The idea of using this solution may have originated due to publicity in recent years about young adults leaving the country to avoid repaying student loan debt.
Leaving the country to eliminate credit card debt is a solution that may have far-reaching consequences for you. Before considering such drastic action it’s best to explore other options that may be available to reduce or eliminate that credit card debt.
Other Options
Before asking if leaving the country will eliminate my debt, you would be wise to talk to your lenders to see if they would reduce the amount you owe to a figure that could pay.
Negotiated settlement can takes money to reach but in the end a lender would rather recoup 25%-50% of a credit card balance then receive nothing.
Settlement negotiations take a long time in some cases because you must prove to the lender your inability to pay the debt now and in the future. Another option is debt consolidation where a loan may be obtained to pay off credit card debt with lower monthly payments and less interest charged.
The last bastion of legal safety that can rescue individuals from high credit card debt is the ability to file for personal bankruptcy.
Under a Chapter 13 bankruptcy you repay a percentage of the debt over a number of years and the debt is then marked as “paid”. With a Chapter 7 bankruptcy your debt is dismissed in full and no longer owed to the lenders.
Bankruptcy is a legal option that is meant to offer a second chance to people who find themselves burdened by debt they have no way to pay. Bankruptcy will damage your credit file for up to ten years but will leave you free of debt and stop collection calls immediately. In time, you can rebuild your credit and restore financial balance to your life.
Statutes of Limitation
If you wonder whether you can eliminate your debt by leaving the country, you may be thinking of leaving temporarily. Many people believe if they can be invisible for a few years, the debt will not be collectible due to the statute of limitation imposed by states.
A statute of limitation gives lenders a specific period of time to collect debt owed to them. If the lender does not pursue repayment for several years or if no payment is made or promised for several years by the debtor, the debt balance is cancelled. Each state in the U.S. sets the SOL for citizens and lenders in that state.
Leaving the country puts the statute of limitations on hold for a debtor. If the statute of limitations in your state is 3 years and you have met the standards for the SOL for two years, leaving the country for a year will not solve your debt problem.
The SOL will freeze at two years and no matter when you return to the U.S. you will still have a year left during which the lender can pursue payment.
Credit and Reciprocity
One answer to the question “Will leaving the country erase my debt?” is that unless you owe an immense amount of credit card debt or the debt was incurred with a goal of avoiding repayment, it is doubtful a credit card lender will pursue you around the world.
However, many countries have reciprocity agreements where a debt in one country is still a debt in another. In addition, most of the large credit lending banks have worldwide branches.
Though you might be able to avoid repaying credit card debt if you leave the country, that bad debt may follow you wherever you go. Credit debt is unsecured debt.
A lender cannot take your house or your car because you fail to pay your credit card balance. However, any cash in a bank account is at risk if the lender takes you to court for repayment.
Cash in a bank in another country might also be at risk of confiscation. More importantly, at some point you may need credit in your new country of residence. If that happens, the bad debt will surely show up in any credit check.
Recommended Reading
- Use our tools to calculate your debt and pay off goal.
- Ideal credit cards for people with bad credit and the applying requirements.
- Learn how to avoid bankruptcy and why it should be your last option.
Summary
Moving out of the country will stop collection calls and may allow you to avoid repayment of the balances due on credit cards.
However, this is an extreme action to take and does not make your bad debt invisible. If leaving the country is a temporary move, the same problems will be waiting when you return.
