes to the worst and you have to face bankruptcy.
When prioritising your debts look at the contracts you signed to get the credit and ensure your home and your freedom are not at risk first. Note, in the UAE for example, defaulting on credit can land you in prisonso make sure you know your responsibilities and the true consequences of any action or inaction you take.
2) Snowball your debts - snowballing is the principle of throwing any money you have at the highest interest accruing debts first in order to get rid of them. The theory is, the quicker you get rid of the highest interest accruing debts, the better in the long-term.
3) Forget about saving (for now) - with many banks paying less than enough in the way of interest to even cover inflation, don't worry about saving your cash if you're deep in debt. (Note: if you're locked in to a savings agreement that will see you lose your invested capital to date if you fail to continue to save, this could be an exception to this rule! If in doubt always speak to your financial adviser.)
If you're in debt you will be accruing interest charges higher than any interest you could earn, so it usually makes more sense to throw all you have at your debt.
4) Be ruthless - cut out the morning coffee or the newspaper, stop subscriptions for services you don't need, walk to work, take on any extra work going cut back and earn as much as you can throw everything you can at your debt. Whilst you will undoubtedly face a period of short-term discomfort, you will get out of debt as quickly as you can and recover your life.
5) Reach out - non-UK residents struggling with debt in the UK can contact the Consumer Credit Counselling Service for free help and advice - however, if you're non-resident and struggling with debt in your new nation, you need to see what support services and charities are available to assist you locally.
Do not be shy about speaking out and looking for helppride comes before a fall they say, so don't be too proud to ask for help. Try speaking to fellow expatriates, or if there is a British Residents' Society or networking equivalent, contact them for any ideas.
Other suggestions include speaking to the local authorities either via the town hall, tax office or any social office that exists. You can also try the forums and ask other expats whether they know of any organisations that can help you, or any individuals who have managed to get through a similar situation to your own.
If you have friends and family, ask them for advice, support or direct help before it's too late for you to get your life more easily back on track.
In Conclusion
Debt is an increasing concern for many expatriates who have been affected by the global economic crisis however, unfortunately for expats there are often far fewer options for them than their peers back home when it comes to getting practical help and financial support.
What this means is that the sooner you accept your debt issues and begin facing them and finding ways to pay back creditors, negotiate with lenders and prioritise your payments, the better.
Forget the social stigma associated with being in debt it is a damaging intangible fallacy instead take action and get yourself back on the right track, and good luck
