Moving to another country doesn’t cancel Canadian debts. It makes some of them harder for creditors to collect, but the debts remain owed, interest keeps adding up, and the damage stays on your Canadian credit report for anyone who comes back. Some creditors, the CRA above all, can still reach money in Canada and, in some countries, abroad. This page goes through what happens to each kind of debt, what creditors can do across borders, and what to deal with before leaving. The debt strategies hub lists the other debt guides.
What happens to each kind of debt
| Debt | What happens after you leave | Reach across borders |
|---|---|---|
| Taxes owed to the CRA | Interest keeps compounding; the CRA can take any Canadian-source income, refunds or benefits | Some tax treaties, including the Canada–US treaty, let the CRA ask the other country to collect |
| Federal student loans | After 270 days of missed payments, the loan goes to the CRA for collection, with the same tools as tax debt | As for tax debt |
| Provincial student loans | Collected by the province or an agency it uses | Limited, but a judgment can be enforced against assets in Canada |
| Credit cards and lines of credit | Sent to collections, possibly sold to a debt buyer | Limited in practice; a creditor would have to sue and then enforce the judgment abroad |
| Personal and car loans | Collections; a car left in Canada can be repossessed | As for credit cards |
| Mortgage | A home left unpaid is sold under power of sale or foreclosure; any shortfall becomes an unsecured claim | Limited for the shortfall |
| Child and spousal support | Enforced by the provincial maintenance program | Strong: support orders can be enforced in many countries through reciprocal arrangements |
Tax debt and the CRA
The CRA is the creditor with the most reach. It doesn’t need a court order to collect, so it can take Canadian employment or pension income, rental income, a bank account in Canada, a tax refund or a federal benefit payment. Some of Canada’s tax treaties include an assistance-in-collection article; in the Canada–US treaty it’s Article XXVI A, which lets the CRA ask the US to collect a Canadian tax debt. What happens if you don’t pay the CRA covers the CRA’s collection steps.
Interest is the other reason tax debt doesn’t fade. The CRA charges interest on overdue amounts, compounded daily, at a rate it sets each quarter.
On a tax debt of $8,000 left unpaid for 3 years, at the Q4 2026 rate of 7% held constant, the balance with daily compounding grows to about $9,869, before any penalties. The rate changes quarterly, so the real figure will differ.
Student loans
Federal student loans that go unpaid end up with the CRA, which collects them like tax debt, including by keeping tax refunds. Repayment help, such as the Repayment Assistance Plan, depends on applying and keeping the account in good standing, so it’s worth arranging before leaving rather than after a default. What happens if you can’t pay your student loan covers the default process.
Credit cards, loans and collections
Banks and collection agencies have limited practical reach once you’ve moved: suing someone abroad and enforcing a Canadian judgment in another country is slow and costly, so it’s mostly done for large balances. The debt still exists, though. It can be sold to a debt buyer, collectors can keep contacting you, and if you return, the creditor can sue in Canada within the limitation period and enforce against Canadian wages and assets. Each province sets its own limitation period, and the rules on when it pauses or restarts vary; limitation periods on debt by province has the details. How credit card debt can be paid down before a move is covered in the credit card guides.
Your Canadian credit report
Canadian credit reports don’t transfer to other countries, so you’ll usually build credit from scratch where you move. The Canadian file stays, though: late payments and collection accounts remain on your Equifax and TransUnion reports for years and will be there if you come back to rent, borrow or get a mortgage.
Before you leave
- File every outstanding tax return, and work out your departure-year taxes, including any departure tax on assets; the leaving Canada tax checklist covers the steps.
- Set up payment arrangements with each creditor you can’t pay in full before going, including the CRA (payment arrangements for taxes owed).
- Arrange student loan repayment or assistance while you’re still in good standing.
- Keep a Canadian mailing address and contact details current so notices reach you.
- Consider the formal options if the debt can’t be repaid: a consumer proposal filed through a Licensed Insolvency Trustee can settle debts such as cards, loans and income tax owed to the CRA, and stops collection once filed; consumer proposal vs bankruptcy explains both processes and the debts they don’t cover.
The debt relief options guide compares every route, from a payment plan to the legal processes.
Sources
The figures and rules on this page come from these sources, last checked against them between September 28, 2026 and September 29, 2026. How we check facts.
- Canada Revenue Agency: Prescribed interest rates
- Employment and Social Development Canada: Canada Student Financial Assistance Program annual report 2023 to 2024