How to pay off an overseas debt

Your debt doesn’t just disappear when you cross an ocean. So if you’re ready to live life in another country, you may need to jump through a few extra hoops to get your finances in order first.

How to pay off an overseas debt

Sending money overseas to your creditors is actually quite easy.

To get the necessary funds back to your home country, you’ll need to send an international money transfer. There are three main ways to do this:

Through your bank

Send the money from your foreign bank account to an account in your home country. This is usually the most convenient option (because you’ll already have an account set up and ready to go), but in many cases, it will also be the most expensive.

Through a cash transfer provider

Companies such as Western Union and MoneyGram offer fast cash transfers from the US to hundreds of thousands of agent locations around the world. These are good options if cash is an accepted form of payment for your recipient and you need to pay off your debt as quickly as possible.

Through an online transfer provider

These companies like OFX and Wise specialize in sending international money transfers and tend to offer the best exchange rates and lowest transfer fees.

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.

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:

• Exchange rate. A minor difference in the exchange rate can make a huge difference in the affordability of your transaction. Shop around for a company that offers the best exchange rates, but make sure those great rates don’t come with high transfer fees attached.
• Transfer fee. Compare the fee that each provider charges per transfer. Depending on the amount you send and where you’re sending it, fees could be as low as a few dollars or as high as $50+. Some providers will waive fees for large transfers.
• Transfer options. Can you send your transfer online, over the phone and/or by visiting a branch? Is there a smartphone transfer app?
• Transfer methods. If you need to make regular repayments to your creditors, check to see if the transfer provider lets you 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. But not every provider offers these options.
• Processing time. Compare how long it will take each provider to complete your transfer. Some companies like Western Union offer cash transfers that are completed within minutes, while other transfer options can take as long as several business days.
• Available currencies. Hopefully you only have overseas debt in one country, but if you owe money in multiple countries, then you will need to make sure that your transfer provider supports all the relevant currencies.
• Customer support. If you have a problem with your transfer or need help, can you access the assistance you need over the phone, via email or through live chat?

Compare international money transfers to pay off your overseas debt

Our table lets you compare services for sending money abroad. Look at transfer speed and fees, then select Go to site when you’re ready to send.

Related: Explore the best money transfer apps

Common overseas debts

Because debt is such a widespread part of life for many people, it’s not unusual for people to owe money when they move overseas. Some of the most common outstanding debts you might be facing include:

But despite the fact that you still owe money, sometimes life changes and you decide to move abroad. Whether it’s your career, romance or even a simple desire for adventure that prompts you to move to Canada, 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 from leaving your home country and heading somewhere else. But that doesn’t mean you’ll be able to leave those old debts behind and start over with a clean slate.

What happens to your debt depends on many factors like how much you owe, who you owe and debt repayment laws in your home country. There are several potential outcomes, including:

• Arrest. If you owe money to your home country’s government, 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 back home will take a hit. This could have devastating consequences in the future if you ever move back. Your credit history could also catch up with you if any lender you approach asks for foreign credit history details.
• You may face legal action. Your creditors may take legal action against you to recover their money. This might continue regardless of whether you’re in the country and able to attend court. An overseas court might not be able to force you to pay debt internationally, but it could allow creditors to go after any assets you 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.
• Your creditors could catch up with you. Banks or credit card providers may 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 worrying and intimidating for many, but you may have to do it if you want to get your finances back on track. The best approach is to be proactive and work out a reasonable and affordable agreement to pay back the money you owe.

Showing that you are willing to work to pay off your debt as quickly as possible will take some of the sting out of the situation. It’s also important to remember that, when dealing with debt collectors, you have rights and don’t have to be harassed, intimidated or treated unfairly.

Top tips for paying off overseas debt

• Keep an overseas bank account open. Consider keeping your existing bank account open when you move to another country. This will give you a destination for your international money transfer and allow you to manage debt payments online.
• Try to pay off debt before you leave. Paying off overseas debts leads to additional expenses for exchange rates and transfer fees. The longer you wait, the more interest you could pay if rates weaken. Try to pay off debt before leaving your home country—can you use proceeds from selling your house, furniture or car?
• Don’t expect debt collection agencies to be limited to one country. Moving overseas won’t help you escape debt. Many debt collection agencies operate internationally, while other agencies can “outsource” your debt to other collectors.

Bottom line

Managing debt while you’re overseas is a little complicated, but it’s not impossible. If you need to transfer money to creditors internationally, do your research to find the most competitive exchange rates and the lowest fees. Then relax knowing that, even if it takes a while to pay down your debt, you’ve got it under control.

FAQs about overseas debt

• Should I pay my creditor with a credit card?

  We don't recommend it. If you have an active credit card in your home country, you can use that to pay your creditors as long as they accept credit cards. However, you'll still need to pay off your credit card, which leaves you right back where you started.

  If you have a Canadian credit card that you can easily pay off with funds from your bank account, you may be able to use it to pay your overseas creditors. But it's likely to come with an unfavorable exchange rate plus foreign transaction fees.

• How will my credit score affect me abroad?

  It depends. Every country has its own unique credit scoring system. However, your current credit file will remain in your home country if you ever return.

• When can a creditor take money out of my savings account?

  Laws concerning debt vary wildly by country. To find out if your overseas creditor can take money out of your savings account in your home country, you'll need to look up your country's laws.