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Can I Dodge My Debt By Leaving the Country?

 
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August 9, 2012
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QDear Erica,

I feel weird asking this, but I need a straight answer. What happens if you owe money, and then leave the country? I’m asking because I have $6,300 left on two credit cards. My friend is fixing me up with a gig teaching English in another country, and I really just want to leave everything behind and go for it because I’ve been unemployed for almost a year. If I don’t give the bank my address, what will happen to the balances? If I stay away for a long time, do they go away? Will I get arrested when I come back to the U.S.? I know this is probably wrong to be thinking about this at all, but I would like to know, and don’t know who else to ask without raising suspicion. – Juliana

AHi Juliana,

Why the debt magically disappears, of course!

Uh, no.

Without getting all scientific about this, a debt is a debt until it’s satisfied or legally forgiven. However, I gather that you’re asking about the consequences of trying to escape creditors. And that’s a different story altogether.Ask Erica

So on to what can happen if you follow through with your scheme — I mean “plan.”

You have a combined balance of $6,300 on your credit cards, and even without working, I presume you’ve somehow been keeping up with payments. That means that the accounts are current and still with your original issuers. Here is a timeline of likely events if you cease payment activity, starting…now.

  1. Miss your due date. If the creditor doesn’t receive a payment by the due date on your statement, they will assess a late fee and add it to your balance.
  2. Skip an entire cycle. After a full 30 days or so goes by from the payment due date, the creditor will report the delinquency to the three major credit bureaus. Credit damage commences when the notation shows up on the reports. Credit scores are derived from that information, and your rating will begin to decline.
  3. Skip more cycles. Each cycle that passes without recompense will result in a credit report notification. It will show up first as 30 days late, then 60, 90 and so forth. The credit scoring damage increases in intensity. Your creditors will try to find you via mail and telephone.
  4. Skip many cycles. Eventually the credit card companies will charge the debt off. Typically they will either sell it at a loss to a third-party collector or will sue you for the debt.

I’ll stop here, because we’ve reached a critical juncture. If a collection agency buys the balance, you’ll then owe them. They will do what it takes to get hold of you, but if you’re overseas, they’ll probably fail in their endeavor. When they can’t locate you, they may hang onto the debt until you reemerge, sell it to another collector or sue you.

You do not want to get sued — not by anyone. Here’s why:

  • You’ll be gone (out of the country) and will lose by default.
  • The judgment will be entered and will appear on your credit report.
  • You will owe a lot more money than you do now because court and other costs will be added to the bill.
  • The judgment creditor may be granted the right to garnish your wages and take your property.
  • The judgment can be automatically renewed. For example, if you live in California, it’s in effect for 10 years, and may be renewed another 10. That’s 20 years in total that the judgment will be dragging down your credit report.

Even if you don’t get sued, there are other problems to consider. There is no debtors’ prison, so you won’t face jail time (unless the credit card company can prove fraud), but your credit will be in tatters. And what of the moral duty to make good on your promises? You got the stuff or services. Why do you think it’s OK to leave without paying? That’s theft, Juliana — whether you can be prosecuted for it or not.

Got a question for Erica? Send her an email.


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