Moving out of the US indefinitely. Any reason not to default on my private loans?
Posted by United-Deer1157@reddit | studentloandefaulters | View on Reddit | 58 comments
Hi, all. As the title states, I’m moving out of the country indefinitely. My spouse is an EU citizen and we are leaving the US with no plans to return. I am contemplating defaulting on my private loans.
My loan situation: balance currently at about $180k, 100% private, refinanced with Earnest years ago. No co-signer.
Aside from about $45k spread across an IRA and Roth IRA, I have no assets in my name, and have no immediate plans to work in Europe.
Based on all of the reading I’ve done, it appears as though this is sort of the dream scenario. But I suppose I want to make sure I’m not missing anything. Are there important things I should keep in mind throughout this process? I know it’s unlikely that they’ll try to chase me overseas, but I worry that my high loan balance may incentivize them to try and recover that money by any means necessary.
Any and all advice or perspective here would be helpful. I have no problem dodging phone calls and emails, and with no plans to return to the US, I’m not concerned with my credit report being impacted for years to come.
Sad-Artichoke-5370@reddit
Bankruptcy will take care of everything and your set
No-Bat3062@reddit
Nope! Stay out of the country until the statute of limitations is up for them suing you.
morbie5@reddit
They can still sue you even if you are out of the country
TemperatureLost6304@reddit
Very unlikely. This is a consumer loan so they have to sue in the county of the defaulter’s residence. It will be difficult for them to get a default in any county based on lack of service. Even if they did get a judgment, that judgment also expires after a certain numbers so unless they domesticated the judgment in the country when OP is moving to, it would be worthless.
morbie5@reddit
Huh?
What?
But anyway my comment was in response to that other commenter talking about the SOL
TemperatureLost6304@reddit
Understood. And I was saying it’s unlikely that they will sue OP while s/he is out of the country and explaining why.
morbie5@reddit
That is wrong tho. Being out of the country doesn't necessarily mean they won't be sued. Matter of fact they probably won't even know if OP is outside of the country. I'd say it is likely that they do sue in this situation tbf
I'm not exactly sure what you are trying to say tbh. Care to elaborate?
TemperatureLost6304@reddit
I don’t mind elaborating. I’m not saying being out of the country prevents a lawsuit. Of course they can still file a lawsuit without knowing where OP is. What I meant is that in practice, suing someone with no US residency, cannot be personally served, and has no easily recoverable assets is not often cost-effective for consumer debt, especially where the debt has been bought by a third party debt buyer. Yes, some might still file but with service issues, default judgments (which is what I was referring to when I I said default), and enforcement of that judgment becomes messy and difficult. So yes, fair point. OP could definitely still be sued. I just think it’s less likely to happen while s/he is abroad and even less likely that it will result in a collectible judgment unless OP later returns or has some attachable US property (which s/he has already said neither is likely). Not a guarantee. Just a risk assessment. That’s all.
morbie5@reddit
Depending on the state a person lives in (or last lived in) they don't need to be served in person, via mail will be enough
Fair point but that is a separate issue.
We'll just have to agree to disagree
Agreed. They won't be going after OP in another country unless it is like more than 300k imo (as things stand now). They'd also have to find OP first
But my main point was that simply waiting out the SOL and then coming back to the US won't work if you are sued. Judgments don't last forever either but usually they are good for 10 years (in my state at least) and can potentially be renewed
thebayoubelle@reddit
Wha is the SoL on defaulted US student loans?
No-Bat3062@reddit
well if its federal, there isn't one. Private loans depends on the state. California is 4 or 6 years depending on the promissory note.
dzebs48@reddit
I did this, and said “I’m never coming back, so who cares.”
I’m back now… and thinking of leaving again because of this.
Make sure that never is actually never!
United-Deer1157@reddit (OP)
No need to reply if you'd rather not get into it, but I'd be curious to know what brought you back.
Wise_beauty2@reddit
I left for a few years then returned. I haven't paid in 10+ years. I came back to the loans disappearing off my credit report due to time limits. I haven't been contacted since.
dzebs48@reddit
Sorry for delayed response. Life changed, made a family abroad but had no other family, then COVID hit and the isolation, family pressured me and offered a house for me to come back and I broke down and agreed.
Artistic_Energy_5435@reddit
Is the loan company trying to contact you? I’m curious to know what’s going on since you’ve been back. If I were to ever take this route I don’t trust myself to actually never come back lol
bonerland11@reddit
You might have a problem renewing your passport.
United-Deer1157@reddit (OP)
My understanding is that applies to federal loans, but not private.
Wise_beauty2@reddit
No, this doesn't happen for student loans. Fed or private.
thebayoubelle@reddit
This was one of my concerns. Can they stop you from renewing if in default from fed loans? Can they track you through passport application?
____DEADPOOL_______@reddit
You only pay taxes on a certain amount over your foreign earned income. Unless you're making 80k+, you can claim to be low income and they put you on an eternal deferral. I haven't paid in 10 years and luckily interest didn't accumulate until this last administration kicked it back in but I'm already a citizen of Australia and there's no way I'm trading Australia back for the US.
CuteTouch7653@reddit
OP's loans are private. If they're anything like my private loan, deferrals are hard to come by.
____DEADPOOL_______@reddit
I would just discharge those then and just deal with the shitty credit for a few years. Boy I would've loved to do that!
CuteTouch7653@reddit
Unless you meant default?
____DEADPOOL_______@reddit
Yes.
CuteTouch7653@reddit
Default, sure. Discharge, no.
____DEADPOOL_______@reddit
That's what another user told me. Did they change that recently? For some reason I thought you could discharge private loans. 🤔
CuteTouch7653@reddit
Private loans, I’m not sure. Private student loans, definitely a no.
____DEADPOOL_______@reddit
What do you think about this?
https://www.reddit.com/r/StudentLoans/comments/zybg3f/you_can_get_private_student_loans/
CuteTouch7653@reddit
Responding to the links from that comment in order:
"For example, according to the report, these loans are dischargeable in bankruptcy: bar study loans; career loans at nonaccredited schools; and direct-to-consumer loans."
I haven't seen that article before.
Debt reduction, not full on discharge.
Angry-Kangaroo-4035@reddit
They are - its an adversarial proceeding added onto your BK. Its just extremely hard to have them discharged, but it can be done.
CuteTouch7653@reddit
Private student loans cannot be discharged in bankruptcy.
____DEADPOOL_______@reddit
It's this new?! I thought you could! 😲
invidiou5@reddit
They can, it's just difficult. It's easier to outrun the SOL or to flee
rachelk234@reddit
Yeah, you owe the money!!!
CuteTouch7653@reddit
Oh, this is a very timely post for me. I'm planning an exit in six months, with a move to Germany for school. There's a pathway to citizenship there, and I also have a potential Italian citizenship application moving too.
DIYGlutenFreePlaydoh@reddit
Commenting to follow, in a very similar position but for some reason my post like this got locked in moderation hell.
justgettingbii@reddit
Same!! My post got deleted too. Also in a similar situation. I’ve been out of the US for 6 years and all my loans are federal. About 80k.
United-Deer1157@reddit (OP)
Yeah, my previous post did as well. I wondered if maybe it was due to my account age being low, but I never got a response from the mods.
Conscious_Worth_6836@reddit
if you are seriously considering leaving the US to dodge loans you might want to think twice. It’s not some magic fix, loans follow you, foreign income reporting sucks, and you could wreck future credit or job prospects back here.
United-Deer1157@reddit (OP)
I appreciate the concern. I should be clear that we are moving out of the country regardless. The purpose is not to dodge loans, but to enjoy our next chapter living in Europe. I am merely gathering data and weighing my options.
Prettybrowneyes8833@reddit
I love this for you. F them loans lol. If this was a civilized country it wouldn’t bog people trying to better themselves down with them to begin with. If there is enough money for all the useless crap the US and these corrupt private banks manage to fund, then they’ll be fine without your $180k. Just know that your US credit will be shot, they will most likely garnish any social security collected and/or possibly try to seize any US assets or funds in a US bank account…but as you stated, you have no plans to return. Enjoy your life and freedom 🥳🥰💰
gallc@reddit
I left the country and never heard from them again except for a few scary letters they sent to a PO box I kept in the US for a while and a few weird phone calls my parents got asking about me. I am now past the statute of limitations and they are not even on my credit report.
They will probably try to contact people they can link to you, so do some prep now and try to scrub yourself from people finder databases & tell people they might contact to just say they are no longer in touch with you. Tell them specifically to say that and not that you left the country as this might give them leverage to argue that the statute of limitations should be paused if it does go to court. Also, change all your contact emails / phone numbers they have for you to some throwaway account.
IDK if you get get the 45k in assets you have out (probably with some penalties) and transfer it to a European account, but might be worth it looking into. Best of luck with the move and enjoy your freedom from this fucked up system. :)
moeterminatorx@reddit
How does one scrub themselves from people finder databases?
Mindless-Ad-511@reddit
Look into Optery. That’s what I use. I’m not moving (yet) or anything. Just paranoid about my information being out there :)
moeterminatorx@reddit
Will do, thank you.
Pleasant-Educator213@reddit
You can’t. AI Data centers are being built. They will eventually find you.
gallc@reddit
You can search for yourself and then submit requests to the websites you are on to delete your data.
United-Deer1157@reddit (OP)
Thanks! Some good tips here.
I believe since my loan originated in a state with some strong protections for IRAs that I might be in the clear there, though I was considering taking the tax hit and moving the money into a European account. I hate the idea of losing a chunk of that to tax penalties, but might be worth it for the peace of mind.
Appreciate the well wishes. All this student loan bullshit aside, we're very much looking forward to the adventure. We've both always dreamed of living in other countries. :)
hopeful_realist_@reddit
Nope. Fuck ‘em. Congrats on escaping!
Hot-Falcon4297@reddit
If it’s not too intrusive, where at in Europe are you moving? I’m planning to study abroad this summer in the UK and I fear I won’t want to leave 😅
ReallyKirk@reddit
You will still be responsible for filing/paying US taxes unless you renounce citizenship. If you default, your potential refund would be seized as well as things like social security payments.
United-Deer1157@reddit (OP)
Luckily, our income will be in local currency, and less than the maximum foreign earned income cap, so our tax liability to the US should be zero. We shouldn’t have a refund to worry about.
It’ll be a long time before I’m eligible for social security payments as well.
mythril606@reddit
Just to maybe take one more worry away, even if you manage to get over the FEIE cap, then you have the standard deduction, and then you have the Foreign Housing Exclusion (if you have earned income in the future). And if you get above that total amount, then you have a tax credit for the taxes you pay to your resident country on the amount over that limit.
So it gets quite difficult to owe US taxes while working in most (almost all) of Europe in most situations. It's not directly about your student loans, but just thought I could add a little here.
thebayoubelle@reddit
That’s really helpful, thanks.
United-Deer1157@reddit (OP)
That is certainly helpful. Truly appreciate you passing that info along. :)
jonsonmac@reddit
That wouldn’t be the case with a private loan. It would basically disappear.
United-Deer1157@reddit (OP)
That was my understanding as well.