Debt before you moved to NZ

[puchkin]

Villager, thanks for the thoughts. Maybe my question was poorly worded but I also didn't want to limit myself given the vast similar experiences people could have.

I figure the worst that can happen is that they will have to negotiate with me. With the new 29.99% interest rates in the US, it's impossible to pay off debts now. Ok, very challenging to say the least. If moving to NZ gives me a slight upper hand, I'll take it!

You are asking a legal and a technical question in the guise of an experiential one. I would suggest you concentrate on the law and facts rather than ask who got away with it. The world is changing too fast to rely on past experience.

Credit card debt is reported to credit agencies. When I check my US credit, it appears I dropped off the map when I moved to NZ. It does not appear there is an exchange of information between the USA and NZ, even though with the internet there is no technical reasons why not. Probably it is not worth the hassle.

However, when you apply for credit in NZ, you may find that they ask a pro-forma question about debt you hold, or debt you failed to pay. If you answer this in the negative, when in fact you should have answered in the positive, you set yourself up for trouble because you have not told the truth in NZ. This sort of thing rarely comes out until something goes wrong, and then it can be used as an excuse for all sorts of punitive action.

In a different example, an American or Canadian, can't recall at the moment, got into trouble as a high ranking employee with a government department... doing favors or something. The press got into it, examined her CV (resume), started making verification calls and discovered that she had not been entirely truthful in her background. She made front page of the papers, was the subject of questions in Parliament, lost her job and if I recall right got booted out of the country. That is usually how these things unravel.

You do have another option that might help. You can make the move, and then write or make a call from New Zealand to the credit card companies advising them of your dilemma and negotiate. You can state that you are unable to pay the funds and propose some compromise where you settle on a lesser amount, longer terms or an interest holiday until you return to the USA. They will probably see that they are in a weak negotiating position and if you get the right person, they may cooperate. If it was me, I would go for the interest free holiday until you return to the USA since that keeps your credit door open on return.

Finally, while this is slightly off topic, before you move, buy (and activate in the USA) a Magic Jack for $35. This, plugged into a USB port on your PC gives you for a year ($20/yr renewal) unlimited free calling in the USA along with a US telephone number that rings anywhere your PC is plugged into broadband. This allows you to call the credit card's 800 number and speak with a supervisor (just keep asking for their superior until you get a reasonable person) to negotiate in person. If you get a number in your local calling area, it also allows your former neighbors and family to call you on a local US number.

[BkyMonster]

I've found said companies very unwilling to deal with overseas payments. They would much rather threaten my credit rating and bluster (which matters to me not at all) rather than giving us any options for paying them. Mostly they have no clue what to do if you don't have an ABA routing number attached to your account (which obviously it wouldn't as it's an American Banking Association number). I've tried negotiating multiple times but as the account we maintained there has been really ridiculous and we can't open another one easily I'm at a loss as to what to do. If you can pay said debts with a credit card style thing then you'll be able to. Anything else and you are looking at certified mail cashier's checks (and no allowance for overseas mail delays because honestly those places want you to be late so they can charge extra fees).

This is always a hostile topic, but I'm rarely here so I don't mind replying.

[victoria24]

here is a non moral reply based on facts as i know them.

unsecured debt is covered by the origination country laws. these laws do not apply internationally as they cannot be enforced. the laws are civil rather than criminal unless fraud has occurred ie. you attempt to gain credit in the knowledge you will not repay it.

the credit bureaus' do not exchange information.

all of this does not mean that companies may not come looking in an attempt to recover. when unsecured debt is modelled with score cards and rates, there is a notional value of default built in. in effect, the payers rates subsidise the non payers. this is how this question will always become a moral one on a forum with real people.

[Super_BQ]

You may not expect to move back to the US, but fate does play some funny old tricks on us.

I completely agree. As our tax teacher at uni said there's always a case where some person has to fly back because of a death of a loved one or some other family matter or like claiming an inheritance.

In NZ, the gov't has the power to stop you at the airport if you attempt to flee without paying gov't debts. Will it come to the point where private companies can impose liens on individuals stopping them at the airport before they can flee? I may come a profitable venture for the gov't.

Many aren't aware that credit card debt like Visa and Master Card is actually held by the bank. When you use the credit card, it's your bank that lends the $, Visa and MC have nothing to do with lending $ as their revenue is from point of sales commissions (ie. 3% on total bill). So it becomes a matter between the bank you have dealt with and the individual.

There's no shame in declaring bankruptcy - why not do that?

[GrumpyGoat]

If you don't pay in the US, there is nothing they can do but sue you. No debtor prison (yet!)

Usually they just write off the bad debt as un-collect-able (charge off) and put a black mark on your credit. I do not know of anyone who has actually been successfully sued over a credit card balance.

The credit card company doesn't generally even hold the debt long enough to get to that point. Once you go into collection, it will be discounted and sold to a collection agency who will try to collect for a while and then sell it on down the line to the next (lower level) collection agency who will work it for a while and then so on and so on.....

Bad credit can only follow you for 7 years (wish we still had the jubilee year!) so after 7 years (maximum and sometimes sooner), the debt will disappear. After 7 years, ALL credit falls off your report--good or bad. So if you leave with stellar credit and are gone for 7 years, you would also return to NO credit rating.

No value judgment here as I don't know you or your situation. Also, I am rather familiar with how predatory the system is and I know it has only gotten exponentially worse in the last several years. No honor on their side at all. And that "money" is fiat money and created out of thin air anyway. They "loaned" you imaginary money and that is exactly what you pay them back with so the whole thing is a bit of insanity anyway.

No, the bad credit does NOT follow you to NZ which seems to be the crux of your question. And they can not extradite you for failing to pay your debts in the US.

If you did return to the US, you would find you had bad credit.

Good luck in making your decision!

[GrumpyGoat]

BTW, declaring bankruptcy is a long and expensive process. It has been changed so much in recent years that there is really no benefit to doing this.

You can only discharge your debts if you are completely without assets or you must enter into a payment plan that may take 5 or more years to finish.

NOT filing bankruptcy will avoid lawyers fees, litigation, paperwork hassles, time in court, etc etc etc and you will end up with the same result--discharged debts.

It is really insane what has become of the financial system (and it's affect on the average person) in the US. I shake my head in disbelief every day when I read the US news. I am sooo thankful to be in NZ reading that news.

[Super_BQ]

After 7 years, ALL credit falls off your report--good or bad

I was under the assumption that computers never forget. When I grew up in Canada, a close family friend always told me to keep a clean record of credit history. I was at highschool at the time and owning a credit card wasn't the norm at highschool age. He was telling me that even though the law says no bank can hold a bad debt 7+ years ago, the fact is they do because computers don't forget.

If you are in the US, they assess credit based on FICA scores. Correct me if i'm wrong but that score also factors a history that extends way beyond the 7 year period; which in essence, bad credit beyond 7 years does matter.

Anyways in NZ, these matters are immaterial. But remember this, NZ credit depts too also have computers.

[K&R]

This sits very uneasily with me. If you leave a country without paying back what you owe, you are a criminal, yet nothing can be done about it! So people can basically just move from country to country accumulating massive debts, then move on without paying them off. Like locusts!

Surely there must be a way of the authorities finding out where people have gone? When you apply for residency in NZ, does the country you are leaving not know where you are going? I can't believe people can leave countries officially, without their home country knowing where they were going. Isn't it monitored, like in the census or something??

It's not fair on people who work their arses off to pay off their debts if other people just abandon theirs.

Sorry, you didn't want to hear that, but whatever. It's wrong.

[72andsunny]

I was under the assumption that computers never forget. When I grew up in Canada, a close family friend always told me to keep a clean record of credit history. I was at highschool at the time and owning a credit card wasn't the norm at highschool age. He was telling me that even though the law says no bank can hold a bad debt 7+ years ago, the fact is they do because computers don't forget.

If you are in the US, they assess credit based on FICA scores. Correct me if i'm wrong but that score also factors a history that extends way beyond the 7 year period; which in essence, bad credit beyond 7 years does matter.

Anyways in NZ, these matters are immaterial. But remember this, NZ credit depts too also have computers.

The credit rating companies make their scoring so complicated, we are not meant to understand it. Some items (eg: length of credit history) stay on forever. A simple "30 day late" will show up for 2 years. A default on a debt goes away after 7 years. If the lender gets a judgment against you, it will stay on longer.

To the OP: a couple of posters recommended contacting the credit card company and negotiating what you "could" pay. Credit card companies actually love getting this phone call because you have reaffirmed the debt. The clock now starts over on everything (including the time to get a civil judgment against you)...as if you had just taken the loan out. If you really want to settle up, go ahead and call...if you're just checking out their best offer, I would refrain. Also, any amount they take off the debt will be taxable as ordinary income in the US. Owing the IRS money is a lot worse than owing a credit card.

Anyway: Although I had an 800+ credit score in the US, I started over with nothing in NZ. Hooking up internet was an ordeal.

PS: I jokingly wrote a post a few months ago about not paying my student loans, and got quite flamed. Sorry your experience has been similar.

PPS: I am not an attorney; this advice is worth the paper it is printed on.

PPPS: Completely debt free on arrival! Besides what I imagine buying a Ferrari would feel like, it's the best feeling in the world.

[victoria24]

If you leave a country without paying back what you owe, you are a criminal,

legally, you are not a criminal. this comes under civil law. rightly or wrongly.