What Happens to Your Debts When You Move to Another Country Permanently?
Leaving your home country for a new life elsewhere can be an exciting and life-changing experience. However, many people are unaware of the legal and financial implications of your debts and what happens to them if you move permanently to another country. Understanding the potential consequences is crucial, especially when it comes to obligations you left behind.
Debts and Your Homeland
Once you choose to leave your country permanently, your obligations to pay off existing debts remain. Most importantly, you still owe the money, and it can be collected. Even though some countries might not recognize your voluntary move and halt your debt repayment, others will continue to hold you accountable.
Debt Laws and Civil Courts
Unless you been evading specific types of debts, such as tax debts, your only significant risk is in the civil courts. However, your lender might have to absorb the loss, especially if the amount is relatively small. Larger debts, like millions, might prompt your former creditors to pursue you globally, including in your new country. It’s not advisable to purposefully evade your debts; doing so would be considered theft.
Statute of Limitations and Legal Proceedings
When you leave a country, the statute of limitations for your debts usually resets. This means that you can still be sued even after a decade or more. Additionally, if the lawsuit is successful, they can use any assets you might have in the original country to settle your debt. Eventually, the debt will disappear over time, but your credit score may take a significant hit, requiring you to start from scratch in your new country.
Starting a Fresh Credit History
When you move to a new country, your credit history does not follow you. If you have a poor credit history or substantial debt in your original country, it won’t affect your credit in your new home. However, it also means that you have no existing credit history to your name, which can be challenging when trying to borrow money.
As a non-citizen or permanent resident in a new country, finding a lender is more difficult because they worry about the risk of your leaving without paying. You need to establish a new credit history from the ground up. If you plan to return to your home country, the authorities will be watching. Expect to be flagged at the airport or during any visits.
Special Considerations
When moving to a country with a different name or citizenship, the situation can be quite complex. If your debt was considerable, your former creditors may try to locate and pursue you. However, if you use a different name, they may find it challenging to track you down. Generally, they will take no action unless they have an agreement with your new government to extradite you, which is a lengthy and expensive process.
One significant exception to this rule is the Internal Revenue Service (IRS) in the U.S. If the IRS finds out about your voluntary move, they can take aggressive action, especially if you owe taxes. This is why it’s advisable to be at least seven years away from your home country if you have a history of not paying your debts.
Conclusion: Leaving your home country permanently doesn’t absolve you of your debts. Expect to face consequences, and it’s essential to plan carefully. If the debt was substantial or you have a history of not paying your debts, it’s best to take legal advice to navigate the complex landscape of international debt laws.
Wondering about your specific situation? Speak to a legal expert for a personalized assessment.