Leaving debt behind??!

Hi all 

My DH's cousin and her family are making the move to the UK not too long after we will be. However, I am concerned that something they plan to do will be a big mistake. Here in the states they have various debts (store cards, outstanding bills and I think a loan on their car) and they think that by moving out of the country they can just leave these behind as they cant afford to pay them off, and their will be no repercussions in them doing so. Ive told them I dont think its a good idea- but I have no idea on the legalities of such issues so cant back up my concerns.
I dont want to see them end up in jail  Am I right to worry?

There are some other threads on here about this somewhere... While I don't think debt collectors can pursue the debt here, I think it could make any return to the US very uncomfortable. I don't know if they could grab them at an airport, but their credit would certainly be shot and it could impact all sorts of other things. I'm sure others will chime in with more specifics though...

Just a comment that if they don't get over the debt "habit" and run up similar debts in the UK, they may have problems legally settling in the UK (unless they are already British citizens).

Hi all 

My DH's cousin and her family are making the move to the UK not too long after we will be. However, I am concerned that something they plan to do will be a big mistake. Here in the states they have various debts (store cards, outstanding bills and I think a loan on their car) and they think that by moving out of the country they can just leave these behind as they cant afford to pay them off, and their will be no repercussions in them doing so. Ive told them I dont think its a good idea-

Plus... isn't this roughly the equivalent of stealing?   

This is another one of those things that tends to raise hackles on UKY, because so many of us had to delay our moves, and make lots of personal sacrifices to ensure that our debts were paid off before we emigrated. 

True, it is stealing, but I think the OP knows that. Clearly her DH's cousins don't though. So what can we tell her to help educate them? What exactly ARE the repercussions?

ETA, Q-G, love your avatar!

For the car loan, can't they sell the car to repay it? 

I have a LOT of credit card debt in the US and DH and I have discussed me just dumping it and not paying it. The problem comes up that we may want to move back to the US in about 5 yrs. Could be longer, could be shorter. And for the cynical - what if something goes wrong in the UK? And you have to move back? Then are you doubly screwed. So, to us, it wasn't worth the risk. I pay it back, albeit slowly, but the exchange rate is great, so it is faster than it would be in the US. I am carrying about $20,000 in credit cards and loans that are not student loans, it's just a matter of putting it into perspective, knowing you have to pay it and just doing it. Tell them not to risk it. Better safe than sorry.

I did leave some debt behind and some, I brought with me.

I was "upside down" on my car so I did a voluntary repossession.  I let them take the car and walked away from the debt.  I hated to do it but I had no choice.

As far as other debts, I just pay them online every month like clockwork.  All "last bills" like electricity, phone, etc. were a one time shot.  All other debt came with me.

Debt collectors cannot arrest you in America if you come back to visit (unless it's something like the IRS or child support offices that can put arrest warrants out for you). It doesn't work that way for normal debt.  But that debt stays on your credit report for up to 7 years, depending on the debt.  So if you want to move back to the states within that 7 years, your credit will be horrible.

Now knowingly running up all your credit cars and then moving away, that is a crime that the creditor would have to prove your intent to get anything moving forward.

For now (the way I understand it), British companies cannot run your credit in America.  You have to set up your credit here and start from scratch.  And companies from American cannot put a lien against your wages in the UK (garnishment). The international lines don't stretch that far, yet.

~BEG

but the exchange rate is great

Good point.  This is exactly the angle I am excited to play.  You could mention to them that with their finances soon to be in Pounds; the exchange rate basically doubles the amount of money they will be paying toward US debts. 


-Tyler

I did leave some debt behind and some, I brought with me.

I was "upside down" on my car so I did a voluntary repossession.  I let them take the car and walked away from the debt.  I hated to do it but I had no choice.

As far as other debts, I just pay them online every month like clockwork.  All "last bills" like electricity, phone, etc. were a one time shot.  All other debt came with me.

Debt collectors cannot arrest you in America if you come back to visit (unless it's something like the IRS or child support offices that can put arrest warrants out for you). It doesn't work that way for normal debt.  But that debt stays on your credit report for up to 7 years, depending on the debt.  So if you want to move back to the states within that 7 years, your credit will be horrible.

Now knowingly running up all your credit cars and then moving away, that is a crime that the creditor would have to prove your intent to get anything moving forward.

For now (the way I understand it), British companies cannot run your credit in America.  You have to set up your credit here and start from scratch.  And companies from American cannot put a lien against your wages in the UK (garnishment). The international lines don't stretch that far, yet.

~BEG

I couldn't sell my car either so I did a voluntary repossession as well and walked away from the debt, I consulted a lawyer and he said as long as I returned the car and didn't try to pay back what I owed it would stay on my credit for 7 years and then drop off, and as long as I didn't owe more than £40,000 on the car that they really couldn't do anything except send me letters and call, but to just not touch it and walk away.   That is my experience I don't want to encourage anyone to do this same thing but this is my experience, my other debts I am paying off.  I do what I can.

True, it is stealing, but I think the OP knows that. Clearly her DH's cousins don't though.

im sure they do know... it's not rocket science.
they probably would not welcome the OP's interest in their situation.   

For ordinary debt, credit card, loans, cars etc, moving is one way to...how do I say this "cheat the system"
I work for a bank, in the credit department(although I do work in IT, I used to be a credit advisor and know a lot of "tricks" heh heh ), and we have absolutely no way of chasing debt from those who have moved countries, we don't even bother, we just register it with a credit agency, where it will sit for 7 years.
Now, if you happen to be abroad for 7 years, well then... good luck to you...
This system also works if you move around/change your name alot in the UK, of course, we can and do use private investigators to find people, but at considerable cost to ourselves, so if the debt is small, likelihood is...credit reference agency, wait 7 years etc etc.
Damage to your credit file is pretty severe in these cases, and you will find it impossible to get a flat/mobile phone/ etc etc with these. After 7 years you will need to work VERY hard at getting your file back up again. There are ways to...cheat this too.
If you do decide to run from your credit, it eats at you constantly, sleepless nights etc, I wouldn't recommend it, as someone has said , you may need to return to the US, you may want a job which will do a FULL credit check (like with  a bank/insurance company etc)and these things will lose you your job or chance of a job, even after the 7 years (it isn't "wiped" per se...just sort of greyed a bit)
The easiest way of doing this is to face it head on "hello, I'm in financial difficulty, this is my budget, I can only afford £5 a month" most creditors will take it rather than risk getting nothing out of you, often interest etc will be frozen.
And you get piece of mind for a few pounds a month.


 

how about school loans. can we forget them? (HA! just kidding!)

I think it is a very silly idea, and if they do decide to move back, what kind of life will they be living if they have no credit or way to move into a decent home right away? morals aside, that would eat me up.

we'll have some debts when we come over (i.e. a fat school loan) and we intend to pay it.  nice thing is, paying it with pounds will seem like we're getting a real deal.  (this is what I tell myself!)

DONT DO IT!!!

Pay off that debt no matter what.  You never know when you wanna go home.  You just never know.....

I am still paying off my CC debt, I racked up that debt and I will pay it off.

Everyone thinks that when they move here they will never want to move back, but let me say from experience, you just never know when you wanna move home to the states.

on the other hand, for those of us who had old debt and bad habits or horrible circumstances beyond our control, an international move does give you a second chance really. I do pay my student loans btw, but yes for us it was an amazing chance to start fresh with new plans and new perspective.

so anyone can you tell me, after those 7 years on my credit, what happens? does it just look like i am starting out again with no credit? or how exactly does that work?
cheers