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  1. #1
    Join Date
    May 2008
    Posts
    2

    Default Defaulting While Overseas

    10 years I go I moved to Europe, and have lived here ever since - with no plans to move back to the USA. At 7 years, I was eligible to become a citizen of my current country and I'm considering doing that (dual citizenship is not allowed).

    I have defaulted on my student loans totalling about 40,000. I have no bank account in the US, no current drivers license, and no temporary address there. My student loan office DOES know my current address abroad, but they have ceased calling, emailing or snail mailing me as of about 10 months ago.

    My question is this: What would their next step be in collecting from me, and how do they do it? Is there a statute of limitations on Direct Loans when the person is living overseas? Could they sue me, and if so - how? My hope leapt when I heard somewhere that once you've lived outside of the country for more than 7 years, your debts are nullified. Sounded too good to be true

    Basically I'm wondering if I'm "safe" as long as I live abroad or become a citizen, or if I need to do something else. What, I don't know. Beg my bank counsellor to let me take out a loan for the entire sum and be in debt HERE rather than the States. The conversion from my foreign currency to US dollars would bankrupt me in no-time, not to mention I don't earn very much and have been financially supporting my partner of 4 years.

    It may be that if I were sued or taken to court, this would all become quickly apparent, but oh... what a hairy way to get that done!

    And finally... for the first 5 to 6 years I lived here, I wasn't working at ALL. Part of it was because I wasn't allowed, due to the integration rules, and eventually because I was married and for a while was supported by my husband. During this time I never filed for taxes. I finally got a job myself 2 years ago but still haven't filed. I know of 3 American families here who don't file taxes either. We pay extremely high taxes here (upwards of 40%) and I can't imagine being able to survive paying both those, and the US ones.

    Anyone have any insight? Sometimes I wonder if Direct Loans contacted the IRS to see what to base my income contingent plan on and the IRS said "Cynara WHO? Haven't heard of her for YEARS. Well, let's look into this..." Or perhaps without the IRS' help the loan company's hands are tied?

    Finally, I feel sick about this. I can't use my degree here but I don't honestly believe that is any reason at all not to repay. I've used up all my deferments and forbearances and hardships during the first 6 years I lived here and my options have now run out. I dream of one day being able to save up and just dump the entire lump sum in Direct Loans' lap so I can be free of the guilt.

    Until then, I just want to know I wont be DEPORTED or EXTRADITED.

  2. #2
    Join Date
    Mar 2005
    Location
    Michigan
    Posts
    28,906

    Default Re: Defaulting While Overseas

    If the creditor tries to pursue you overseas, their rights and remedies depend on the laws of your country. In most states, if you leave the state the statute of limitations stops running. You're not going to be extradited from your country to the U.S. over a bad debt.

  3. #3
    Join Date
    May 2008
    Posts
    2

    Default Re: Defaulting While Overseas

    Quote Quoting aaron
    View Post
    If the creditor tries to pursue you overseas, their rights and remedies depend on the laws of your country. In most states, if you leave the state the statute of limitations stops running. You're not going to be extradited from your country to the U.S. over a bad debt.
    By MY country I assume you mean the States, of which I am still a citizen.

    It's so peculiar that my State should have anything to do with it since my lender is not located there, nor have I been for the past decade. But, them's the rules. I believe the SOL is 6 years, there.

    I greatly appreciate your help, aaron. Thank you.

  4. #4

    Default Re: Defaulting While Overseas

    They would have to sue you in whatever country you live and the laws prevailing in that country would apply to the case. It is against the law to fail to file your US tax return if you meet the requirements to file and you must report your worldwide income, although there is a tax exemption for foreign earned income up to a certain point, as well as a tax credit for tax paid to another country.

    While they would have to sue you in your resident country, they could still offset whatever federal benefits you might have coming to you to apply to your student loan debt, i.e. social security, etc.

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