I have a colleague who is going back to his country after staying for a couple of years in US. He has 3-4 credit cards plus a personal loan. His total debt would come to around $10,000. Some days ago, he told me he is going to default on the accounts. He figures, since he is not planning to come back to US, it should not matter to him.

Question is, is this a bad move on his part, and if it is, how can I convince him?

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    This is our money he is stealing. A decent fraction of credit card charges go to covering bad debt. he may be stealing a tiny amount each from millions of people, but I'm one of them. On behalf of all of us, please report him. – DJClayworth Feb 24 '14 at 16:20
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    Ugh. Is he planning to acquire more credit cards and run up a bunch more debt? If not, why not? If $10,000 is good, wouldn't $100,000 be better? – Joe Strazzere Feb 27 '14 at 16:03
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    @DJClayworth: To whom would you report him, and what would they do about it? Defaulting on a debt is not a crime. – Nate Eldredge Feb 27 '14 at 18:40
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    Taking a loan and planning not to pay it back is theft. Or at least fraud. – DJClayworth Feb 27 '14 at 19:06
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    @DJClayworth: Asked on Law.SE. – Nate Eldredge Jul 9 '15 at 5:32

For starters that may be criminal fraud. Since he's defaulting not because he's bankrupt but because he just doesn't want to pay - he's in fact stealing, or at least committing fraud. That type of criminal offenses would be criminal in his home country as well (I am not aware of any country that doesn't criminalize stealing and fraud), and he may be prosecuted if the US government does file a complaint, even if he's "at home". I do not know of any country that limits its criminal code only to their own territory. He may also be extradited back to the US, if his home country has such a treaty.

That said, if he has no intentions to come back to the US now - he may change his plans in the future. It will be too late to "change his mind" then, he will be in big troubles, may be arrested on landing, denied visa, most likely denied any credit, and harassed by collectors.

Last but not least - the debt is a contract between him and the credit card company. Even if the US doesn't file a criminal complaint at home - the credit card company may file a civil complain and sue him for the money. The courts in his home country will likely to accept jurisdiction since he refused to return to the US.

Bottom line - stealing is wrong, and the victim ( the bank/credit card company) may very well go after him wherever he goes, and for a long time. Statute of limitations in the US doesn't advance while he's out of country, so the matter may still be open even if he comes back in 50 years, and the victim may also pursue action against him in his home country.

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    And US is friendly with quite a few countries, and US can if they want very well block him travel anywhere else. – Dheer Feb 24 '14 at 10:47
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    -1 because this is simply wrong. It's not stealing, and it's not fraud either unless he was already planning to default when he took on the debt. You're also ridiculously overstating the possible consequences of defaulting on small loans. A US federal court won't even accept a case with such a small damage sum. – Michael Borgwardt Mar 23 '15 at 9:44
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    @MichaelBorgwardt obviously, he is planning. As to what the courts will or will not accept - not up to us to decide. – littleadv Mar 23 '15 at 15:31
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    What he is planning now does not matter at all. As to what courts will not accept, Congress has decided that the minimum amount of claims to fall under the jurisdiction of a federal court is $75,000 en.wikipedia.org/wiki/Amount_in_controversy – Michael Borgwardt Mar 23 '15 at 16:21
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    State courts often have their own limits, lower, but some would not take a $10,000 case either. And a case involving a foreign national may not fall under their jurisdiction at all. Where I'm going is that the lengths to which courts and credit card companies are prepared to go for a $10k debt are far more limited than what you're claiming. – Michael Borgwardt Mar 24 '15 at 8:53

He is not stealing. He is defaulting on his debt. There is a huge difference. I don't know the USA law on this, nor his home country, but the USA & his home country has to have bilateral agreements about extradition and legal proceedings, and even if they do, you will never get extradited over such small an amount of 10.000 $. He might end up paying it in his home country anyways, but I highly doubt it.

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    I don't agree he should default, but I think this answer is correct. Probably nothing will happen other than I think the colleague is a bum. – MrChrister Feb 24 '14 at 15:45
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    @littleadv - the question was "is it a bad move?" I get your point and I agree, but my instinct tells me that realistically jerks do jerky things and get away with it all the time. I suppose it depends how you define "bad" – MrChrister Feb 25 '14 at 7:04
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    Why the down votes? The question is: "is this a bad move on his part?" - Answer, "Probably Not". And the follow up"and if it is, how can I convince him?" Since I say nothing will happen, this question is void... – Thorst Feb 26 '14 at 9:56
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    Your intentions don't matter in regards to a loan. Either you pay, or you don't pay. The reaction is the same from the financial institution. They will make a cost/benefit decision about whether to pursue him or not. If he stayed in the US they could probably seize his assets, in another country they won't be able to do that, without huge costs. The first part of the question is about law and economics, not about morality. That's the second part. – Thorst Feb 26 '14 at 14:24
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    @CsBalazsHungary - it is a matter of answering technically, realistically, legally, or morally. Each is rather clear. I guess the community will downvote low moral fiber. – MrChrister Feb 26 '14 at 20:01

I agree he should honor his contract, however if he does not, the credit card company will ultimately charge-off their debt and sell the debt to a collection agency (typically for 2 cents on the dollar). At this point he cannot pay the original creditor as they no longer own his debt, the collection agency is the legal owner of his debt. Collection agencies often accept 15 - 30 cents on the dollar as payment in full. If the collection agency agrees to a reduced payment, and they nearly always do, then he is done.

If he does not pay the collection agency, they will file a civil case, however they cannot serve him so the case will be automatically dismissed. After 7 years the charge-off will be removed from his credit report.

I wonder what action the police would take if you reported him as suggested by DJClayworth. Maybe he is suggesting you report him to the customer service rep? I suppose they could add a note in the comments field.

I would not tell your friend that the US government will pursue a credit card debt in a foreign country, because your friend will know that is silly. The US government will not be involved in a civil matter. He may then ignore anything else you tell him. Tell him to honor his contract.

Your friend can be arrested if he returns to the US if he is charged with a crime. This is not a criminal matter.

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    How is it not a criminal matter? Its fraud. – littleadv Feb 27 '14 at 2:30
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    A friend borrowed $17k from his sister, and then he did not pay his sister back, even though he was not broke. His sister went to a police station and reported the "crime". The officer laughed in her face. I felt bad for the sister but sometimes people borrow money and refuse to pay it back. That is what civil courts are for. – Julius Seizure Feb 28 '14 at 3:20
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    can you please provide a reference that fraud is not a crime? While I can believe you that police may some time ignore complaints, to the best of my knowledge, fraud is still on the books. And since BoA has a bit more influence than your sister - it is likely that if they complain - the police won't laugh. – littleadv Feb 28 '14 at 3:36
  • Fraud is about using deceit. Pretending something is true that isn't. This isn't deceitful, it's simply refusing to pay a debt. – bdsl Jul 24 '16 at 19:26

protected by Chris W. Rea Jul 23 '16 at 1:18

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