Gone but not forgotten – recovering debts from Australia

Record numbers of New Zealanders continue to leave permanently for Australia, almost 54,000 in 2012 alone. While most of those departing leave in search of higher incomes and warmer weather, some leave to escape their financial responsibilities, whether this is child support, a student loan or a liability under a personal guarantee. Correspondingly, often there are no assets left in New Zealand for the creditor to recover.

So, is it really as simple as purchasing a plane ticket to Australia to walk away from debts?

This common tactic has become such a concern for the Inland Revenue Department, who administers the student loan scheme, that new sanctions allowing the arrest of overseas based defaulters at the border were announced in the last budget. There are, however, some relatively simple and straightforward recovery solutions available to creditors under the Trans-Tasman Proceedings Act 2010 which do not require the power of arrest (although we expect that creditors would still appreciate this), and allow a creditor to continue recovery action that has already commenced in New Zealand.

For example, if a creditor has obtained a High Court judgment against a delinquent debtor for the provision of goods and services (including guarantees) in New Zealand, they can utilise the following procedure to obtain the benefit of a judgment enforceable across both sides of the Tasman, for a cost of as little as $2,000 (subject to certain conditions):

1. Register the judgment with the Australian Courts within 6 years of the judgment being awarded; and

2. Serve notice of the registration upon the delinquent debtor within 15 working days of registration.

Using free and cheap tools to track debtors

There are also a number of cheap and free tools available to creditors that allow a debtor's financial position to be reviewed. These include basic internet searches (eg. Google, LinkedIn, ASIC directorship and shareholder registers) to confirm employment, land title searches to confirm home ownership, and carrying out an Australian credit and financial check (including searches of Court websites and land title registers).

It should also be noted that by simply tracing and querying the now Australian based debtor on their repayment plans, often a financial solution can be obtained. Most debtors will accept the situation if you locate them. The vast majority of people are willing to pay something rather than go bankrupt.

Conclusion

Debts are enforceable across borders, and it is a false assumption that once a debtor leaves New Zealand, it is too expensive and complicated to chase them.

McDonald Vague has considerable experience in advising lenders and companies that are owed money on the options available to them. We also have the experience of gaining the best possible results for our clients. If you require assistance or have any queries, please do not hesitate to contact us.

Murray Matthews, Insolvency Accountant

DISCLAIMER
This article is intended to provide general information and should not be construed as advice of any kind. Parties who require clarification on issues raised in this article should take their own advice.

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