Hey everybody,

Wondering if anybody has any useful advice:

I moved to Toronto from London (England) in October 2008, after I was headhunted for a job over here. I have about £18,000 debt on UK credit cards in the UK, a lot of which has until now been on a 0% balance transfer deal, but a lot of it also accrued in the first month of moving to Toronto. Now I'm starting to get charged interest on the balance transfer, and first monthly interest charge is close to £300, and even to pay off the interest will be a struggle, so the debt will only keep increasing unless I do something. Most of the advice I've found for expat credit card debt has been to do with whether they'll ever catch up with you if you skip out on the debt, but this is definitely not my style and not an option.

Now shortly before I left the UK, I took out a £15,000 loan to pay for renovations I had to do to my flat in London in order to rent it out. I'd bought as a project, and it was unrentable in its (then) current condition. I didn't want to sell the flat as I would have lost a lot of money, having bought it at the market peak in 2006, and I need a base to come back to if things don't work out in Canada. I'm paying this loan off over a 5-year period. Initially I was also having to supplement the rent to cover the mortgage as it was £300 short each month, plus I have to pay the service charges and work done to the building, meaning I was originally losing about £800 a month. Even now if I sold my flat, I would get £50,000 less for it that it was worth 2 years ago plus the renovation costs, so selling it until the market recovers (probably in 3-4 years) is apparently not an option as I would have negative equity.

My problem is that where it used to be a simple task to transfer balances at 0%, these offers have dried up in the current climate; the interest is starting to accrue faster than I can pay it off, and I cannot get another loan in the UK – partly because I already have a loan I’m paying off in the UK, and I am not currently resident or employed in the UK.

A large part of the debt is because when I moved to Canada I had to put down rental deposits, car downpayments (inflated because of my new resident status, as is the interest rate), put down a deposit for a bonded credit card (because of my new resident status) buy new furniture, and all without any Canada-based capital. Finance/bank charges were also higher because I have no credit history here. My company had agreed to pay moving expenses, but this did not cover buying furniture, or having to replace things which could not be shipped or would not work over here (electrical appliances, furniture etc), and every cost had to be justified claimed individually. So, because I’ve only been here for 7 months, I’m still dealing with the financial aftermath of all that, plus now I have the £18,000 to pay off much more urgently than I’d anticipated.

All I can think of is to try to get a loan here for $30,000 and use it to pay off the credit cards in the UK. However, my bank won’t even give me an overdraft because, like all TWP holders, my SIN begins with 9. Through some string-pulling (which cannot be repeated), I did manage to get hold of a credit card here which I am paying off in full every month to establish my credit history, so it should hopefully have improved slightly. Would I be able to find a loan for this amount without being ripped off because I’m not a permanent resident?

I’m actually earning a decent salary for Toronto, but the situation back in the UK has got me in a bit of a pickle. Haven’t been able to sleep for the last two nights and I’m exhausted! I realise that some people will think that I only have myself to blame for the predicament, but you don’t know all the circumstances surrounding this situation, so please no judgemental comments – I’m looking for constructive advice on how to manage this type of debt and/or get a low-cost loan with my status as a temporary work permit holder.

Any help gratefully received!

Thanks

BritinCanada

Why can you not just pay the debt from Canada?

The point is that with the interest accruing as fast as this, it will be building faster than I can pay it off - ie if I get charged £300 a month interest but can only afford to pay £200 a month then the debt still increases steadily by £100 a month, so the debt continues to grow larger until I can transfer it somewhere where it can be paid off over a longer period, and without huge credit card interest charges.

We've just got a 0% balance transfer rate (Virgin credit card) so they are definitely still out there in the UK. We had several to choose from, wanted to buy a new bathroom so got a 0% balance and purchase card.

Whether you would be eligible to get one from Canada is another matter, but there are certainly still lots of companies doing them in the UK, contrary to your understanding.

Alternatively, the only thing I can suggest is either a second job to help with some extra income, or contact one of those 'debt resolution' companies that help you work out a lower payment plan on what you owe.

Also, I just had to say well done you for not wanting to run away from your debts.

A good idea.

If you don't want to use a third party then I would talk to the credit card companies directly. Explain you situation. Tell them you want to pay off the balances but that at the interest rates they are charging you cannot. I think most companies will be willing to work out a repayment plan with you if their alternative is to get nothing.

Thanks everyone,

Some useful advice here - unfortunately the card with the largest balance, and which is now charging £300 interest per month is a Virgin card! I've already spoken to them and they won't extend the 0% period any further and won't negotiate on the rate either... I used to transfer smaller balances between my Egg & Virgin cards for 0% interest, but they can't help right now, and it's impossible to get a different 0% card while I'm not resident in the UK and don't have a UK income. Hmmm...

The only advice I can give is to contact the card company and ask for the interest to be freezed as you no longer reside in the UK, but you still want to pay off your debts. The other suggestion that I can make is that you post this thread in www.moneysavingexpert.com Martin might have a better input on how you go about managing this debt.
Hang in there, as long as there is life there is hope..

Can't you transfer the debt onto another card at a better rate than Virgin are currently charging you? I know it might not be 0% but the debt may be more manageable.

Check out the National debt Line website http://www.nationaldebtline.co.uk/

They have template letters etc to send to the credit cards asking to freeze the interest and to make an offer of what you can afford to pay. Go to the section about the Personal Budget Sheet, fill it in with your details and include it in your letter to the credit card company. The credit card companies are accepting offers as low as 1% of the balance and usually for 6 or 12 months fixed. They are so inundated with people not being able to pay that they are accepting this method rather than going through a third party company to assess your situation.

Make sure you sort out your Virgin card though as we have one of their cards and they are very aggressive with their demands!

Hope this helps?

Thanks everyone, this is some really good stuff!

Bex, do you know whether asking the creditor to freeze the interest would have any negative effects, eg credit rating or blacklisting? It's still early days but when I moved here I was intending to move back someday.

Thanks!

Hi Brit..

Am going through the same thing..sort of ...

OH has already started job in Vancouver (boy are we missing him!) and I'm left to sort out all the debts and house sale etc.. any agreed payment plan on a debt will be recorded and will certainly affect your credit rating. Apparently there's no such thing as a 'black-list' as all lender score differently and if you ever come back (even though we hope never to..but I'm not even out there yet) it may be hard to get credit for a while again.

I think if you let the card go more than 3 months full minimum payments in arrears then they do add the information to Experian / Equifax and it will affect your credit rating, but to my knowledge the card companies have said that if the arrangement is with them and not been referred to an outside agency then it will not affect your credit rating as the information is not shared with the credit reference agencies as you are keeping up the payments.

Some credit cards will get funny about freezing the interest, some like Egg do it straight away without really being asked and others like Halifax only give you a reduced rate, not sure about MBNA (Virgin) and they are a law unto themselves.

On the National Debt webite link I posted there is follow up letters if they don't freeze the interest, always worth following it up with another letter. The key is to keep them informed of your situation.

We found ourselves in a similar situation, differing reasons but same outcome. We contacted the credit card company direct & informed them that we were no longer U.K. residents but wished to honour our debt. We suggested they freeze the interest & reduced our monthly payment from £300 to £50, they agreed immediately & with no argument. They have assured us that this wouldn't affect our U.K. credit rating (which was excellent) but I can't say that this is the case for sure..

Well I called Virgin Customer Assistance and was told that they won't do anything for me, and because I've called them, they've now put a block on the card - fair enough, and I have no intention of using it anyway. They told me that they haven't put me on their highest rate of interest, which is 34.9%!

I guess a follow-up letter would be the next thing to do.

How big of them!

I must say, we have found Virgin (MBNA) to be an absolute nightmare. Departments don't talk to one another and it took ages to sort anything out, so far 3 months and still not done! When they start making calls to you you end up on an autodialer and we were getting calls every hour from them, all from a call centre abroad I think we had to miss a few payments before they took notice. They so far have threatened us, told us that it's be recorded with Experian/Equifax and that it'll stay on our record for 16 years, WHAT AN ABSOLUTE LIE! This woman was particularly aggressive and we have reported her and have been told what she'd said was not true. So just be careful with them, they are nasty. They can only read from a script

They have to be "Responsible Lenders" and if that means that if you can't afford to pay and they are piling the interest on and compounding your situation, they are not being responsible. Sending in the Personal Budget sheet and letter from the Debt Management website (tailored to your circumstances) did it for us and I sent it recorded/signed for whichever as you always get someone different on the phone. Virgin do not deal with their overdue debts it gets passed to a Company called RMA, so you'll probably have dialogue with them at some point too.