How to pay off an overseas debt
Here’s everything you need to know to pay off an overseas debt after moving to Australia and get your personal finances back in the black.
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
For most of us, taking on a certain level of debt is simply a part of life. Whether it’s a hefty credit card debt or the multi-year commitment of a home loan, most people will borrow money and need to pay it back at some stage.
The quicker you pay the money back the better off you’ll be, but debt can become even more complex and confusing when you move abroad to Australia. Let’s take a look at how overseas debt works and how you can pay your creditors as quickly and easily as possible.
Search and compare international money transfers to pay off your overseas debt
Can’t find what you’re looking for? Have a TorFX currency expert contact you for free
Common overseas debts
Because debt is such a widespread part of life for many, it’s not unusual for people to owe money when they plan to move overseas. Some of the most common outstanding debts you might be facing include:
- Credit card debt
- Student loans and education fees
- Car loans
- Personal loans
- Home loans
- Tax debt
But despite the fact that you still owe money, sometimes life changes and you decide you want to move abroad. Whether it’s your career, romance or even a simple desire for adventure that prompts you to move to Australia, you can still do so even if you are in debt.
Can I leave my debts behind?
In many cases, your debt won’t stop you leaving your home country and heading to Australia, but that doesn’t mean you’ll be able to leave those old debts behind and start life down under with a clean slate. Of course, what will happen to your debt (and to you) will vary depending on a wide range of factors, including the amount you owe, who you owe it to and the laws in your home country surrounding debt repayment.
There are several potential outcomes, including:
If you owe money to the government in your home country, you could be arrested at the airport before you even depart. Alternatively, you may be refused permission to head overseas and have your passport seized.
Your credit history will suffer
If you try to skip out on your debt or fail to make repayments on time, your credit file will take a battering. This could have devastating consequences in the future if you ever plan to return to your country of origin. Your credit history could also catch up with you overseas – it all depends on whether any lender you approach for financing asks for details on your credit history in your home country.
You may face legal action
Your creditors may take legal action against you to recover their debts, and this action may continue regardless of whether or not you’re in the country and able to attend court. While an overseas court may not be able to force you to pay your debt from overseas, it could allow creditors to go after whatever assets you still have in your home country.
You could lose some of your salary
If you work overseas for a company based in your home country, your pay could be garnished or withheld. For example, if you’re a US expat who works in Australia for a company based in the USA, that company is subject to US laws and may be required to dock your wages to pay off your debts.
Your creditors could catch up with you in Australia
There are plenty of other ways your creditors might seek to reclaim the money they are owed. For example, the ATO has agreements in place with tax and revenue services in many other countries around the world to force debtors to pay their bills. Banks or credit card providers may also send debt collectors after you in your new country of residence to try to reclaim their debt.
How to deal with overseas debt collectors
Dealing with debt collectors can be a worrying and intimidating experience for many, but it’s something you may have to do if you want to get your finances back on track. The best approach is to get on the front foot and work out a reasonable and affordable agreement to help you pay back the money you owe. By showing that you are willing to work to pay off your debt as quickly as possible, you will take some of the sting out of the situation.
It’s also important to remember that you have rights when dealing with debt collectors to ensure that you are not harassed, intimidated or treated unfairly.
How to pay off an overseas debt
The hard part of paying off an overseas debt is saving enough money to repay what you owe; the act of sending money overseas to your creditors is actually quite easy.
To get the necessary funds back to your home country you will need to send an international money transfer. There are three main ways to do this:
Through your bank
You can send the money from your Australian bank account to an account in your home country. This is usually the most convenient option (because you will already have an account set up and ready to go) but in many cases will also be the most expensive.
Through a cash transfer provider
Companies such as Western Union and Moneygram offer fast cash transfers from Australia to hundreds of thousands of agent locations around the world. This is a good option if cash is an accepted form of payment and if you need to pay off your debt as quickly as possible.
Through an online transfer provider
If you want to find the most cost-effective way to transfer money overseas, specialist online transfer companies will usually win out. However, you’ll need to compare international money transfer providers to find the best exchange rates and lowest transfer fees.
Case study: Debbie’s debt
Debbie moved to Australia from the UK in mid-2016, leaving behind a personal loan debt of £1,500. After a couple of months working in Australia and getting her finances in order, Debbie has saved enough money saved to pay off the amount she owes. She initially plans to send the funds straight from her account with a major Australian bank back to her old bank account, but she decides to compare her options and see if a specialist money transfer company can offer a better deal.
The results of her comparison are shown in the table below. As you can see, Debbie can save $138.30 if she sends the transfer via an online money transfer company rather than from her bank. This shows just how important it is to shop around for the best exchange rate and lowest transfer fees.
|Bank||Online money transfer provider|
|Exchange rate||1 AUD = 0.5599 GBP||1 AUD = 0.5935 GBP|
|AUD needed to convert to £1,500||$2,680||$2,546|
|Total cost of transfer||$2,702||$2,563.70|
The latest articles in foreign exchange
MasterRemit allows you to transfer your money quickly in a range of currencies.Read more…
SPONSORED: From lockdowns to currency fluctuations, make sure you consider all these key factors.Read more…
Get today’s best Australian to US dollar exchange rates before you send money overseas.Read more…
Beat the banks, find the best exchange rates and avoid fees when you send money abroad from Australia.Read more…
Learn about how TransferMate’s personal product works and what it can do for you.Read more…
Make simple and small transfers to the Philippines through the IREMITX app.Read more…
How to choose a money transfer provider
There are several factors you need to consider when choosing a company to handle your international money transfer, including:
As Debbie’s example shows, a minor difference in the exchange rate can make a huge difference to the affordability of your transaction. Shop around for a company that always offers the best exchange rates, but make sure those great rates don’t come with high transfer fees attached.
Compare the fee that each provider charges per transfer. Fees could be as high as $60 or $70, depending on the amount you send and where you are sending it, or as low as a few dollars. Some providers will also waive their fees on large transfers.
Can you lodge your transfer online, over the phone and/or by visiting a branch? Is there a smartphone or tablet transfer app?
If you need to make regular repayments to your creditors, check to see whether the transfer provider allows you to set up a recurring payment schedule. Other transfer options, such as forward contracts and limit orders, can also be used to help you save time and money.
Compare how long it will take each provider to complete your transfer. Some companies, such as Western Union, offer cash transfers that are completed within minutes, while other transfer options can take as long as five days.
Hopefully you will only have overseas debt to be repaid in one country, but if you owe money in multiple countries then you will need to make sure that your transfer provider offers support for all the relevant currencies.
If you ever have a problem with a transfer or need help, will you be able to access the assistance you need over the phone, via email or through a live chat service?
Top tips for paying off an overseas debt
Keep an overseas bank account open
Consider keeping your existing bank account open when you move to Australia. This will give you a destination for your international money transfer and then allow you to manage debt payments via Internet banking.
Try to pay off debt before you leave
No matter which money transfer provider you choose, paying off overseas debts will still lead to additional expenses due to exchange rates and transfer fees, not to mention the added pressure of interest charges. With this in mind, take whatever steps you can to pay the debt off before you leave your home country – for example, could you use the proceeds from the sale of your house, furniture or car?
Debt collection agencies aren’t limited to one country
Moving overseas won’t help you escape your debt. Many debt collection agencies operate internationally, while other agencies can “outsource” your debt to other collectors.
More guides on Finder
MasterRemit international money transfers review
MasterRemit allows you to transfer your money quickly in a range of currencies.
Salt and Lime Debt Consolidation Loan
Looking to consolidate your debt? Salt and Lime offers fee-free loans, same-day funding, and the ability to earn discounts on your interest over the life of the loan. Apply today.
September’s best balance transfer credit card offers
Standard credit card interest rates haven't changed much, but these balance transfer offers give you a way to save with 0% interest for up to 36 months.
From $10K debt to $50K saved: How I fixed my finances in 4 years
How Eliza paid down her debt, cut up her credit card, saved $50,000 and started investing in a few short years (all while renting in Sydney!).
Coronavirus: How it’s impacting life insurance
The outbreak of covid-19 has many people wondering about their insurance options. This guide helps answer all you life insurance question during the coronavirus outbreak.
The Perth Mint review
We look at the pros and cons for those hoping to invest in gold bullion and other precious metals with Perth Mint.
Westpac Low Rate Credit Card – Cashback Offer
A no-frills card offering a $0 annual fee for the first year, $400 back when you meet the spend requirement and a 13.74% p.a. interest rate on purchases.
humm90 Mastercard – Balance Transfer Offer
Check out this card’s long-term interest-free offers on purchases – plus one of the longest 0% balance transfer offers on the market.
PayPal Rewards Card
The new PayPal Rewards credit card offers no annual fee and points per $1 spent. So how much value can you get from it?
August’s best balance transfer credit card offers
Ready to deal with credit card debt? Here's how you can save on interest with one of these 0% balance transfer offers that lasts up to 36 months.
International Money Transfer OffersImportant Information*
Azimo sends money directly to a bank account or over 280,000 cash pick-up points. It also has fast transfers to 50+ countries.
TorFX guarantees to match any competitor's exchange rate. Conditions apply.
TorFX sends money overseas in 30+ currencies, with competitive rates for transfer amounts over $2,000.
New customers get their first transaction for free with code FIRSTFREE. T&Cs apply.
Send money in minutes at competitive exchange rates with this Australian money transfer service.
Ask an Expert