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I moved to the US over 18 months ago and was paying existing

Resolved Question:

I moved to the US over 18 months ago and was paying existing Australian debt but due to unforeseen circumstances with my job and legal fees paid to stay in the US I stopped paying the debt.

The debt was sold to credit corp and they've been harassing me the past coie of months. They're contacting an employer I'm currently consulting for after repeatedly being told not to contact them.

They have now contacted me via email stating to pay the debt immediately and if I refuse to they will get their international agents in the US to obtain the debt from me. They said that failing to respond will result in legal proceedings and will serve on me at my current employer along with listing the debt on my US credit file.

Can they affect my US credit file and serve on me in the US for debt based in Australia.
Submitted: 1 year ago.
Category: Australia Law
Expert:  replied 1 year ago.
Hello and thank you for your question.

It is possible to pursue debts incurred in Australia in many overseas countries, and this includes the United States. However, whilst many countries have reciprocal debt recovery arrangements whereby the countries will in fact take action to enforce a judgment of a foreign court, the United States and Australia do not have such a treaty. This means that for an Australian creditor to pursue a claim they would have to obtain an order for payment from a US court, and may be able to raise defences to the claim which may not be available in Australia.

So in practice this means that your liability for the debt will be subject to US laws and the creditor would essentially have to incur considerable legal costs (the legal costs of pursuing debts in foreign countries is notoriously expensive since lawyers in both countries are usually required to prepare a case) which means that creditors often do not pursue such action unless the debt is very substantial, and most commercial lenders will be more willing to negotiate a compromise repayment arrangement than they would if the debt were local.

It is also possible, depending on the nature of the debt, that US law won't recognise it (our laws are quite similar but if your debt arose in something other than commercial or ordinary domestic circumstances it is theoretically possible that the US courts would not recognise it, though you would need to consult a US attorney about that possibility).

If they did take legal action in the US and assuming they are successful, then then how they can recover the money will again depend on local laws which only a US lawyer can advise you definitively on, however, I would expect they would have similar processes to those in Australia which likely include such enforcement steps as garnisheeing your wages directly from your employer, or seizing funds directly from your bank accounts.

I appreciate the above is not the answer you were necessarily hoping for, but I trust the above assists your understanding of your legal situation, and will help you decide whether to try to negotiate some compromise arrangement with the creditor.

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Thank you and good luck.

Patrick
Patrick H., Lawyer
Category: Australia Law
Satisfied Customers: 4625
Experience: Dip Law LPAB - Sydney based lawyer
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