Enforcement of Student Loans While Overseas
Taking a job overseas isn’t the exotic choice it used to be. We live in a global market. For recent graduates, doing so raises the issue of enforcement of student loans while overseas.
The world is truly a global economy. That is a good thing for the most part, although the last few years certainly has show how scarily all the economies are entwined. Regardless, it used to be a rarity for a person to take a job overseas. This is no longer the case. For those going overseas who have student loans, it raises interesting issues.
The first rule of thumb is you have to continue to pay your student loans while overseas. There is no “traveling, be back soon” exemption to paying. Most people realize this, but run into the issue of how exactly to make the payments. Sending a check from Singapore to Sallie Mae works, but is hardly practical. To overcome this, many open a joint bank account and have a person in the US write the checks.
So, what if you stop paying your student loans? Can an enforcement action be taken against you? The answer is yes, but probably not in the way you think. Is someone going to show up at your door in Amsterdam looking for payment? It is highly unlikely. That doesn’t mean the matter has been put to rest.
Enforcement actions will almost always be limited to the United States. That doesn’t mean they can’t ruin you. They can. Here is how. The creditor will get a default declaration. Since all or at least part of your loans will probably be backed by the government, the feds will pay out on the guarantee. The government doesn’t like doing this and it will be looking to you for repayment.
As a citizen of the United States, you must pay taxes on your income regardless of where you are in the world or where you earn it. There are usually tax treaties between countries that prevent double taxation issues, but you still have to file a tax return and make at least some payments. Guess what the government does? It put a hold on any tax refunds you are due…forever. It is also going to file liens against you, which will destroy your credit. Eventually, you could even have your passport frozen if someone gets really ticked off.
Is there enforcement of student loans while overseas? Yes. Creditors do not forget and they very rarely forgive!
