Is it worth it to keep paying the bills?

October 17, 2008 9:05 AM

Is it worth it to keep paying my American bills while permanently overseas? Much more after the jump.

Greetings MeFi's,
I'll start by saying this isn't a moral, ethical, or financial question - merely a practical one that happens to belong in each of the aforementioned realms. I think that's important to mention right off the bat for some reason...

I work as an English teacher in Seoul, South Korea, though I'm otherwise a pretty typical twentysomething American. In America, I have nearly $16,000 in debt ($6,000 in credit cards, $10,000 in student loans). In Korea, I have a decent enough paycheck from being a teacher, but sending money from Korea to America is barely making a dent considering the wiring fees, interest, credit card fees exchange rate, etc. It also seriously crimps what would otherwise be a wonderful lifestyle.

Making more money isn't an option - I'm contractually obligated to the school as a condition of the work visa. Spending less isn't an option - expenses are essentially fixed at a moderate level. I'm not an idiot, and know that 7 years of bad credit (FWIW) is in store. I've had a sub-500 credit score since the day I graduated college (another long story I won't get into), so that doesn't seem too big a deal. I have no plans whatsoever to return to America, buy a house, rent an American apartment, get an American job, or have much (if anything) to do with the country. I never plan to have another credit card (actually carry cash and only cash when I do spend money). I suspect declaring bankruptcy from abroad is much more of a hassle than it's worth... In Korean currency, I have an emergency fund, and have otherwise gotten myself into good financial habits (some learned from lots of reading, others from the school of hard knocks).

I'd love to simply walk away from my American debts and think I'm untouchable now that I'm more or less off the grid. Again, not a moral / ethical / financial question, just a practical one. Is there something I'm missing? What happens after 7 years of not paying? Again, the credit score is just a three-digit number to me - and that system is far from being adapted worldwide.

posted by chrisinseoul to work & money (20 comments total)

I don't think your creditors will just forget about you after 7 years unless those debts are actually discharged.
posted by mkb at 9:14 AM on October 17, 2008

If you aren't going to come back then you'll be fine.
posted by zeoslap at 9:21 AM on October 17, 2008

I don't have anything substantial to offer except that court judgments ordered to collect bad debts don't expire after seven years. When you are typical twentysomething, you might not be thinking that your situation might change for you in 10 years: your spending habits, your necessities, where you want/need to live, everything. I think by defaulting now you are limiting your future options in a way that your future self might eventually regret.
posted by mrmojoflying at 9:27 AM on October 17, 2008 [1 favorite]

Can you talk to your creditors about a kind of slow-pay situation, sending just a few bucks a month? The most effective way to do it might be to open up a Korean MasterCard/Visa account and see if your creditors can accept credit card payments online. If the option is not getting paid at all, they may be willing to be very flexible.
posted by Rock Steady at 9:28 AM on October 17, 2008

Yeah, I was going to say that the obvious thing you're missing is how much your plan is dependent on big assumptions about your future self's wants and needs. In general we're very bad at making these predictions, and if you're like I was in my 20s, particularly bad at it at that stage of life.
posted by game warden to the events rhino at 9:29 AM on October 17, 2008 [1 favorite]

Taxes are a problem. Bankruptcy is a good strategy since you aren't coming back... maybe in twenty years you will change your mind. Declare now. Taxes though aren't going anywhere.

1. Surrender your driver's license if it is held in a state that charges state income tax. You'll owe it for money you earned overseas in some cases.

2. If possible, get a p.o. box in a tax free state like Florida. If you ever come back, you can argue that you had no intention of being a resident of any other state.

3. Find out what Federal taxes you might owe, and pay those.

I am IN NO WAY AN EXPERT, so you should collect more data, but I do know that taxes are forever and sometimes people change their minds after twenty years. You should act soon and not put off this stuff off.
posted by ewkpates at 9:30 AM on October 17, 2008

Never say never. You may actually want to do all of those things you say you don't want (return to the US, rent an apartment, buy a house). I've burnt my fair share of economic bridges over the years - and I urge you not to do the same thing. At least pay your student loans - those folks don't mess around. Pay online so you can avoid the wire fees.
posted by The Light Fantastic at 9:31 AM on October 17, 2008

Something else to consider: just because US creditors cannot at the moment get you if you're outside the country, that doesn't mean it will be that way forever. The financial systems of the world are integrating more and more, and it's entirely possible that at some point your credit history will follow you around from country to country.

To interject a bit of opinion that may be straying from the "practical" aspect of the question: I always figure any choice like this you make that will limit your options is likely to come back to bite you later in life. It often turns out to be much easier to deal with these situations properly in the first place than to have to fix them later on.
posted by Emanuel at 9:41 AM on October 17, 2008

Your premise is bad.

Your creditors are perfectly able to collect on your American debts in South Korea, and sooner or later they will, if you ever obtain the resources (legitimate job, bank accounts, any kind of property or other visible assets) which makes collection worthwhile.

Staying poor as dirt indefinitely is a pretty poor trade off for frustrating your creditors...
posted by MattD at 9:43 AM on October 17, 2008

I jokingly encourage my friends to do this all the time. It's always joking for the reasons that everybody has hit on above.

Depending on your long-term intentions, ability to charm a bank manager, and probably your Korean language skills, you might be able to convince a Korean bank to buy the debt from your current lenders. Or rather, you might be able to get a loan for some or all of the $16,000 US from a Korean bank.

At least then you're paying in local currency and avoiding wire and exchange fees.
posted by generichuman at 9:46 AM on October 17, 2008

I don't think bankruptcy would eliminate your student loan debt anyway. It hasn't for anyone I know. So that'll stay forever. Get a "temporary hardship" leave from paying your student loans, use that time to pay down your credit card bills and just make it happen. You incurred these debts, and what you're saying, in essence, is that you just don't want to pay them because it's hindering your lifestyle. It's your choice, but according to your website, you haven't even been in South Korea for a year. I spend a lot of time in other countries, and I moved (not because I wanted to, but to escape war) from Bosnia to America . . . I never thought I would want to go back to Bosnia, but after a decade, the urge suddenly appeared and was inescapable. So don't think you can reasonably make this decision now. You may fall in love and want to move back, or any number of other things. It'd be a shame to screw up the unexpected scenarios which arise in life for a paltry $16K (really only $6K, if you get a temporary leave of paying your student loans) and the possibly premature belief that South Korea is where you want to be forever.

Also, blathering about "good financial habits" in a post wherein you're trying to run from debts you incurred - including debts for an education which is allowing you your current life - is pretty lame. Be a big boy, suck it up, and pay the bills. You'll be happier in the long run, at least in about 99% of likely situations. The seven years of pain thing is a myth in your situation anyway - that'd only work after a bankruptcy (which you consider a hassle from SK, which I'm sure it is) and it wouldn't affect your student loans. You're stuck with a bad situation, start dealing with it now.
posted by Dee Xtrovert at 9:57 AM on October 17, 2008 [6 favorites]

What MattD said. If your creditors find out where you are, which sooner or later they will, they will pursue you in South Korea. The world isn't nearly as small as it used to be. That may sound like snark, but it truly isn't, just the straightforward answer to your question.
posted by different at 9:58 AM on October 17, 2008

I do not intend to doubt your sincerity, but speaking as someone who moved to live overseas and also at that time had no intention of returning.

At the time I left, I was busy settling debts and getting my affairs in order. The person I was with at the time was annoyed that I was using money to do these things, because in his words, "I wasn't coming back so it didn't matter and it's a waste of money you'll need later." For me it was a matter of principle. I settled my affairs. I also couldn't countenance the mess being left behind and/or creditors calling family.

When I came back 6 years later and was able to call and get a credit card IMMEDIATELY so I could rent a car while on a business trip, I was grateful that I had done what I thought was right.

You probably don't owe any Federal taxes and I understand what a drag it is to go through the mounds of paperwork designed for expatriates living in oil producing countries whose housing is paid for by the company and who makes a six figure salary only to not have to pay anything, but you still should just do it. There will be someone at the Embassy every year to help you through it. You also get a ridiculous automatic extension just by virtue of living overseas, so there really is no excuse.

My question is this: do you not have anyone in the states you can wire one lump sum each month and let them pay the debt? You can't open a us account or an international account and then pay online? I am sure there are plenty of people in your shoes, or at least having to keep accounts current that could offer the advice you need.

But the thing is, you don't want to. You just want someone to tell you you can walk away.
posted by micawber at 10:01 AM on October 17, 2008 [2 favorites]

Sorry, I know you said it's not an ethical question, but please take responsibility for your financial situation and do something about it. Don't treat it like a problem someone is forcing on you, as so many people seem to do these days.

Someone loaned you money for education/stuff/whatever - and they deserve to be paid back. That's how it works. If you don't pay it back, that's a heck of a thing to hang over you down the road - and the world is getting smaller day by day. Foreign companies can still do US credit checks on former US residents.... you get the idea.
posted by TravellingDen at 10:10 AM on October 17, 2008

Emanuel is spot on with this observation - "... just because US creditors cannot at the moment get you if you're outside the country, that doesn't mean it will be that way forever."

I'm an American who has been living outside the United States for about one third of my adult life. I currently know and have known many, many ex-pats and this question has come up in our circle several times before.

So short answer: under the default scenario, if you ever come into any assets back in The United States (e.g., inheritance, whatever) they are very likely to be seized to honour a judgement. Textbook case, low cost / high profit for the collection agency.

And a somewhat longer answer: we are seeing efforts at collecting US debts in most of the G7 now. I've known people who have been contacted in Europe. Now that's different than having the debt collected, mind you. But contacted? Hell yeah. Again, cost / profit have to be evaluated.

Under these scenarios I'm not sure if the debt had been sold to a European collection agency, but most certainly folks have been contacted here in London.

In terms of judgements (I'm a banker, not a solicitor by the way, so this is effectively lay opinion), the key issue would be how likely your country of residence would be to honour a foreign judgement.

I spent a lot of time working in Africa, and while in Lagos one colleague who defaulted on some US loans was contacted and a foreign judgment was presented - to a bank where he kept his savings, and his employer no less - but it wasn't honoured. His debt was rather substantial - tens of thousands of dollars - but he argued that he hadn't been served, and the Nigerians accepted his explanation. Every country has different standards / requirements for the serving of legal notices.

So I guess a lot would depend upon where you're reside, and that country's relations with the United States. Things might be fine at the moment in Korea, but who knows what changes a few months or years might bring.

Keeping in mind other factors of the debt collection business: the magic of compound interest over a sufficiently long period markedly increases the size of debt owed, and collection agencies can purchase said debt for perhaps pence on the pound, telecommunication costs are (relative to your debt) zero these days, well, you just might find yourself relentlessly pursued from job to job and country to country in a few years time.
posted by Mutant at 10:12 AM on October 17, 2008 [2 favorites]

I have a decent enough paycheck from being a teacher, but sending money from Korea to America is barely making a dent considering the wiring fees, interest, credit card fees exchange rate, etc. It also seriously crimps what would otherwise be a wonderful lifestyle.

You should establish a checking account in the states and pay your debts out of that.

I sent an average of $500 a month back when I was living in Japan in the 90s, it sucked but the exchange rate losses and stuff weren't THAT significant -- Citibank Visa took international postal money orders as payment, so getting one of these every month was one the chores I had to do.

Being an upstanding member of society is worth something in the long run. Don't be an immature ass and take the easy way out.

See if you can't get a 0% balance transfer approved to stop (or reduce) the interest charges.
posted by troy at 11:03 AM on October 17, 2008

I'll also agree that it's not practical to try to hide from them forever. Also, if you ever decide to return to the US not only will you be responsible for the debts, but they will also have grown tremendously due to fees, interest, etc.

I think you're better off trying to find a cheaper way to pay off your debt. I know you'd rather not do it, and you said this isn't a moral question, but if nothing else you should pay your debts because it's the right thing to do. You did borrow the money, after all.
posted by PFL at 11:07 AM on October 17, 2008

Get a Citibank account in Korea. You should be able to do conversions and route money for virtually no fees. (The exchange rate... well... That's out of my hands.)

That's about all the advice I can give because I really feel like I can't trust much of anything you say in your post. You've proven you're untrustworthy by walking away from your responsibilities.

I know a lot of people who went to Japan/Korea/China/Taiwan and said "I'm never going back!"

They all did, eventually. Even the ones who got married. Asia has that effect on Americans. The honeymoon is amazing and long, but it wears off.
posted by Ookseer at 11:36 AM on October 17, 2008 [1 favorite]

Pay online so you can avoid the wire fees.

This probably isn't possible if you don't have an account that's part of the U.S. banking system.
posted by oaf at 2:45 PM on October 17, 2008

FWIW, I was in a similar situation, and assumed that I was never going to come back. Two years later, I was laid off from my job and a month after that, my father passed away, which would have brought me back for an extended period anyway, to deal with the resulting family business. Never say never is good advice; you can never predict what circumstances might occur in the future. I needed a credit card, a car, and later an apartment, and it took time and financial assistance from my mother before I was able to function as a financially independent adult again.
posted by lemonwheel at 4:33 PM on October 17, 2008