Evasion of Student Loan Debt Through Relocation: Myths and Reality
Introduction
Many individuals grappling with student loan debt find themselves considering relocation as a “silver bullet” to escape their financial obligations. However, is relocation a genuine solution for those seeking to avoid their student loan debt? This article sheds light on the feasibility and potential consequences of moving to evade debt.
Risk of Relocation: Debt Escapism Through Relocation
While the idea of moving abroad to evade student loan debt may seem appealing, the reality is far more complex. Although temporarily avoiding contact with collection agencies may offer some relief, relocating does not eliminate the underlying debt. Collection agencies can pursue debtors in their home countries and internationally, making relocation a risky strategy.
Legal and Financial Impact of Relocation
The principal issue lies in the enforceability of the debt. As a US citizen, filing taxes remains mandatory, and you are still required to address your debt despite moving abroad. Even if you change your name, close your bank accounts, and set up a PO box in a different city, the original debt persists. This is because the debt is collectible, and many countries' courts will uphold it, albeit making it more challenging and costly to recover.
Procedural Challenges of Relocating to Escape Student Loan Debt
Relocation to escape student loan debt faces several procedural and bureaucratic hurdles. For instance, obtaining a passport will be problematic if authorities suspect you are attempting to evade debt. Additionally, credit bureaus like CIBIL may require you to settle your debt before renewing your passport, presenting a significant barrier.
Practical Steps to Consider Before Relocating
Those considering relocation as an escape from student loan debt should carefully evaluate the practical and legal implications. Some steps may include:
Changing Address: Set up a PO box in another city to use as a forwarding address. Canceling Existing Services: Cancel cell phone and credit cards in your home country and replace them with new ones in the country you plan to move to. Legal Compliance: Ensure that you comply with the legal requirements of your new country and home country.Challenges and Realities of Avoiding Debt Through Relocation
Even with careful planning, the likelihood of successfully evading student loan debt through relocation is slim. Debt collection agencies can take years to find and pursue debtors. In many cases, they face significant costs and bureaucratic hurdles when trying to collect debts from foreign nationals. Notably, the debt is often covered by insurance, and after 13 years, declaring bankruptcy may be an option for some individuals. However, returning to the US for visits presents a risk of debt recollection.
Conclusion
Relocation cannot be a definitive solution for escaping student loan debt. While it may offer temporary relief, the legal and financial aspects make it a challenging and ultimately futile strategy. It is crucial to explore other options, such as payment plans, debt consolidation, and income-driven repayment plans, which can provide a more sustainable and legal approach to managing student loan debt.
Key Takeaways:
- Moving abroad does not legally eliminate student loan debt.
- Debt collection agencies can still pursue debtors in their home countries.
- Practical steps and careful planning are necessary, but success is uncertain.
- Seeking alternative, legal financial solutions is recommended.