For some people, starting afresh is part of the appeal of moving to The Lucky Country. However, if you have debts in New Zealand, they don’t disappear when you leave.
There are a range of different types of debt that can be racked up, and all of them have different outcomes if they are not paid. While some debt types may seem to have no consequences for non-payment, they may end up having future implications. It is very wise to pay off debt before you leave or make payment plans that you will stick to.
If you do want to consider risking it and leave without arranging to pay back debt, there may be problems on your return to New Zealand. Even if you think you’ll never go back to New Zealand, deaths of whanau and friends, marriages or other life events may prompt an unscheduled return. Some unpaid fines can result on arrest at the border upon your return so make sure you understand the implications before you leave.
Unpaid fines that can stop you travelling to Australia
There are some debts that will stop you from leaving the country.
Can You Leave New Zealand with Unpaid Debt?
For some people, starting afresh is part of the appeal of moving to The Lucky Country. However, if you have debts in New Zealand, they don’t disappear when you leave.
There are a range of different types of debt that can be racked up, and all of them have different outcomes if they are not paid. While some debt types may seem to have no consequences for non-payment, they may end up having future implications. It is very wise to pay off debt before you leave or make payment plans that you will stick to.
If you do want to consider risking it and leave without arranging to pay back debt, there may be problems on your return to New Zealand. Even if you think you’ll never go back to New Zealand, deaths of whanau and friends, marriages or other life events may prompt an unscheduled return. Some unpaid fines can result on arrest at the border upon your return so make sure you understand the implications before you leave.
Unpaid fines that can stop you travelling to Australia
There are some debts that will stop you from leaving the country.
Student loans
If you default on your student loan repayments, you can stopped from leaving New Zealand or be arrested upon your return. The IRD say this is a very last resort, and a lot of effort is made beforehand to contact the borrower and arrange for repayments. If you are a serious defaulter, it’s worth calling the IRD and discussing repayment plans. You can also apply for relief from repayments in the case of hardship.
An information sharing agreement with the DIA (Department of Internal Affairs) means that the IRD is alerted when a defaulter applies for a passport. Australia has an information sharing agreement with New Zealand, so your contact details in Australia may be sent over the ditch.
Child support
Similar to student loan defaulters, if you are in serious default of your child support payments, you can be arrested at the border when you return to New Zealand. The IRD is notified when liable parents with outstanding debt are traveling in or out of the country.
There is a reciprocal agreement between NZ and Aussie which means that child support is assessed based on your Australian income and the monthly amount still has to be paid, even if the children are in NZ. If it is not paid, the IRD will continue to make efforts to collect it. If unsuccessful, the debt is referred to the DHS in Australia. They will then take over collection of the debt and this can be taken from your wages.
Legal aid debt
Legal aid is considered a loan. You must repay it. Interest starts accruing on your legal aid debt from six months after the case is finalised. Legal aid can be wiped if it’s determined to cause serious hardship. Because this debt is from the Government, it may stop your passage to and from New Zealand.
Overdue tax payments and penalties
Much the same as other Government debts, overdue tax bills can stop you from the leaving the country, or you may be arrested upon your return. This also includes any WINZ benefit overpayments or working for families’ monies that need to be repaid. If you are receiving an Australian pension, any money due to WINZ will be taken from your pension amount.
Unpaid court fines
If you have unpaid court fines, they don’t magically disappear. If you try to leave or return into New Zealand, you can be stopped by police at the airport. You can pay over the phone at any time using your credit card on 0800 729 677.
If you refuse to pay, you can be arrested, have your passport confiscated and summoned to court. If you set up a payment arrangement to pay your fines and they discontinue while you’re in Australia, you may be met at the airport by the friendly constabulary.
Remember, that unpaid fines have penalties charged to them so your debt grows while you ignore it.
Other outcomes of overdue fines
The court can take other actions as a result of your non-compliance. Your driver’s licence can be suspended due to overdue traffic fines which will affect your drivers licence in Australia. If you still have property in New Zealand, your car and property can be seized to pay for fines.
Bankruptcy
You can claim bankruptcy if you owe creditors at least $1000. However, this does not wipe court fines, student loans, child support or creditor compensation. Also, if you claim bankruptcy, you’ll need to apply for permission to travel overseas from the official assignee.
Civil debts
These debts are the ones you owe to private businesses, companies, banks and individuals. If you run up a credit card debt or don’t pay your power bill, this will not affect your ability to leave or return to New Zealand.
However, the debts are referred to Baycorp and be lodged against you as a bad debt. This will affect your credit rating.
Generally, after six to seven years, the debt cannot be taken to court unless you’ve admitted to the debt or been ordered by the court to repay.
How your credit rating affects your future
Any overdue court fines will end up appearing on your credit rating. This will significantly impact your ability to get a loan or hire purchase in the future.
The best advice is to not leave debts in New Zealand when you leave. Although they may not affect you straight away, they may cause problems in the future. A bad credit rating will stop you from getting a mortgage or loan; or you may end up in court for overdue Government fines.
