Can An Expat Just Go Home And Leave Their Debt Behind?
December 11, 2016 9:24 AM Subscribe
What happens if an expat living in the US runs up a ton of debt - let's say credit cards, bank loans, car financing, mortgage, medical bills - and they just decide to book a one way flight home and never come back?
Yes I am an expat, no I am not planning on doing this (I don't have debt), but this morning I was thinking how easy it would seem to be able to do this because:
a) if you're already an expat, moving your life again to another country wouldn't be a big emotional hurdle
b) to what extent would your creditors be able to locate you in another country?
c) to what extent would your creditors have jurisdiction to collect their debt in another country?
There's an average of 1 million green cards plus approx 1/2 million work visas issued per year, so that's a lot of folks who could potentially find themselves in serious debt and have the means to simply bail out. I wonder how many people do this, and what systems are in place to recoup those debts (or are they simply written off)?
Yes I am an expat, no I am not planning on doing this (I don't have debt), but this morning I was thinking how easy it would seem to be able to do this because:
a) if you're already an expat, moving your life again to another country wouldn't be a big emotional hurdle
b) to what extent would your creditors be able to locate you in another country?
c) to what extent would your creditors have jurisdiction to collect their debt in another country?
There's an average of 1 million green cards plus approx 1/2 million work visas issued per year, so that's a lot of folks who could potentially find themselves in serious debt and have the means to simply bail out. I wonder how many people do this, and what systems are in place to recoup those debts (or are they simply written off)?
I'm not sure about expats, but I remember a story (maybe in the Times?) a few months ago that this is actually a fairly common strategy for American young people with student loans. They move to Europe (mainly Berlin, it would seem), and then stop making payments.
posted by kevinbelt at 9:34 AM on December 11, 2016
posted by kevinbelt at 9:34 AM on December 11, 2016
The individual that sponsored your green card is on the hook for your debt. This is why it is a good idea to not randomly sponsor someone you don't know. I think. I can't find any official link on this though.
posted by k8t at 9:38 AM on December 11, 2016 [1 favorite]
posted by k8t at 9:38 AM on December 11, 2016 [1 favorite]
I don't think that's true, k8t. A sponsor is on the hook for any government benefits the card holder receives, and you have to support them financially if they become unable to do so themselves. But if they rack up credit card debt, a mortgage, or student loans... those are not the sponsor's legal responsibility. Aside from servicing those debts causing the card holder to be unable to support themselves, leading to them suing the sponsor for support... which the card holder could not realistically do if they aren't living in the US anymore.
posted by lefty lucky cat at 10:19 AM on December 11, 2016
posted by lefty lucky cat at 10:19 AM on December 11, 2016
The individual that sponsored your green card is on the hook for your debt.
I don't think this is the case. A sponsor has to maintain you at 125% of the poverty level and is liable for any government means-tested benefits you collect. The sponsor is not liable for every single debt you incur. If that were the case, no one would ever sponsor anyone.
posted by praemunire at 10:21 AM on December 11, 2016 [4 favorites]
I don't think this is the case. A sponsor has to maintain you at 125% of the poverty level and is liable for any government means-tested benefits you collect. The sponsor is not liable for every single debt you incur. If that were the case, no one would ever sponsor anyone.
posted by praemunire at 10:21 AM on December 11, 2016 [4 favorites]
that's a lot of folks who could potentially find themselves in serious debt and have the means to simply bail out.
It's certainly possible. Part of why the credit system is designed to give people like that limited amounts of credit is to mitigate the damage that can be done.
But keep in mind, many of the people that come to the United States to work because they have a higher quality of life or better opportunities than if they stayed in their home country. They don't necessarily want to walk away from that unless the debt is truly crushing. If they've been poor enough in their money management that they're in debt, chances are that they've not sent enough savings outside of the reach of US creditors to have the lifestyle that they're accustomed to if they leave.
As to the legal aspects, IAMAL, but there is comity between the US and many other countries that includes debt. If the debt is sufficiently large to motivate the debt holder to bring suit in a foreign country, it is possible to do so and enforce recovery there. How that would play out would depend on that country's specific laws. In practice, I suspect that many companies expect to write off quite a bit of debt and get their profit margin out of other debtors with high interest rates, just like they expect a certain amount of domestic debtors to declare bankruptcy, die in heavy debt, or game the system to get out of it. As long as the net is still in the black, a certain amount of loss is expected.
posted by Candleman at 11:05 AM on December 11, 2016
It's certainly possible. Part of why the credit system is designed to give people like that limited amounts of credit is to mitigate the damage that can be done.
But keep in mind, many of the people that come to the United States to work because they have a higher quality of life or better opportunities than if they stayed in their home country. They don't necessarily want to walk away from that unless the debt is truly crushing. If they've been poor enough in their money management that they're in debt, chances are that they've not sent enough savings outside of the reach of US creditors to have the lifestyle that they're accustomed to if they leave.
As to the legal aspects, IAMAL, but there is comity between the US and many other countries that includes debt. If the debt is sufficiently large to motivate the debt holder to bring suit in a foreign country, it is possible to do so and enforce recovery there. How that would play out would depend on that country's specific laws. In practice, I suspect that many companies expect to write off quite a bit of debt and get their profit margin out of other debtors with high interest rates, just like they expect a certain amount of domestic debtors to declare bankruptcy, die in heavy debt, or game the system to get out of it. As long as the net is still in the black, a certain amount of loss is expected.
posted by Candleman at 11:05 AM on December 11, 2016
It's not easy for a non-citizen to get a lot of credit quickly - e.g. most banks will only give you a secured credit card until you have a decent credit score, which takes at least a year even if you're well-behaved. By the time you'd been in the US long enough to get a bigger loan or a mortgage, you've likely put down some roots and the whole "leave and never come back" idea is less trivial. It's certainly possible, but unappealing.
posted by une_heure_pleine at 11:36 AM on December 11, 2016 [3 favorites]
posted by une_heure_pleine at 11:36 AM on December 11, 2016 [3 favorites]
When I was at university (UK, good few years ago now), a friend had a very scary encounter with a debt collector at her doorstep, looking for the person who lived in the flat before she did. The debt collector was looking for the person for unpaid medical bills in the USA, so some organisations are determined enough to follow you abroad. (They had been sending back envelopes addressed to this person with 'final demand' or similar written on them for a while before this).
posted by Vortisaur at 11:45 AM on December 11, 2016
posted by Vortisaur at 11:45 AM on December 11, 2016
there is comity between the US and many other countries that includes debt. If the debt is sufficiently large to motivate the debt holder to bring suit in a foreign country, it is possible to do so and enforce recovery there.
This is obviously a complex situation in which there are many, many possible variations and exceptions, but most courts won't entertain most suits brought under foreign law (e.g., breach of contract on a credit card agreement under Delaware law in a Venezuelan court). You bring the case in the jurisdiction whose law governs, then seek to enforce the judgment where the individual or his/her assets are.
This two-step process imposes a threshold on the amount of debt you'd need to have run off on to be chased internationally.
posted by praemunire at 11:48 AM on December 11, 2016 [1 favorite]
This is obviously a complex situation in which there are many, many possible variations and exceptions, but most courts won't entertain most suits brought under foreign law (e.g., breach of contract on a credit card agreement under Delaware law in a Venezuelan court). You bring the case in the jurisdiction whose law governs, then seek to enforce the judgment where the individual or his/her assets are.
This two-step process imposes a threshold on the amount of debt you'd need to have run off on to be chased internationally.
posted by praemunire at 11:48 AM on December 11, 2016 [1 favorite]
I feel like a lot of people are answering without understanding the question completely:
If one is an "expat" in the US, presumably one does not have family in the US, so I'm not sure why the hounding friends and family would apply (creditors may hound family for debt, but I doubt they would be able to hound friends - how could they?)
There are many ways to be an expat in the US without necessarily being sponsored by someone - e.g. by self-sponsoring a green card. Additionally there are ways to live in the US for long periods of time even if one doesn't have a green card - depending on the country of origin. Thus no one else is necessarily responsible for one's debts
in the US, even to the limited extent required by green card sponsorship.
posted by peacheater at 12:09 PM on December 11, 2016 [1 favorite]
If one is an "expat" in the US, presumably one does not have family in the US, so I'm not sure why the hounding friends and family would apply (creditors may hound family for debt, but I doubt they would be able to hound friends - how could they?)
There are many ways to be an expat in the US without necessarily being sponsored by someone - e.g. by self-sponsoring a green card. Additionally there are ways to live in the US for long periods of time even if one doesn't have a green card - depending on the country of origin. Thus no one else is necessarily responsible for one's debts
in the US, even to the limited extent required by green card sponsorship.
posted by peacheater at 12:09 PM on December 11, 2016 [1 favorite]
I'm not in the US, but was told by the real estate agent at a previous apartment that the tenant before us had abandoned the property and skipped the country. There were letters from a bank, whose envelopes became increasingly insistent and angry-looking, and persisted for YEARS despite us returning each one with a note that we didnt know this person. I think that person would have a lot of difficulty getting credit or lodgings if they ever returned to Australia, so it's definitely a bridge-burning move.
posted by Cheese Monster at 12:44 PM on December 11, 2016
posted by Cheese Monster at 12:44 PM on December 11, 2016
If you owe a lot, there's a good chance they will want to and will be able to find out where you went. If it's a place that routinely and effectively enforces the judgments of US courts, then they'll get such a judgment and sell it to a debt collector where you went, who will have all the tools to collect it that debt collectors have in that place. But a lot of "ifs" -- which explains the challenge foreigners have to get unsecured debt in the US!
posted by MattD at 1:03 PM on December 11, 2016
posted by MattD at 1:03 PM on December 11, 2016
students from china in the uk can't get credit cards or bank accounts that let you get overdrawn because there's no extradition agreement with china. Under EU rules EU students have to be given the same loans as UK students but 85% just go home without paying a penny (read in a newspaper ages back)
posted by maiamaia at 2:03 PM on December 11, 2016 [1 favorite]
posted by maiamaia at 2:03 PM on December 11, 2016 [1 favorite]
Again, this is Australian rather than US-based, but earlier this year a student was prevented from leaving the country after a bank accidentally gave her an unlimited overdraft, and she ran up debts of AUD$4.6M (currently about US$3.43M). So, depending on just how big your debts are, and if there's suspicion of fraud, you may not even be allowed to leave the country.
posted by Cheese Monster at 4:04 PM on December 11, 2016 [2 favorites]
posted by Cheese Monster at 4:04 PM on December 11, 2016 [2 favorites]
So, depending on just how big your debts are, and if there's suspicion of fraud, you may not even be allowed to leave the country
FWIW there's been a couple of these here in NZ in recent years but the banks being the banks you have to try really hard to get them to notice . One I remember was a couple with next to no assets that a bank was kind enough to give NZD10M to (largely due to bad design of a user input screen).
For most people with a car loan and too many credit cards I really don't think the 'stop at the airport' bit applies.
In the case cited ...
Ms Lee had transferred $1.15 million to her PayPal account in 14 transactions over one day
... in one day ! ... only then (with Westpac already on the hook for north of AUD3M) did alarm bells start ringing down at quality control.
I really would not recommend this as a course of action but the banks throw unsecured credit at all sorts every day and then charge everyone else for their significant losses - they can afford to be pretty blase about those who choose not to play the game.
posted by southof40 at 5:38 PM on December 11, 2016
FWIW there's been a couple of these here in NZ in recent years but the banks being the banks you have to try really hard to get them to notice . One I remember was a couple with next to no assets that a bank was kind enough to give NZD10M to (largely due to bad design of a user input screen).
For most people with a car loan and too many credit cards I really don't think the 'stop at the airport' bit applies.
In the case cited ...
Ms Lee had transferred $1.15 million to her PayPal account in 14 transactions over one day
... in one day ! ... only then (with Westpac already on the hook for north of AUD3M) did alarm bells start ringing down at quality control.
I really would not recommend this as a course of action but the banks throw unsecured credit at all sorts every day and then charge everyone else for their significant losses - they can afford to be pretty blase about those who choose not to play the game.
posted by southof40 at 5:38 PM on December 11, 2016
there is comity between the US and many other countries that includes debt. If the debt is sufficiently large to motivate the debt holder to bring suit in a foreign country, it is possible to do so and enforce recovery there.
This is really variable. Where I live, there is zero hope of a US debt collector enforcing recovery. Zero.
posted by DarlingBri at 8:05 PM on December 11, 2016
This is really variable. Where I live, there is zero hope of a US debt collector enforcing recovery. Zero.
posted by DarlingBri at 8:05 PM on December 11, 2016
For the record, EU students in the UK are frequently ineligible for credit cards because banks require several years of residency in the UK before opening a card (e.g HSBC requires three years) so I think it extremely unlikely that there is an epidemic of EU students opening cards and running off without ever paying it - especially as many of them want to stay in the UK. Wouldn't be surprised if Nigel Farage claimed it was a thing though.
posted by the agents of KAOS at 8:07 PM on December 11, 2016
posted by the agents of KAOS at 8:07 PM on December 11, 2016
yeah I know people/friends who racked up debt in the US during their years there and then went back to their home countries without paying it off or being held accountable. It did become a problem if they ever wanted to return to the US, though. (But, in the event that they needed to go back to the US, they would just pay the balance owed. I knew someone who spent years away from the US then needed to go back for some reason, and then had to settle her old debts. It worked out.)
I'm assuming this mostly applies to expats who don't owe a lot of $. It seems to work for people who owe figures in the thousands; I dunno about, say, millions.
posted by aielen at 1:11 AM on December 12, 2016
I'm assuming this mostly applies to expats who don't owe a lot of $. It seems to work for people who owe figures in the thousands; I dunno about, say, millions.
posted by aielen at 1:11 AM on December 12, 2016
Yeah, I know people who have managed to leave the US after taking out loans, using credit cards, and even being charged with shoplifting. They go back, their address changes, the postal system doesn't function so good, they're never going to see the US again. What aielen said - it's not a big enough deal for an international hunt.
posted by Wrinkled Stumpskin at 1:35 PM on December 12, 2016
posted by Wrinkled Stumpskin at 1:35 PM on December 12, 2016
This thread is closed to new comments.
posted by Drosera at 9:29 AM on December 11, 2016 [1 favorite]