Defaulting on credit card after moving overseas a good idea?

[Winston]

Joe,
You make some valid points and I understand and empathize where you're coming from.

Like you, I also follow situational ethics. I do not believe that morality is black and white and that any act is always 100 percent right or 100 percent wrong in every situation.

And besides, you could argue that this world is corrupt, especially those who have power and money, such as corporations. They all abuse their power and do bad things too right? So your little act would be puny compared to theirs. There are far worse crimes out there committed by both individuals, corporations, and governments, right?

Back in the 19th Century, the US government stole all the lands of the Indians, murdered many of them, and broke 400 treaties. Is that morally wrong? Of course it is. So it's not like everyone is an angel and you're not.

Anyhow, the government allows you to declare bankruptcy if you have to. If you do, you lose your credit for 7 years. Have you considered that?

Just choose wisely and consider the big picture consequences of your actions. And have some backup plans.

Be realistic too, and take it one step at a time.

[momopi]

In many countries around the world, where credit is difficult to obtain, it's very hard to elevate yourself up the socio-economic ladder. Unless if you have the cash, you cannot get business loans, student loans, housing loans, etc. No education, no career, no money, and working your ass off as a tenant farmer or laborer.

With credit, you can borrow money to afford an education, get a mortgage to buy a house, car loan to get a car, etc. It makes you mobile in the economic ladder, as you utilize someone else's money to build your equity. Of course, there's smart ways and dumb ways to use credit, people who abuse it will go back to being poor.

If everyone abused the credit system, good luck getting a home or business loan. If you run a business and your supplier refuse to give you NET 30 terms, you must pay up front in CASH for any goods delivered. If you don't have cash on hand, you'd never grow your business and make any money.

========

What is personal integrity?

After the Great Hanshin earthquake in Kobe, Japan in 1995, which killed some 6,500 people left 300,000 homeless, how did the survivors act? See anyone rioting or looting? At the jam packed hospitals, where patients were filling the corridors, people waited patiently for the over-burdened medical staff. 1.2 million people volunteered to assist in the relief efforts, even the Yakuza gangsters were ordered to provide disaster relief by their boss:
http://query.nytimes.com/gst/fullpage.h ... A963958260

The recent 2008 Sichuan Earthquake in China, where some 70,000 people died, 374,000 injured, and 4.8 million left homeless, you did not see people running off to loot stores. There were a few unfortunate incidents of theft in abandoned properties afterward, but that was about it.

Now compare to Hurricane Katrina in 2005. Carjacking, looting, murder, theft, rape, arson -- you name it. The idiots even shot at rescue helicopters. Cops abandoned their post. When the law finally returned, they came like this:



Here's your choice -- you can be the kind of people who will be orderly and lawful in stressed situations, where the government can come and provide aid in good order. Or, you can be the other kind, where the government has to send armored vehicles and assault rifles to keep order.

[DiscoPro_Joe]

In many countries around the world, where credit is difficult to obtain, it's very hard to elevate yourself up the socio-economic ladder.

This is really getting off-topic, but I don't think "ultra-tight credit" has anything to do with creating Third-World economic conditions or rigid socio-economic stratification. I think the two biggest causes of actual Third-World conditions are...

A. Draconion and/or exclusive business licensure laws, which makes it extremely difficult or impossible for the masses to start their own businesses to compete against the large corporations.

B. Laws that actually prohibit most people from owning property, thereby preventing the masses from having any profitable incentive to develop their own land.

Anyway, China's consumer economy is mostly cash-based; the U.S.'s is primarily credit-based. (A very-low percentage of Chinese people have credit cards or access to credit, while most Americans do.) And yet, during the last 30 years, the standard of living of the average Chinese person has skyrocketed, while the average Americans' living standards have declined (peaking in the early 1970s). The size of the Chinese middle class has burgeoned and socio-economic mobility has hastened, while the exact opposite has been occurring in the U.S. in recent decades.

Anyway, if I live in the U.S. and don't have access to credit (in a credit-based society), then my life would certainly be harder. But if I live in China without access to credit (in a cash-based society), I think I'll do just fine, thank you.

(And by the way...when you apply for a job or try to rent an apartment in China, they don't look at your credit rating, as they do in the U.S.)

[ladislav]

I am not against using credit. Actually, I have built my life on credit and paid everything back with interest. I am now debt-free with some 53K ( thank God) of available credit that I can use at any time + an American Express card with no credit limit. My credit rating is 781.

From 1985-1990 I lived in LA, and then, left LA with 27K in debt. I went to Japan and paid most of it off which left me with 10K in student loan debt. I then went to Thailand and tried to start businesses there and failed. I accumulated some 17K in debt for the total of 27K. Could not find work in the US that would enable me to repay it . So, I enrolled in a Consumer Credit Counselling program, had my monthly payments reduced, then went to Saudi and paid off all of my debt. My credit was spoiled for a while anyway, but now it is OK. I paid everything off so thus I was able to get 11 credit cards after some years, and am OK now.

My point is this:

The argument in this thread is like this:

I am lonely and I am about to do something bad.
I will borrow money from an Arab bank and skip
That is OK because I would turn into a demon therefore it is justified.

Why should some Arab bank deal with our personal problems? We are responsible for solving them and if they lend us money, well, then we will use it and pay it back little by little.

The two times I had credit problems, well-paying jobs in Japan and Saudi allowed me to get rid of the debts and reestablish my credit. I would always notify my creditors when I could not make payments and eventually I would pay everything off in the end.

So, yeah, I guess charging is great help- that is what banks want you to do, after all, but sometimes, if one cannot pay back, one can go to some country where they pay you big money and settle those debts. A year in Saudi or Iraq, a year in Korea, debts paid, credit line is "fresh" and available again.

This is how I have done it and it has worked for me. But I did not let payments lapse- I called them and renegotiated for smaller payments, deferrals, etc. I pride myself on being responsible in business dealings. If you go that route, I see nothing wrong with that.

[Hero]

Wait, how could you do all that travelling and start a business without money?

[ladislav]

Wait, how could you do all that travelling and start a business without money?

I applied for a job in Japan first, then borrowed some money off the cards. Paid it all back as I worked. Businesses that I attempted tos tart were also with credit card funds but they failed.

[DiscoPro_Joe]

I did not let payments lapse- I called them and renegotiated for smaller payments, deferrals, etc.

That's good advice. Next spring, I'll probably call them from China and say, "Well, I'm here in China and there's nothing you guys can do to make me pay....But, I'd like to pay back some of it if I can. Here's what I'm making with my teaching job. If you reduce my debt and/or payments to this smaller amount, I would be capable of paying that."

[ladislav]

I did not let payments lapse- I called them and renegotiated for smaller payments, deferrals, etc.

That's good advice. Next spring, I'll probably call them from China and say, "Well, I'm here in China and there's nothing you guys can do to make me pay....But, I'd like to pay back some of it if I can. Here's what I'm making with my teaching job. If you reduce my debt and/or payments to this smaller amount, I would be capable of paying that.

Well, you know, if you ask me the above plan still sounds like a bit of premeditation. From the karmic point of view, and the Golden Rule, it is not kosher- would you like someone to borrow money from you and then confront you with a similar proposition?

What you can do is pay back interest only and then you and your creditor will both be happy. How is it done? Say you charge $3000 for your ticket to China. Your minimum monthly payment will be some $100 a month. But out of this, the interest will be some $37. So, you pay them $100 and then you can charge your card $63 again for miscellaneous things. They will love you for it. The balance will stay the same but so what?

Yes, you won't be paying down the principal but who cares? With minimal payments, it will take you 20 years to pay it all back anyway. So, you might as well let the inflation eat away at the debt for 20 years and then pay it all off when 3k is worth nothing at all.

[Winston]

Someone said that if a person dies, and they still have debt leftover, that the debt transfers to their next of kin, like a sibling or something. Is that true? How can that be? Isn't that an invasion of someone's personal rights? What if there is no next of kin?

[momopi]

Someone said that if a person dies, and they still have debt leftover, that the debt transfers to their next of kin, like a sibling or something. Is that true? How can that be? Isn't that an invasion of someone's personal rights? What if there is no next of kin?

Yes and no.

Technically, you cannot pass debts off to your spouse or children upon death.

But suppose if you owed money when you died. Before your surviving relatives can get your money, the debts must be paid off first. So if you left your wife $100k, and you owed the bank $50k, the bank gets paid before the wife.

If you have a joint account with someone, or co-signed any financial obligations, you'd be liable if the other person dies. For example, if you have a joint credit card account with your wife, and your wife died. You're still legally liable for the balanced owed, even if she was the only person who was using the card.

[DiscoPro_Joe]

Here's a very informative link:

http://debtprison.net/wordpress/247/wil ... you-abroad

[ladislav]

Many credit card companies offer forbearance and lower interest and all kinds of things. Try to negotiate with them and you can get a good deal out of them without becoming a deadbeat. I used such techniques for some 15 years ( not all the time but quite often).

If not a secret, how much money are we talking about?

[polya]

Theres so much baloney here I have to set things straigt:
1. Discoprojoe is in the USA, not some arab country. He is not under arab law.
2. In the USA failing to pay a credit card is not a crime UNLESS YOU GOT THE CARD BY DECEPTION E.G. FRAUDAULENTLY USED ANOTHER PERSON'S IDENTITY. In fact, its no more a crime than not paying your electricity bill.
3. Its normal for people under financial stress to come to an arrangement with the credit card companies - best to use a 3rd person to negotiate e.g. your mom, or a financialler counsellor.
4. The worst that will happen is Joe can come back to America and go bankrupt? So what, we are in a credit crisis, so are thousands of others.
5. We aren't living in an ideal world where everyone is perfect 100% of the time. Joe has his whole life to pay, so it no big deal he is late paying because he goes China.
6. This may sound sly, but after 6 years its impossible to collect any normal debt and your credit record is espounged of 6 year old debts unless you state in writing/verbally you owe (when the clock starts again). Its legal, but may be immoral. NB. This is in New Zealand, I'm not sure about the USA.
Feel free to criticise me and be self-righteous, but I think Joes mental health is more important than a big companies profits.

[gmm567]

I agree with Fschmidt, credit ratings are overrated. Yea, you'll have a tough time getting another credit card RIGHT NOW, but wait till the economy recovers. They'll be giving credit out to all kinds of people again.

It could affect you though if you want to start a business, but the best thing to do is to go teach in Saudia Arabia so you'll have savings to start a business.

[icarus]

6. This may sound sly, but after 6 years its impossible to collect any normal debt and your credit record is espounged of 6 year old debts unless you state in writing/verbally you owe (when the clock starts again). Its legal, but may be immoral. NB. This is in New Zealand, I'm not sure about the USA.
Feel free to criticise me and be self-righteous, but I think Joes mental health is more important than a big companies profits.

The US is slightly different. Depending on the state, the statute of limitations usually runs from 4-6 years from the time when the debtor defaults. This simply means that the creditor cannot bring an action in court to recover. They can however still attempt to collect the debt. Even after this 4-6 year period the debt may still remain on your credit report though. For this kind of debt I believe it's 7 years.

Another VERY important thing to note is that in some states (Virginia is one I believe) the debtor must affirmatively raise the statute of limitations defense. Thus, if a creditor files suit 10 years later, the debtor must show up to court to challenge it under the S.O.L. ...or...he'll be SOL.

Right now I have an old credit card debt from when I was young and dumb. The principal wasn't that much, but I got in trouble after college when I was unemployed for a while and could only scrape by with the minimum payments if even that much. I agree that people should pay their debts, but they shouldn't necessarily put their lives on hold and sacrifice their dreams for a few thousand dollars, most of which from interest and penalties. I finally decided that the longer I put off going to law school, the less my chances of ever doing so would be. I have to admit, the BS I hear from some of those debt collectors makes it a lot easier to deflect the criticisms and self-righteousness that Polya mentioned. Many of these guys- some of which barely made it through high school still spew out the same legally erroneous crap to me, even after I tell them that I'm an attorney and that they can go pound sand. But hey, at least they are more entertaining to talk with than the ones calling from India who read verbatim from a script.