What should people know when moving abroad and leaving debt?Some people move out of their country to escape from debts. They think that being out of the county will probably lessen the debt weight or remove the stress associated with the obligations. However, it is a bad idea. You shouldn’t consider this an option due to the following four reasons:
1. Debt Companies Can Go InternationalIf you travel abroad while in debt, it doesn’t mean the lender won’t chase you. At times, the companies of the state you move in to can buy the debt amount and then chase you. Additionally, the same lender may have branches or agents in the same country you move in to.
Can you Escape Debt by Leaving the Country?One of the most intriguing yet seemingly popular issues today is that some people leave the country with debt. Keeping one step ahead of your creditors is not that simple. Although it is possible to escape your debt by going out of the country, you should initially have the means to leave and have enough money to establish residency abroad. Moreover, debt companies can still sue you even if you are already abroad. Some people escape debt by leaving the country. Those who relocated to other countries to run away from their financial obligations are at risk of tainting their credit records. Loans do not mysteriously vanish when you decide to become an ex-pat. Is the credit score international? Your debt will appear and stay on your credit history and credit report, depending on the type of mortgage you incurred.
2. It Taints Your Credit RecordRunning away from your country because of debts will only leave a bad mark against your name in the credit records for a long time. If you ever return to your state, the chances are high that you will still be chased for the amount and above all, have a bad credit history, which might prevent you from getting other loans.
What Happens to Unpaid Credit Card Debt If You Move Abroad?Creditors can file a lawsuit even if you already moved abroad. They can also go after your unpaid credit card debt by sending your data to debt collections. Collections companies may acquire your past-due debt from creditors. Some people think that they can escape debt by leaving the country. Although you may not be reachable demographically, it can still have some considerable harm to your credit score. You may have to suffer a lot of issues should you decide to go back to the U.S.
3. You Can be Trapped AbroadNo one knows what might happen next, and tomorrow might get worse in that new country when things don’t work out well. There are many reasons, and you might even become homesick and desperately miss your home country. Wait a minute; you have multiple debts that you didn’t settle when you were leaving. What do you do now? That will be a harsh welcome, which might even cost you more than you should have before. You will put yourself in a tight financial situation or even will have to handle a financial crisis.
4. For the Sake of Your ConscienceNo matter how appealing running away from your country to escape debts might look, just don’t do it. Although it might make you feel better at first, you will never be settled as your conscience won’t be clear enough. You will also be leaving in fear that something might happen to your property. So, deal with it and move away when you have cleared your debts.
How to Prevent Problems When You Travel Abroad While in Debt?If you must travel and leave behind outstanding debts, then be sure to continue making your payments. You have these three options for making international debts payments:
1. Keep Your Bank Account When You Leave the CountryThis is the best option that can help you to settle your debts irrespective of your current location. If you always settle your debts by using your bank account, then keep your bank account number well as you can continue making cash deposits when you are away. By doing this, you won’t have to keep notifying the company that you have paid.
2. Use Someone Else’s AccountThis is an alternative option for those who don’t want to keep their bank accounts. Find a family member or trusted friend and use their accounts to manage your payments. However, you should only use this method if you trust the person.
3. Start Direct Debits Using a New Bank AccountYou can open a new bank account from the other country and then start making the payments using that account. However, you should notify your lender first before making this move, so that they can advise on whether they are comfortable with the arrangement or not. It’s advisable always to inform your lender if you’re going to travel abroad while in debt. This will help the bank to know that you are not escaping from the debt. Also, your lenders will tell you the best method that they would like you to use to settle the indebtedness while abroad.
How to Settle Your Debts Before You Leave?Your lender might advise you to settle to debt before you leave. In that situation, you can:
- Use your cash to pay the amount;
- Look for trusted people who can help you to clear the debts;
- Sell your property such as house or goods;
- Obtain a credit from your new country and use it to settle the debt.
Final WordsDon’t forget about your financial situation when you travel abroad while in debt. If possible, start a side hustle to help you manage the debt. Also, be a responsible borrower and avoid getting into other debts before you clear the earlier ones. Some people who ended up living abroad to escape their debts have some of the saddest stories, while those who settled their debts before going globe-trotting experience the opposite. For Brian, 29, going to school in California means incurring up to $40,000 worth of student debts. He decided to move abroad and neglected loan payment, stating that he is not paying for something that should have been given to him. However, his other two friends paid off their student loans and enjoyed confidence and peace of mind from it. In the case of Vanessa, 29, paying off her incurred student debt that reached up to $53,000 started with applying for a loan through Sallie Mae, a private bank. She received $30,000 just within 48 hours in her bank account but spent all of it for her loan payment. She moved to Germany, worked at a fancy restaurant in Berlin, and forgot all about her loan. Creditors didn’t badger her when she was abroad, but the moment she went home in the U.S., her phone rang non-stop. Mario, 34, incurred a total of over $160,000 in debt when he decided to enroll in a film school in California. His parents co-signed the loan since he knew that he could not afford private school. Although he has all the intentions of paying off his student loan but then he started questioning the system, especially how he can start something from his career when he is starting in a hole of debts. He decided to move to Europe for his career, but escaping his debt is tricky because his parents co-signed in his loan. His parents moved back to El Salvador, and Mario expressed no intention of going back to the U.S., encouraging Americans rather study abroad because it is definitely so much cheaper. For Zoe, 31, leaving for abroad made her dodge her debt of up to $24,000. However, her original plan is to get forbearance for a year and start paying off. She went through her grace period, paid off after getting a really good job, and had all her payment up to date. She moved abroad but decided not to elude her debt because the creditors are calling her parents, grandparents, and even former employers. She is hopeful that someday the government can offer a remedy such as the rumored Obama loan forgiveness.
References and Sources1. Erin El Issa (2019). 2019 American Household Credit Card Debt Study. Nerdwallet.com. Available at https://www.nerdwallet.com/blog/average-credit-card-debt-household/ 2. The art of the side hustle. Capitalone.com. Available at https://www.capitalone.com/bank/money-management/saving-business/side-hustle/ 3. Sarah Schlichter (2017). Should You Travel If You’re in Debt? Available at https://www.smartertravel.com/travel-debt/ 4. Alex Huntsberger (2018). Can You Flee Your Debt by Fleeing the Country? Available at https://www.opploans.com/blog/can-you-flee-your-debt-by-fleeing-the-country 5. Annie Nova (2019). These Americans fled the country to escape their giant student debt. Available at https://www.cnbc.com/2019/05/25/they-fled-the-country-to-escape-their-student-debt.html