Escape Student Debt by Leaving the USA

I am the author of the e-book, How to Escape Student Debt by Leaving the USA, which is available on Kindle

Leaving the United States is an option for people because it is impossible for the US government to collect debt outside the country. In my case, leaving the country gave me a fresh slate and I managed to become a USD millionaire, something that would have been impossible had I stayed behind.

I am answering questions from anyone interested in learning more about this option. Feel free to ask any questions and I will answer them.

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What countries can you do this? Canada? Do you have to have a non-US based company job or get married to get the new line of credit? Do you have to become a citizen in the other country?

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Hell DrNate. You can do this in virtually any country and I discuss a few places in my book such as Canada, Australia, the EU countries, Chile, parts of Asia, and Africa. The question is going through the process of successfully immigrating to another country. As a rule, First World countries such as Canada or Australia require more (a degree, job in an area with a demonstrable skills shortage, etc.). However, the process is very doable.

When you move to a new country, you will start a new credit in that country. Places like the UK or Canada have US-styled credit bureaus, but starting a new credit history is straightforward. You do not need to be a citizen to establish a credit history. More importantly, your US history does not follow you. Other countries do not have such credit bureaus.

You can even work abroad for a US headquartered companies. I have twice worked for the local entity of a US multinational without a problem. If you have a decent skillset and you do not want to return to the US ever again, then going abroad and starting over is a very viable option.

I went to grad school in the US and took a loan for part of my tuition fees. I never managed to repay my loan because I had to come back to my native country, Brazil. The university hired a lawyer in Brazil and they are taking actions, pointing to a lawsuit here, so I guess leaving the country not always get you to escape debts…

Well, couldn’t you keep loans in IBR, still be able to visit the USA and get the new line of credit to have a normal life in another country?

It is possible, but it depends on your individual circumstances. You could conceivably use the Foreign Earned Income Exclusion to get your Adjusted Gross Income to $0 and then have the debt forgiven after 20 years. If the current rules remain in effect twenty years from now, you would owe gift tax on this forgiven money, but you would pay nothing in student loans.

I earn a great deal more than the current USD $107,600 threshold for the Foreign Earned Income exclusion, I live in a country with lower tax rates than the US, and I do not intend to return to the US to live. Additionally, I adamantly disagree with how the US government spends its money or how it applies US tax laws to US persons living outside the US. Extraterritorial taxation is the modern equivalent to the British practice of impressing US sailors that helped lead to the War of 1812.

I used savings to leave the USA and start fresh elsewhere. I have been able to travel into the US without a problem despite defaulting on student loans. These days, I enter with my non-US passport despite US law technically forbidding this. I identify with my new country.

I hope this helps.

Hello Ana: I do not want to be presumptuous without knowing your situation. This is the first time I have heard of this happening.

I suspect you may have inadvertently facilitate this by providing address information to your university or making yourself easy to locate on social media, which I advise against in my book. At any rate, I can only give you general tips. The statute of limitations may apply and make the debt time barred. Similarly, you may have defences available to you in Brazil or you can force the debt collector to prove that you borrowed money. Many debt collection companies keep poor track of records. You can also shift assets outside the country to make you judgment proof.

I am happy to discuss your situation to the extent you feel comfortable sharing it. I hope this information is of use.

Hi! (I’m sorry, I couldn’t find your name here!)

You’re right to some points. It was never my initial intention to not repay my loans or to hide, so the university had my parents’ home address, my email, phone number and so. I came to Brazil because I got pregnant during school and came back for family support after graduation. When I was back the currency exchange was crazy, which made the installments impossible to pay. I didn’t ever really thought they would go through the trouble (and costs) of chasing me here. Also, I always thought it would be possible to come to an agreement and pay an amount that was reasonable within my budget since Yale give scholarships based on financial needs and my needs had changed drastically due to circumstances out of my control. I was naive enough to think the would negotiate, so I confirmed through email that I owed the debt but I couldn’t afford to repay it. As I am dealing with a collector, they say they won’t settle for less than the whole amount. So now I’m kind of stuck because I can’t pay. Any advice you may have on how to deal with this would be highly appreciated.

Hi Ana,
I am a US Attorney, also in the same student loan nightmare as all of us in this site. Yes, even an Attorney can fall into this ridiculous student loan trap, as many doctors and other professionals. I imagine you are one too, otherwise, none of us (former students) would be here. I have been following your dilemma and your communications with “EscapeStudentDebt” (I don’t think he/she wants to share his/her name for obvious reasons, so we’ll leave it at that) and ESD is right about everything he/she points out to you. Very generous of him/her, by the way. Also, I applaud ESD for having had the courage of packing up and leaving his/her life here in the US. Obviously, he/she did very very well. So, back to your problem: Mainly, my advice to you at this point is STOP ALL COMMUNICATIONS with your debt collectors immediately. You have already given way too much information to these people. Know this: They are relentless. They don’t care one darn bit about you, or your problems, or anything other than getting their loan money back, period! So, you must, MUST stop communicating with them, no matter what threats they throw. your way. Don’t be afraid of them. They use this aggressive approach to intimidate us all into submission, but they are not vigilantes who can do whatever they want. As ESD correctly pointed out to you, there is something called a statute of limitations. So, starting from the time you openly admitted to owning that debt, it usually takes about five years, in some. jurisdictions less than that, to have the whole nightmare go away. If they don’t take any true legal action against you that is VALID in the USA, then just stall for time. No responses to anything ever again. Again, they have to prove that you borrowed the money, so let them go through all the trouble and stop making it so easy for them. Otherwise, there is no point of you being on this site at all. We are all here because we are rebelling against paying for these usurious student loans, interests, etc. If you can wait it out, the statute of limitations will time bar them from further pursuing you legally. Never again write or make any further statements asserting you do owe that debt!! I hope I was of assistance.

Hi Marilyn!

Thank you for your advice, that was helpful. ESD has also been helpful, I’m glad I found this community. I understand what you’re saying but I do have a few questions, if you dont mind helping a bit more:

  1. I thought the SOL counted from the last time I made a payment to each account. Is it the time I admitted to own the debt?
  2. You being a lawyer, you may know about this, but what happens if I get sued in the US and I can’t be there to defend myself?

Hi again Ana,

I can’t give you legal advise as I am not your “official” legal representative. I am merely giving you some suggestions and ideas to defend yourself. I can’t get myself in trouble, I hope you can understand. If you wish to share your email, I can elaborate a bit more. This is a public forum after all.

Hi Ana: Congratulations on the baby. I hope everything worked out well.

I stay anonymous online because I have accrued assets and I do not want to jeopardise my ability to earn an income or encourage anyone to target me. One idea I had was to create a low cost service to provide unconventional advice to people in similar situations to you find solutions to this problem. I have written my book as a low cost solution to help people.

I am assuming you borrowed directly from your university rather than from a traditional student lender. If so, your university may take a different approach to collections. I know one person who left the US, but received a call at his work because he had posted his university and company on LinkedIn and Facebook. The debt collector harassed him several times, but the communications ceased.

In your case, it sounds as if the university have hired a lawyer/debt collector. How much money did you borrow? The decline in the Brazilian real certainly makes it more difficult to repay. I know in Poland courts modified mortgages taken out in foreign currencies when the zloty declined. My suspicion is the lender is bluffing. I imagine collecting debts in a country like Brazil is similarly difficult to a place like Italy, but I genuinely do not know. Court cases take a long time to materialise.

The general suggestion is to read your initial loan contract to see when the debt happened based on the applicable law and jurisdiction in the contract. If it is US law, they may not even have the ability to collect the debt in Brazil unless the lender first obtains a US judgment. Second, check the statute of limitations, stall for time, and do not make any payments. Third, do not respond to communication from the debt collector. Fourth, remove social media accounts and any information that makes you traceable online. Fifth, change your phone and even consider moving depending on how practical the latter is. Sixth, if you have assets, consider stashing them offshore to make you judgment proof.

Let me know your thoughts. I can try to provide you with some contact details, as your circumstances are new. I am keen to learn more and see what I can do to help. I would need to know better specifics to advise you better, but I do not want you divulging private information online.

Excellent advice! Ignore ignore ignore!!!