Debts do not cease to exist when an individual leaves his home country, but they will not appear on a fresh credit report internationally. Credit bureaus require membership and reporting software before a creditor is allowed to report accounts. International creditors will not be able to meet these qualifications.
What Happens to Debt When a Person Leaves the Country?
If an individual leaves his or her home country while owing a debt, the debt can be “tolled.” This means the legal statute of limitations for debt collection will be frozen for the period of time the individual is not living in the country. If the individual returns to the country after the statute of limitations has expired, he or she may still be sued for the debt.
If, however, the debtor maintains a home in the U.S., the creditor may opt to file a lawsuit and seek a default judgment. A debtor must have a U.S. address for this to take place, since the court summons is required to be delivered to the debtor as notification. The hearing will then be scheduled in the debtor’s county of residence. If he is no longer in the U.S., this cannot occur.
The reporting period on the debt, however, will not be tolled and will eventually time out.
International Credit Reports
International credit reports are most often company credit reports. Business credit records are much easier to access than personal ones. Equifax International is one such organization offering comprehensive international credit records.
A consumer’s credit report that is pulled internationally is also commonly referred to as an international credit report even though it does not fit the technical definition. There is no credit report that merges an individual’s debts from each country that he or she has lived in. Each country’s credit bureaus operate independently and neither share nor merge information.
Creditors can only report accounts to credit bureaus whose credit reporting programs they are enrolled in. The process requires expensive software that is automated to report multiple accounts. In addition, the creditor would have to adhere to the credit laws present in the country in which it was reporting. Few, if any, creditors actively do this- even if the company maintains international branches.
When Credit Can Be Pulled Internationally
A consumer credit report can be pulled from a different country by the consumer himself when he requests his credit reports online from the credit bureaus. A credit report can also be requested internationally by government institutions in the interests of homeland security. Governments, however, will request an international credit report directly from the credit bureau in question and do not pull it using a system.
Unfortunately, banks and credit unions will rarely have the ability to pull a consumer’s credit file from another country. Even if the credit bureaus themselves are the same (which is the case with the U.S. and Canada) the way the consumer is tracked is different. Each system is specifically set up to pull reports using a certain type of identification number. In the U.S., credit is pulled using an individual’s SSN. If that same person were to travel to Canada and have his credit pulled, the credit bureaus are the same but the system will be set up to track Social Insurance Numbers and thus the consumer’s credit report will not appear.
Many banks make the claim in good faith that they are able to access international credit files only to find out when an attempt is made that it is impossible for them to do so.
Debts That Can Follow a Person Abroad
Although international debt will not appear on a credit file in another country, there are situations in which the debt can still be legally pursued. Debts that may be pursued internationally are:
- Tax debts
- Debts incurred by fraud
- Unusually high debts
An individual may be extradited for tax evasion, but unless the amount is significant, the costs to extradite are typically more than the debt owed. In most cases, small tax debts are viewed as an oversight and are simply filed as unpaid tax liens. Fraud is traditionally a very gray area with the law. If high enough debts are incurred via fraud, an individual may be extradited on criminal charges.
High unsecured debts could potentially result in collection activity in an individual’s new country of residence, but debt in and of itself is not a criminal offense. Collection activity would be limited to calls and letters, however, since any credit report in the country of residence would be filed under a new identification number and untouchable to international creditors.
 |
