Yes, it’s true. You can move out of the U.S. and live abroad to escape student loan debt or any debt for that matter. However, there are many stipulations, the most shocking being that you can never come back.
It is an easy way out. According to the Consumer News and Business Channel (CNBC), Americans now owe more than $1.53 trillion in student loan debt, based on the most current figures available. That money is not only owed by young people fresh out of college, but also by borrowers who have been out of school for a decade or longer.
The standard repayment timetable for federal loans is 10 years, but research suggests it actually takes four-year degree holders an average of 19.7 years to pay off their loans.
Essentially, if you move abroad, you may no longer be traceable for debt collectors to find you.
Cheaper living, a clean slate, and a chance to see the world. The American dollar goes a long way in other countries. The more remote you are, the cheaper you will find land, housing, and food. By ditching what we consider “The American Dream” you will find that you can make ends meet with a fraction of what spend in the U.S.
By eliminating extra “things” you think you need such as Starbucks and entertainment subscriptions, you can not only save money, but put a dent in your debt if you choose, all while exploring the world.
There are many. Leaving your debt back in the States may sound appealing, but it’s not that simple. Often, when applying for a visa in another country, your debt will be examined. If it appears that you’re trying to avoid paying off debt, your application will likely be denied.
Also, if you do move abroad and give up your U.S. citizenship. You may never be able to come back to the U.S. to live permanently. You can certainly try to, however, once you do return it’s likely that you’ll come back to the same debt (if it hasn’t tripled in late fees, interests, tax liens, and more).
So, if you’re going to go. You’ll have to stay gone.
While it is legal for you to move to any part of the world you’d like, the federal government can still come after you. Your debt is one thing, but
the IRS is another. If you have unpaid debt balances when you move, those balances may eventually be canceled and be reported to the IRS, at which point the unpaid debt may be considered part of your income.
If you owe more than $600 to any one company, if it’s canceled, forgiven, or discharged in a bankruptcy, it can potentially be considered income in which you now have to claim on your taxes.
Another fact to note is, your debt collectors can file a lawsuit against you. If they are already in the process of filing or file before you leave the country, it would still go before a judge and be decided in your absence.
If that happens, while the court may not be able to force you to pay while you’re overseas, the debt collector can go after any money you leave behind in a checking, savings, or investment account. And if you continue working for a U.S. based employer, they can garnish your wages.
If you’ve already left the country, depending on the size of the debt, the company may choose to bring suit against you in the country of your residency. They will hire counsel there and the case will be decided based on the laws in that country.
However, there is a caveat. Since circumstances like these come with a big price tag for the debt collector, more than often, they may consider it trivial and not worth pursuing.
Tia Muhammad, BS, is an award-winning freelance content & media creative, copywriter, blogger, digital designer, and marketing consultant. She owns the boutique content and digital media company, jackieGLDN|studio.
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