Debt Collection When You Move Out of the United States
Last Updated: July 10, 2017
We do get this question from time to time, and it was the subject of a recent discussion forum thread: "What happens to debts when I leave the country?"
The first issue that should be addressed is whether or not a contract for debt is enforceable outside of the the United States. The simple answer is "No." Period.
Returning to the U.S. With Outstanding Debts
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 prior to leaving the country.
Can 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.