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I am moving away from the USA and I don't really plan on coming back.

What are the consequences if I stop paying my student loans?

My current debt is ~50,000 USD in federal loans.

I know next to nothing about this subject, so any information would be insanely helpful.

Please provide sources with your answers.


I ask this question out of necessity, not because it's something I'm proud to have to do.

I don't earn a lot of money, I don't have savings, and I own nothing of value. I can just barely afford to pay the loans each month as it stands.

I have no idea what sort of income I'll have after I move, I just don't want student loans to be the thing that keeps me locked down in the USA.

My thought process is: If there's no significant consequence for defaulting on the loans, I'll be hopelessly scraping to make the payments each month for no reason other than to save grace.


Concerns:

  • Does USA credit score transfer to other countries?
  • Will someone come after me?
  • Could I be extradited?
  • Would I be arrested if I ever came back to visit a family member?
  • Would someone go after my family to collect the debts? Can they do that?
  • Could the USA somehow garnish my pay in another country?
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    It is a good question. I hope answers stick to the facts the practical situations a person might need to evaluate their decision. As you say, there is doing what is right and what is possible. Student loans are a big topic in the United States and I'd expect a lot of need for clarity. Money.SE can be a good source for that information. – MrChrister Mar 29 '14 at 0:08
  • Are you asking "if I leave the country and don't pay it back will I be in default (Yes)"? What will happen to me? Or can I justify it? – mhoran_psprep Mar 29 '14 at 12:29
  • You have to be reminded that this is our money you are considering walking away with. Whoever loaned you the money will raise its charges to cover the loss of your money, essentially making us pay off your loan for you. – DJClayworth Apr 14 '14 at 13:39
  • All of this depends on your guarantor. Who are your student loans with, and what sort of power do they hold? Department of Education is just that: a United States entity. Bank of America however is not. As someone who works in a PCA (Private Collection Agency), I'll try to write an answer to this one hopefully later today, but my advice is to be taken with some logic, as I'm not a lawyer or advisor and cannot legally counsel on the issue. – Anoplexian Apr 5 '16 at 22:36
  • @Anoplexian held by Dept of Education. What sort of implication does this have? – user633183 Apr 6 '16 at 1:50
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You should really talk to a lawyer about criminal concerns. There may be some.

Does USA credit score transfer to other countries?

The USA doesn't do anything with credit scores. In the USA credit records are maintained by private companies who provide the information to your creditor. There's no legal limitation for the creditors to be within USA, only that you allow access.

So bottom line - technically it is possible for foreign creditors to get that information. If you don't have local credit score, it is likely that they will.

Will someone come after me?

Depends on the loan managers. Civil suite is possible, since you cannot discharge student loans in bankruptcy. How likely is it? Probably not very likely.

Could I be extradited?

Only if a criminal complaint is filed and the country you're at has an extradition agreement with the US.

Would I be arrested if I ever came back to visit a family member?

I'm not sure on this. I believe it is possible for a lender to have your passport taken by a court, but I don't think you can be actually arrested unless there's a criminal charge. But as I said - I believe your passport may be taken away from you when you come to the US, to prevent you fleeing without paying the debt.

Would someone go after my family to collect the debts? Can they do that?

Unless they co-signed, or they have control over your assets - unlikely.

Could the USA somehow garnish my pay in another country?

Yes, if a court decides so. That would have to be a court in that country though.

In addition:

The US can freeze your assets abroad if you keep them in a FATCA-compliant institution (which is almost any bank, nowadays).

Also, when you die, the US may (and probably will) demand a portion of your estate to pay the debt.

Talk to a lawyer about additional issues and concerns.

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    +1 for mentioning the lawyer. It is certainly possible this is entering the realm of a criminal act, and a lawyer can discuss the implications of criminal and civil law and the possibility of declaring bankruptcy. – ChrisInEdmonton Mar 29 '14 at 13:49
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    I would like to add, the lack of extradition agreement does not mean you cannot be extradited, it just means it is completely at the di$cretion of the country you are in instead of a formalized process – CQM Apr 13 '14 at 17:56
  • @CQM True. Also, many countries won't extradite their own citizens, even if an agreement exist, and the complaint must be for an act that is also criminal in the extraditing country. – littleadv Apr 13 '14 at 17:58
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    There's the problem of what happens if you ever return to the USA. Maybe accidentally: Holiday in the Caribbean, and your flight gets redirected to Florida. Assuming you are in your twenties, consider possible law changes in the next thirty years. Consider applying for a mortgage where you will be asked for debt - not mentioning that debt would put you in a bad legal position. – gnasher729 Jul 20 '14 at 10:35

protected by mhoran_psprep Jul 19 '14 at 10:47

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