Can You Move Abroad To Escape Student Loan Debt?

Yes, it is true. You can move out of the U.S. and abroad to escape student loan debt or any debt for that matter. However, there are many stipulations, and one major one indeed: You can never come back. 

Why would someone want to move abroad to escape debt? 

It is an easy way out. According to CBNC, Americans now owe more than $1.53 trillion in student loan debt, based on the most current figures available. That money is not only owed by young people fresh out of college, but also by borrowers who have been out of school for a decade or more. The standard repayment timetable for federal loans is 10 years, but research suggests it actually takes four-year degree holders an average of 19.7 years to pay off their loans. 

Essentially, if you move abroad, you may no longer be traceable for debt collectors to find you. 

What are the other benefits? 

Cheaper living, a clean slate, and a chance to see the world. The American dollar goes a long way in other countries. The more remote you are, the cheaper you will find land, housing, and food. By ditching what we consider “The American Dream” you will find that the world outside of the U.S. make ends meet with just a fraction of what we spend in a day. By eliminating extra “things” you think you need such as Starbucks, entertainment subscriptions, and etc., you can not only save more money, but actually put a dent in that debt if you choose to and explore the world while you’re at it. 

What are the risks associated with it? 

Many. Leaving your debt back in the States may sound appealing if you want to escape your debts by moving abroad. However, it’s not that simple. Often, when applying for a visa in another country, your debt will be examined. If it appears that you’re trying to avoid paying off debt, your application will likely be denied.  

Also, if you do move abroad and give up your U.S. citizenship. You may never be able to come back to the U.S. to live permanently. You can certainly try to, however, once you do return you will more than likely come back to the same debt if not tripled in late fees, interests, tax liens, and more. 

So, if you’re going to go. You’ll have to stay gone. 

Is it legal? 

While it is legal for you to move to any part of the world you’d like, the federal government can still come after you. Your debt is one thing, but the IRS is another. If you have unpaid debt balances when you move, those balances may eventually be canceled and be reported to the IRS, at which point the unpaid debt may be considered part of your income. If you owe more than $600 to any one company, if it’s canceled, forgiven, or discharged in a bankruptcy, it can potentially be considered income in which you now have to claim on your taxes. 

Another fact to note is, your debt collectors can file a lawsuit against you. If they are already in the process of filing or file before you leave the country, it would still go before a judge and be decided in your absence. If that happens, while the court may not be able to force you to pay since you’re overseas, the debt collector can go after any money you leave behind in a checking, savings, or investment account. And if you continue working for a U.S. based employer, they can garnish your wages.  

If you’ve already left the country, depending on the size of the debt, the company may choose to bring suit against you in the country of your residency. They will hire counsel there and the case will be decided based on the laws in that country. 

However, there is a caveat. Since circumstances like these come with a big price tag for the debt collector, more than often, it may not be worth it to them to follow through with it anyway.