Can you avoid paying your debts by leaving the United States and will your debt or credit report follow you to another country? If you leave, will you be arrested when you return to the United States? Can you be arrested in the country you’re moving to for the debt you leave behind in the U.S.? Can you be deported back to the U.S. for debt? Apparently these are complex questions and there is little information on the web that provides a complete explanation for leaving debt behind. So I’ve created this article to piece together the bits and pieces to form a reasonable answer. Now bear in mind that I’ve fitted this article together from information I’ve gathered. As far as I know the information I provide here is accurate and I’ll provide links indicating the source. The correct answer to this question is… it depends on the circumstances! Fraud (criminal charges) related to debt I’ve already addressed in Can you go to jail for not paying your debts.
**Disclaimer – Debtprison.net does not administer legal or financial advice. The contents of this website are my opinions on collection agencies and how to deal with them. Nothing on this website should be interpreted as legal advice or council. No opinions on this website should be used to replace the advice of your financial advisor or your legal council.
Debt can only follow you if it knows where you are
Let’s assume that you are a debtor with $50,000 in credit card debt and you can no longer make the minimum payments. Your goal is to make a fresh start. Filing bankruptcy is one option. Leaving the country is another… but also staying in the U.S. and avoiding being located by the collection agency can provide resolution. Here’s why.
If you default on your payments your accounts will likely move into the hands of a collection agency or ‘law firm’. Either way they still have to follow the law in order to force you to pay. This means taking you to civil court to obtain a judgment. But before they win a judgment against you in civil court, you have to be served a summons. They can’t service you if they don’t know where you are. Therefore, if the court cannot service you the collection agency or ‘law firm’ will be unable to obtain a judgment in their favor. Now all of these bill collectors will likely hit a brick wall if they can’t locate you.
How is a civil court summons usually served?
The plaintiff (creditor/collector) has a duty to notify the defendant (you) that a law suit has been initiated. This notification is performed via the serving of a summons which must be performed according to a set of guidelines. Generally these guidelines require that a third party (deputy/constable) physically present a written summons to the other party. Generally, the law suit can not continue until the defending party has been properly notified by the service of a summons.
Normally the collection agency will provide the court with your last known address. So if you no longer live at that address the summons will not be served and the court date postponed. The suit will then sit idle until the collection agency provides another address where you can be served the summons.
UPDATE: 9/14/2009 on summons and service
Some version of this applies in most or all states…
How do I serve the defendant?
There are 3 ways to “serve” the defendant with papers to start your case:
Personal service:
Personal service means that someone gives the Summons and Complaint to the defendant.
Service by mail:
This means that someone mails the Summons and Complaint to the defendant. And,
Service by publication:
This means that you publish the Summons and Complaint in the newspaper that the defendant’s most likely to read. You have to ask the court’s permission to do this. Usually you have to try personal service a few times first.
This means they can have court against you and gain a default judgment even if they cannot personally hand you the summons. From what I’ve read this is rare… but does happen sometimes. If they have reason to believe you have valuable assets in the U.S. then this scenario becomes more likely.
***If a collection agency gets a judgment against you, even if the judgment is about to expire (SOL on the judgment), they can go back to court and get the judgment renewed! This just happened to my best friend. He thought the judgment was about to expire and then he got a summons for more court…. to renew the SOL on the judgment.
However, sometimes you can have the same name as another person – this can create problems for you.
THEN the attorney went to the county in which we both live and put a lien on my fathers house thinking it was my house. Amazing because I don’t own ANY real property and his house is in HIS name with HIS SSN. The Attys office believes his house is mine because his address is on my credit report (our stuff gets mixed up all the time on our credit reports). Their using his address as “my last known address”
I can’t believe you can go put a lien on someone’s property that easy…and then THAT person will end up having to pay an attorney to fix the problem. My father should be able to sue the attys office for placing a lien on the wrong property.
As you can see, sometimes credit history can be attached to the wrong person. And sometimes the court may think they served the correct person when they haven’t. If the court served the court summons to the wrong person then the creditor will likely get a default judgment against you. Since you won’t know about the summons – you won’t know the judgment occurred. For the sake of discussion here… we’re assuming you didn’t receive bad service and that the court was unable to deliver the summons. In which case, the collection agency’s claim against you is dead in the water. That is, unless they can find where you are!
The goal of avoiding debt payments, default judgments, and wage garnishment can often be accomplished if the collection agency cannot locate you before the Statue of Limitations expires on the debt! Whether you go abroad or stay in the U.S. – that is the only legal way of avoiding repayment on defaulted debt. You have to prevent being served until the SOL on the debts has passed. Granted, an aggressive collector may opt for the ‘post your summons in the newspaper’… in which case the court may consider you served.
So whether you stay in the U.S. or move to another country…. their harassment of you will only end when they no longer know where you are.
See also, Debt Prison related article Debt past the SOL but Collection Agency still suing.
What about tolling a debt?
Concerning the Statute of Limitations the issue of tolling was mentioned. Tolling means to stop the running of a statutory period (the SOL) for a certain period of time. However, in order to toll a debt (in California), you must leave the state before the cause of action accrues. In other words, you’d have to have left before you defaulted on your debts. Therefore, for the toll (to stop the SOL clock) to occur you would have to leave the country with your debt in good standing – this means you haven’t defaulted yet. For California:
If, after the cause of action accrues, he departs from the State, the time of his absence is not part of the time limited for the commencement of the action.
Creditors only see your social security number
One of the ways that banks/collectors locate us is by utilizing a successful tracking system. In the United States the system is successful because the government forces all businesses to adhere to certain legislation. Examples are the I-9 form, the W-4 form, and the 1099. Therefore, your taxes due, your credit report, your credit history, and even your income history all are traced by utilizing your social security number. Therefore, becoming a working immigrant of another country or a naturalized citizen could mean no longer utilizing your SSN. As a result, leaving the country in exchange for a new life may seem appealing to many folks.
Can a bad credit report follow you to a new country?
The short answer is no. The long answer is… if you allow it to. Some credit reporting agencies (Equifax – Transunion) may have offices in other countries. For example, Headquartered in Atlanta, Georgia, Equifax Inc. employs approximately 6,900 people in 14 countries through North America, Latin America and Europe. If applying for credit in a foreign country (with a U.S. based CRA) your U.S. credit report may be pulled by utilizing your SSN.
In several scenarios, people have found that the United States TransUnion and the Canada TransUnion share the same data in their systems. In result, there may be a possibility of a Canadian financial institution pulling your U.S credit history. This could be good for people with positive credit and bad for those with not so good credit. Equifax may do the same and share their data between countries. We have found that Experian has no effect in foreign credit because it only conducts reports on U.S residents.
So don’t apply for credit in your new country.
How to leave the United States
To learn more about this concept please visit this link.
** If you are $2,500 or more behind on child support payments you cannot receive a passport.
I think it’s also important to point out that collection agencies follow leads they get from people they call on the phone. So if they have your old number and your old room mate still lives there…. the old room mate could give them all of your forwarding information into your new country. Though they won’t know if it’s accurate… they’ll give it a shot and see what turns up. So make sure there are no people they could call who would give them any information (of any kind) as to your whereabouts. One of my readers had a room mate do just that up in New York. Now the collection agency has his phone number and address in Canada. However, in Canada he received a clean credit record and fresh credit.
What if you leave the United States and the collection agency finds out where you are?
Let’s suppose the collection agency achieved a judgment against you to repay the debt. And for arguments sake, let’s assume they’ve located you in another country. Have you ever heard of a long arm statute? Well neither had I. Normally this is a statute that is applied when the court of one state needs to obtain jurisdiction in another state. In that case they try and implement the long arm statute. But can this statute be applied internationally? The short answer is yes. But the long answer is…. it depends on the other country. Some countries may allow a U.S. court to obtain jurisdiction through their court system. Now at this point… I’m thinking you must have owed this creditor a truck load of money because the price tag for your harassment is getting expensive!
If the collection agency has a judgment and your new address… the agency could push for long arm jurisdiction through the court system. This request would be made possible through your new country’s U.S. Embassy or other such legal representation. The new country may then decide to assist the U.S. court in exercising the judgment. Some countries arrest defendants for debt… while others do not. Does this mean if your new country cooperates with the U.S. court you may be arrested until court is held? Maybe, I honestly couldn’t find a definite answer to that question. But the best solution would be to select a country which is favorable to debtors.
However, I failed to find an actual source where this situation occurred concerning overseas arrest for U.S. debt collection. But for fun you can read up on Personal Jurisdiction.
Can you be arrested returning to the United States for old debt?
I honestly don’t know, but based on what I read on other sites and forums the following is my opinion.
If you had an old judgment the court may have issued a ‘bench warrant’ to force you to show up and explain why you haven’t satisfied the judgment. If you are returning to the United States can you be arrested by Immigration or police at the airport upon entry? I found nothing suggesting you would. You just want to make sure that you don’t do anything that would cause the police or immigration to run your passport or drivers license through their database. The best general answer I could find on this subject:
The answer depends on where the bench warrant was issued, for what and if the warrant is in the same jurisdiction as the airport and if you are flying international or domestic.
You can be arrested anywhere in the jurisdiction covered by the warrant. If you are trying to leave the country and they run your passport or driver’s license and the warrant comes up the person will certainly be arrested.
I also found nothing to suggest that you could be deported back to the U.S. for a judgment regarding a civil suit for debt collection. The worse that could happen would be your new country participating in enforcing a judgment against you to repay the debt. A very unlikely event. I didn’t find a single source where this enforcement has occurred under these circumstances. Now I’m not assuming that everything I’ve implied here is 100% accurate. I’m only presenting this information based on what I was able to find.
So why do collection agencies call debtors in new countries?
Harassment is a very effective tool. Intimidation, caused most often by lies and emotional persuasion, convince debtors to pay up… even when there’s no legal reason for them to… and even when they don’t legally or morally owe the debt. Collection agencies are collecting on debts that were wiped out by bankruptcy or the Statute of Limitations years ago. They wouldn’t do this unless some people pay up.
If you have further information on this subject or if you believe any information in the above article is incorrect – please let me know by joining the forum or send email to info [at] debtprison [dot] net.
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Related Articles
* Restrictions on Wage Garnishment for Debt Collection.
* The Fair Debt Collection Practices Act
* Reasons not to file Bankruptcy or Settle Your Debts
* Can you go to jail for not paying your debts?
* How to settle your debts on your own
* How to deal with collection agencies
* Sample Debt Validation Letter
* Information on Credit Card Balance Transfers
* How I Escaped Credit Card Debt
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