"Forgetting" about US debt while living in NZ?

[skibumwa]

I had a lunch this past weekend with some of my new American friends and the topic of our US debt came into play. We were all wondering something? If we were NEVER planning on living or buying properly in the USA again AND did not pay back our Eg. student loans, US credit cards, other debts in the USA we know our US credit rating would take a hit, but would it affect our ability to visit the USA?

FACT: US credit scores and NZ credit scores are not affected (or hurt) by one another.

We are wondering if US Customs in Los Angeles Airport or San Fran Airport would harass us for having unpaid US Debt while we permanently lived here in NZ?

The exchange rate hit form us to send NZD to the USA to pay US-debts is painful to say the least. So when someone has to pay $670 USD per month for a debt, they are really paying $1000NZD for their US-debts. Does anyone know if the IRS will harass us is we earn less than the untaxable threshold of $82,500 USD/year?

I am sure I cannot be the only US citizen here in NZ wondering about this- right? (FYI- I only have $2000 USD in US-debt)

Cheers,

John

[Kea]

I've heard that UK companies can seek to recover debt. If you skip the country they can employ people in the second county to recover it. The cost of recovery, court action etc will be added to your debt so it can end up much bigger than it originally was. It seems unlikely that comapnies would persue a small debt but there are risks.... I've no idea about the US though.

Julie

[BkyMonster]

Don't know if this is quite related but several years ago, maybe 10-15, my father wasn't allowed to renew his Japanese visa because of outstanding unpaid child support. (He moved to Japan, remarried, and never paid my mother child support). He had to pay and ended up having to liquidate his business in Japan to pay off this US debt so he could stay in Japan.
Now this is child support which is different than regular debt, so may not apply. Also Japan may have a different deal with the US.

I'd love to....err ignore... my OH's student loan especially as the US changed the laws right as he graduated and student loans can no longer be consolidated for lower payments

[Moorf]

Personally I don't understand why you'd want to start a new life abroad with the baggage of debt in your home country - I couldn't do it, I'd be watching my back all the time - and let's face it, you benefited from the money you borrowed so why not pay it back instead of running away from it?

What if you need to renew your U.S. passport? What if you have to return to the U.S. (might they spot that you're entering the country and can they apprehend you (I think UK can)?)

Plus, collection agencies do have a presence globally these days and yes, they could find you... whether they bother for $2k is another matter.

What about offering to repay them at a very small amount per month - as you said, it's only $2,000 (about $3k NZ?)...

Just my (unborrowed) $0.02cents....

[kanatakiwi]

another possibly unrelated story but remember that NZ and Aus can get you at customs as you arrive if you have unpaid fines, child support etc. so its quite possible that US can too although I have not personally heard of any instances.

Back several years ago when NZ thought it unnecessary to have photo ID on drivers licences, people use to just give any name when they were stopped for traffic offences, including not having a licence.
We were harassed in Canada by a collection company in NZ about unpaid traffic tickets and fines, which we had to prove could not have been my OH's as he was in Canada at the time. Fortunately NZ customs provided us with a copy of all his arrivals and departures from NZ for the previous ten years and we were able to prove "identity fraud"--had to go to court to do so though. but my point is they can track you and harrass you and they do..... and they can put your name on a list to be picked up at Customs when you arrive in the country.

[Leccy-Lee]

Debts are civil matters and not criminal, and as such how can "entering country" or "renewing passports" matter at all, theres nothing that can be *done* about your debt etc, no "civil" court or debt collection agency in the world (afaik) can place any restrictions on entry or passports etc etc. In fact its amazing how people worry about the powers of Bailiffs / Debt Collection etc when if they did some research they would find out that powers are very very limited indeed.

Speaking for just the UK law here, i often heard friends say "oh got debt agency after me for an old Gas bill, they will come and take my stuff away...." Once i pointed out that only Customs have the power to do such they start to understand. With a UK debt agency all you need do is lock your home when you leave and refuse to let them in when your home and theres nothing they can do whatsoever other than annoy you. And yes i speak from experience back in the poll-tax days (all paid back i add, but i told the bailiffs to get lost).

Anyway, all i am saying is i cant see why worrying about it really, i would think other than write letters and ask nicely no debt has a jurisdiction in a different country. Somebody mentioned an old UK Gas debt finding them here in NZ, so why worry (pay it sure, but i mean why WORRY or rush?) No British agency or court has any jurisdiction to collect said debt over here.

I'd say rest easy and dont worry John, Sort out your own reasonable payments and clear your conscious (thats what i have done) but dont spend worry over it.

[Leccy-Lee]

Personally I don't understand why you'd want to start a new life abroad with the baggage of debt in your home country - I couldn't do it, I'd be watching my back all the time

Plus, collection agencies do have a presence globally these days and yes, they could find you.

"could" find you and do WHAT? As i posted above, they can write you pretty letters and ask for the debt back, but global or not they dont have a legal jurisdiction to enforce any debts. No UK / USA / Etc court can say "go to NZ break down there door, put a stop on there wages and recover our money". They dont have the legal power, it cant be done.

In theory they could try taking you to a NZ court and then recovery would be of course legal, but on legal grounds and sharing of information etc i pretty certain a NZ court would be unable to rule on a foreign debt as they couldn't legally get the info past data privacy.

SO, yes i agree moorf and others, do pay back your debts to keep a clear conscious and happy state of mind i totally agree, but worrying about being chased around the globe for civil debt just cant happen.

Anyway i'll shut-up now, just i had some run-ins years back with such agencies and companies and after hours of lawyers appointments and research i learnt that they love to scare you (and clearly it works with most), but in essence they have about as much power as you and I have to recover a debt!

[victoria24]

lee is dead right on this. I wouldnt advocate non repayment personally but its worth knowing that after 6 years, any debt in the UK comes under "Statute Barred" which means it cannot be legally recovered. A friend of mine had a letter from a debt collection agency stating he owed them £1200 on behalf of british gas. the letter stated that if he didnt contact them urgently, they would take immediate action. I called them up on his behalf (he did the DPA bit) and discovered that they work on the presumption that the average person wouldnt be aware of the legislation and try to steamroll them. When I challenged them, they admitted that they had no legal power over the debt and would appeal to better nature from a moral standpoint! needless to say, he received a letter stating the balance was zero and the account was closed!

its an interesting moral question at the moment with large corporations not honouring their debt obligations while senior execs still take large monies themselves. should they expect their customers to take an honourable attitude?

[dilanium]

I'll pay back my debt eventually. I'm working too hard to make it bigger at the moment though...

[skibumwa]

Thanks for all the responses guys. I am still wondering though, can US Customs at LAX or SFO stop you from entering the US though if you have unresolved debt? Can the IRS contact the IRD here in NZ to seize wages for unresolved US-debt?

With regards to morals and paying debt, well get this hilarious but true story. The day I left the USA for good (to move to NZ), I accidentally left my AT&T cel phone on the chair at LAX airport when I boarded the plane. I got to NZ and realised this and called them long distance to cancel my account due to the lost phone and moving overseas. I was past my contract date, so no worries there. However this is when the fun started.

AT&T told me that my final bill would be available to view/pay online in 1 day. But what she did not tell was that when AT&T cancelled my account, they also for some reason would automatically remove my online access to see bills.

So I called them and asked to have them mail me a paper bill to my address in NZ. They of course said yes sure. Well 2 weeks past by and I never got my final bill. So I called AT&T again on a long distance number mind you! grrr! They next person I talked to said their "System" did not allow them to put overseas addresses into the database so they'd mail me a handwritten envelope instead with the bill printed out on the inside. I said OK to that. Well 2 more weeks past by. Never received it. I called AT&T back to complain. The lady told that the balance was $120 or so, and just to send an payment in. I told her "no way, I need to see the bill first to check for errors, then I will pay it after seeing it!!!". She said that they had no way to get me the final invoice and to "trust them". I laughed at her and said, "you want to pay a bill without seeing it?? No way!".

I never ended up paying it afterall because the incompetent company could not even get me the invoice in my hand.

My overall morale in this is also what Victoria24 states. If U.S. Corp Execs are allowed to run companies into the ground/deep debt (where US tax dollars bail them out), and but they are still drawing their big $5million paychecks, then why should I feel guilty about a credit card debt I left back in the USA to collect dust?

Anyway, my "AT&T final invoice story" still makes me laugh. It cost ME money to call a long distance number to get an AT&T bill so I could have given THEM my money.



PS. In the USA, bad debt can only stay on your record for 7 years; this also goes true for bankruptcies as well.