Is Debt Collectable or Enforceable When Moving Out of U.S.?

All of our debt settlement secrets in an easy-to-read book - Only $19.95!

What Happens to Debt and Judgments When I Move Out of the U.S.?

Last Updated: Nov 1, 2010

I do get this question from time to time, and it was the subject of recent discussion thread: "What happens to debts when I leave the country?" There are two separate issues here, both with their own problems - getting a judgment if the debtor has left the USA and how to enforce a judgment in a foreign country.

The first issue that should be addressed is whether or not a contract for debt is enforceable outside of the the U.S. The simple answer is "No". Period. In other words, if you have a U.S. judgment entered against you and you leave the country, the debtors cannot sue you or collect while you live abroad. From the US State Department information sheet:

There is no bilateral treaty or multilateral international convention in force between the United States and any other country on reciprocal recognition and enforcement of judgments. Although there are many reasons for the absence of such agreements, a principal stumbling block appears to be the perception of many foreign states that U.S. money judgments are excessive according to their notions of liability. Moreover, foreign countries have objected to the extraterritorial jurisdiction asserted by courts in the United States. In consequence, absent a treaty, whether the courts of a foreign country would enforce a judgment issued by a court in the United States depends upon the internal laws of the foreign country and international comity. In many foreign countries, as in most jurisdictions in the United States, the recognition and enforcement of foreign judgments is governed by local domestic law and the principles of comity, reciprocity and res judicata (that is, that the issues in question have been decided already.)

Returning to the U.S. With Outstanding Debts

Ok, we know that when you're out of the country, you leave your debts behind. But what if you decide to return to the U.S. after a number of years? There could be several situations.

You have unpaid credit card, auto or mortgage debt and cease payments before or after leaving the country.
You have unpaid debt in collection
You are sued for an unpaid debt after leaving the country
You get a judgment against you while out of the country
You already have a judgment against you when leaving the country

Let's go over what could happen in each of these cases:

Situation	Affect on Credit	What Happens if You Return to the U.S.
You have unpaid credit card, auto or mortgage debt and cease payments before or after leaving the country.	The debt is charged off and possibly goes to collections. You will have a severe negative mark on your credit report. Negative marks remains on credit report for 7 years. Therefore, if you're gone for more than 7 years, there will be no affect on your credit, unless a judgment is entered against you before the statute of limitations is up.	You may have dings on your credit. If the debt is not older than the statute of limitations, you could be sued.
You have unpaid debt in collections.	Negative mark already on credit report, so nothing is changed. It's possible that you could be sued and have a judgment entered against you ¹, which would be an addition black mark.	If the debt is older than 7 years, then nothing should happen to you. If collection calls start occurring for this debt, you can send the collection agencies a "cease and desist" letter.
You are sued for an unpaid debt after leaving the country. ¹	If the creditor wins and gets a judgment entered against you, your credit report will have a black mark on your credit. However, a judgment can only stay on your credit report for 7 years.	If you do get a judgment against you, it may be too late to appeal it, since the time to appeal a judgment is about 1 years, depending on your state. If this is the case, you may have to pay the judgment if not past the statute of limitations on judgments by the time you return.
You get a judgment against them while out of the country. ¹	Your credit report will have a black mark on your credit. However, a judgment can only stay on your credit report for 7 years.	If you do get a judgment against you, it may be too late to appeal it, since the time to appeal a judgment is about 1 years, depending on your state. If this is the case, you may have to pay the judgment if not past the statute of limitations on judgments by the time you return.
You already have a judgment against you when leaving the country.	Your credit report will have a black mark on your credit. However, a judgment can only stay on your credit report for 7 years.	You may have to pay the judgment if not past the statute of limitations on judgments by the time you return.

¹Can a Creditor Sue You When You're Out of the Country?

There are all kinds of problems with a company suing you while you are out of the country. In some cases, depending on the loan agreement and local laws, the process server might have to serve you in the county where the contract was signed. In some cases, a the loan agreement might specify in which state legal arguments and court cases must be settled.

One issue trumps all others. Technically, it's illegal for a creditor to sue you in a county or state in which you do not currently reside. Why is this illegal? In most cases, a state court rules state the creditor must sue in the county and/state of the Defendant's current residence.

What if a Creditor Sues Me Even Though It's Illegal?

Even though it may be illegal for a creditor to sue you while you're out of the country, it doesn't mean it won't happen. If a lawsuit goes uncontested, even if it shouldn't have been filed in the first place, the creditor can win and get a judgment entered against you.

If a creditor sues you where you no longer live and wins the case, you can appeal the judgment based on this fact. The gotcha here: most court rules only allow you to appeal or vacate a judgment within a certain time after the judgment is granted.

If you know you have unpaid debts and/or defaulted debts, and you plan to return to the U.S., it would be worth your while to keep tabs on what is happening with those debts. You don't want to come home to the hassle of dealing with a judgment, even if it was technically granted illegally.


Get a FREE Credit Consultation & Credit Score! Call 800-461-0524 or fill out the form below and an experienced paralegal from Lexington Law will call you in a matter of minutes!
	First Name: Last Name: Phone Number: -- E-mail: Zip Code: By clicking "Call Me", I consent by electronic signature to be contacted about credit repair or credit repair marketing by a live agent, artificial or prerecorded voice, and SMS text at my residential or cellular number (dialed manually or by autodialer) and by email. Calls are recorded for quality assurance.