Consequences of leaving the US with credit card debt?

May 25, 2019 4:04 PM

I'm leaving the US, most likely for Canada. I've lived here for a few years but am not a US citizen and don't intend to come back permanently, though I'll want to visit occasionally. I have credit card debt in the low five figures, divided between 3-4 cards (Discover and Visa), which probably I can't pay in the foreseeable future. How much should I be worried about the repercussions if I leave it unpaid?

Please note this question is only about the practical consequences of defaulting, not the ethical side. This is a stressful situation and not one that I want to be in: I'd pay the debt if I could, but I can't do so anytime soon, and I'd rather not be taken to task for that in this thread. Thanks.

As far as I can gather, credit history in the US doesn't follow you elsewhere -- i.e. wherever I move, I'll have to start building credit from scratch -- so I'd probably be OK on that front. Is that wrong? If I default on a Visa card in the US, would Visa Canada find out about it and refuse to issue me credit?

If I do decide to default, does it make a practical difference when I do so -- before or after leaving the US? Would I be better off going on making minimum payments for a while from abroad, even if it turns out (as is likely) that I can't repay in full?

I won't have credit in the new country (likely Canada but not certain) when I first move. Is it a bad idea to keep using one of the cards for a while from abroad, making minimum payments on all the cards and hoping to eventually pay off at least that one? What happens if I can't? Will I be in more trouble for having continued to use it after leaving the US?

If I default and then want to come back to the US for a visit, could there be trouble obtaining a visa? At the border? After entering the country?

If I think I may have to default, should I inform the credit card issuers that I'm leaving the country / let them know my new address?

posted by anonymous to Work & Money (11 answers total)

Do you have any assets or income? Perhaps bankruptcy would work for you.
posted by the agents of KAOS at 4:08 PM on May 25, 2019 [1 favorite]

Not answering your main question, but indeed, 15 years ago my (good!) U.S. credit history did not follow me to Canada and I was not able to get a normal credit card right off the bat. What I did get was a credit card that was secured by a deposit equal to the credit limit (for the first year, through a credit union). I cancelled my U.S. credit card pretty quickly because it was such a pain paying it in U.S. dollars, not to mention paper mail turnaround time and the foreign currency exchange charges.

Be reassured that a certain expectation for the credit default rate is built in to the egregious interest rates charged by the credit card industry.
posted by heatherlogan at 4:19 PM on May 25, 2019

Walk away and don’t think twice about it. It’ll likely destroy your American credit, but so what?
posted by Automocar at 4:44 PM on May 25, 2019 [1 favorite]

A thought: if you decide that you're going to declare bankruptcy eventually, doing it sooner rather than later might be convenient down the line because it falls off your US credit reports in seven or ten years (depending on the type). Whether you care depends on how long those visits would ever be, I guess, i.e. if you'd want to sign a lease or (would be eligible for) work.
posted by teremala at 5:37 PM on May 25, 2019 [1 favorite]

Previously. I know very little about Canadian work visas but it appears that some work visas require you to show proof of funds of $12,669 (in Canadian dollars) and to "list outstanding debts such as credit card debts and loans". Source. This may not apply in your particular situation but may be something to consider.
posted by mundo at 8:53 PM on May 25, 2019

My spouse immigrated to Canada, eventually becoming a permanent resident and then a citizen. She didn't have any serious debt left behind her, but her financial history and credit score were atrocious -- to the point that she couldn't open a bank account in the States, as I recall -- but here, it was 100% start from scratch. I had to co-sign for her first credit card and as I recall bank account, but nothing 'followed' her here, either.
posted by Shepherd at 9:25 PM on May 25, 2019 [2 favorites]

FYI, debts don't disappear, but in many states, there is a statute of limitations on how long they can be collectible (as in you getting sued, they can still try to collect). See this government website for more info. It depends on what state you are living in, of course. In my state, debts become defensible after 6 years, that is, if a creditor tried to collect at 7 years, I could go to court and defend myself by saying it was past the statute of limitations.

A lot of debts will go to a collection agency, who then calls and writes dunning letters. Here is the page on what to do if you want a creditor to stop contacting you.

If a lawsuit is filed, and say, you are out of the country and don't show up in court, a judgement may be filed against you. That stays on your credit record in the U.S. for a while (I think in my state it's 20 years), or until it's paid off. Usually, lawsuits are filed by collection agencies who are also lawyers and that's their main business. There's one in Connecticut that has lawyers in Maine, and they do it on a regular basis, buy old credit card debt, send notices on how to pay them, and if they think it's worth it, they sue in court. Lovely people. /not

IANAL, etc.
posted by Marie Mon Dieu at 4:58 AM on May 26, 2019

I have a hunch (and that is all it is) that the one thing you should worry about is providing false/misleading information re: debts to any official/ financial institution in your new country of residence. While your credit rating/score will probably not follow you it is a relatively easy thing for a financial institution/government agency in another country to check/verify information which you provide. As a resident of another country (not a citizen) you are a guest and guests can be asked to leave/not return. Whatever you do--do not provide any misleading information to a government authority involved in approving a work permit, resident permit etc. I am a resident of a country of which I am not a citizen. To secure my residency approval I did need to provide a certified/detailed financial statement--however--This might not be necessary if you have an approved work permit or entry on a temporary basis
posted by rmhsinc at 10:35 AM on May 27, 2019 [2 favorites]

Worldwide debt collection is a thing - companies can come after you in new jurisdictions.
posted by lalochezia at 3:27 PM on May 27, 2019

Also, think about the interest that credit card companies charge. Might want to co solidne i to a single, lowest interest card? Don't want the debt to balloon to crazy sizes, even if you decide to ignore it.
posted by Yavsy at 7:08 PM on May 27, 2019

It's unlikely to affect your ability to get credit in Canada, but they debt collectors will call you here. When I moved from the U.S. back to Canada I had a few hundred dollars (essentially the last month of spending since i paid my full balance every month) on the card. I was unable to pay it despite repeated attempts because I no longer had a US bank account and the credit card company wouldn't take a cheque drawn on a Canadian account. Anyway, despite my repeated attempts to pay it, they sold the debt to a debt collection agency and that agency absolutely did call me in Canada (fortunately, debt collectors actually want to make it easy for you to pay, so they were happy to take my money in whatever form I offered it).
posted by If only I had a penguin... at 7:38 AM on May 28, 2019