American living oversees unable to pay down credit card debt

Submitted by slamspamslam t3_zxxhx3 in personalfinance

TLDR: American living overseas working full time is unable to make progress paying down CCs and private student loans. What should I do?

Not sure if this is the right sub for this but looking for advice - let me know if I should go elsewhere! I am an American living overseas. I have a lot of debt that has built up over the past several years (all US originated and denominated in USD) - 88k federal student loans, 23k credit cards, 18k Sallie Mae student loans, and 22k personal loans from friends. I work a full time job (actually 55-70 hours a week), and my after tax pay is about 2000-2300 USD/month. After essentials (rent, groceries, transport to work, phone bill), I have about 1100 USD/month to put towards my loans. After 4 months, I've made less than $100 progress on the CCs and private student loans (my federal student loans and personal loans are deferred) - every month I pay down 1100 USD and then the interest hits and I'm right back where I started. I have no savings left, and while I'm looking at trying to change careers or get a new job, if I miss even one paycheque I will also fall behind on payments.

My questions:

  1. What happens if I stop paying my credit cards or Sallie Mae? Can I be sued (effectively) in the EU/UK? Are collectors able to garnish my wages internationally? Are there other ways a judgement can be used against me? Can this prevent me from re-entering the US or lead to me going to jail if I do so?
  2. Can I negotiate a settlement/file for bankruptcy in my situation/from overseas? What is the difference between Chapter 7 and Chapter 13 bankruptcy?

Any advice appreciated, even if its something that I'm not considering/haven't asked about.

A little more background - the federal loans are from undergrad, but the remaining debt built up from moving costs and finishing my degree where I live now. I came here to get a visa and a career start in this country, and my degree did put me in a good situation to do that, but I cannot afford to follow up on the opportunities I have sometimes without missing payments. I've double checked my monthly expenses and I don't really have any slack left in terms of cutting down rent costs or food.

Wages in this country are much lower than in the US in general, so in order to make substantially more I would have to move back to US. This would lose me my visa, I would likely accrue more debt/miss payments during the move, and I'm also extremely unwilling to return to the US. I'm considering defaulting on the loans or trying to file for bankruptcy, but I dont know how these work given that I am overseas. I realize the accounts will go to collections, but I have no US assets. I have no intention of returning to the US on any permanent basis besides to visit family, so I dont anticipate needing my US credit score or US bank accounts.

(posting on behalf of a friend)

Edit: clarity/highlighting questions

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BastidChimp t1_j23hqu6 wrote

Try using either the Avalanche or the Snowball method to bring down your debt. There are YouTube videos that have extensive information on these two methods. Prep your own meals and refrain from going out to eat. Pause all investments including IRAs. Just invest enough of your salary to receive your company's matching contribution. Once you have ended your debt your options will open up immediately to save and invest more aggressively.

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slamspamslam OP t1_j24j81w wrote

Thanks for the answer! I am familiar with the Avalanche method and am doing that in theory, but in practice there is nothing left over after paying the minimums. I prep all my own food and do not go out to eat; there are no outgoing investments.

I'm aware of the best practices for saving - as it is, after paying for minimums, rent, and transport to/from work, I often dont have enough for food for the month. Hopefully I will get a raise or two over the next few years, but as things stand the timeline for paying off my high interest debt is >10 years, and assumes I continue to get 60hrs/week.

Appreciate any advice about the process of defaulting/bankruptcy, and how that could impact either my legal ability to return to the US, or the ways judgement can be enforced overseas.

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BastidChimp t1_j24mrac wrote

Bankruptcy should be your very last resort. Switch to the Snowball method for a change. You never know. Sometimes the Avalanche method can be grinding in that you don't see immediate results. Some people like the easy wins the Snowball method brings.

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killmetruck t1_j23j47l wrote

You seem to be putting a lot of blame on third parties (the university fucked you over, the visa fell through…) and taking no responsibility. You got here because you took too many loans that you could not afford.

If you want to post your budget, we can try to help to see where you could cut expenses and find money to pay off the loans. Look into the avalanche and snowball methods of paying down debt if you’re interested in this option.

Only you can decide whether you want to live with the consequences of defaulting or bankruptcy. Make sure that it won’t affect your current job and visa too.

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slamspamslam OP t1_j24jcig wrote

Thanks for the answer! I am familiar with the Avalanche method and am doing that in theory, but in practice there is nothing left over after paying the minimums. I prep all my own food and do not go out to eat; there are no outgoing investments.

I'm aware of the best practices for saving money - as it is, after paying for minimums, rent, and transport to/from work, I often dont have enough for food for the month. Hopefully I will get a raise or two over the next few years, but as things stand the timeline for paying off my high interest debt is >10 years, and assumes I continue to get 60hrs/week.

Appreciate any advice about the process of defaulting/bankruptcy, and how that could impact either my legal ability to return to the US, or the ways judgement can be enforced overseas.

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killmetruck t1_j24kh0z wrote

I didn’t mean that it would affect your ability to go back to the US. Some countries would take into account a bankruptcy procedure when approving a visa, so in the country you’re staying in right now, you could be affected when renewing the visa.

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fl135790135790 t1_j23ocpd wrote

Nobody is providing practical answers given your context lol.

Stop paying the credit cards. After 4-6 months they’ll be charged off, which means they’ll stop accruing interest. In this time, other companies will buy the debt and you can work out a payment plan, like $50 a month of something. Interest free. Or, if you’re never going to be back, ignore them for 7 years and it falls off your credit report.

You don’t have any options on the federal student loans, but those should be in deferment until Aug of 2023 anyway.

Brb

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