# Can Defaulted US Student Loans be garnished from my wages in the UK?



## mofo23 (Jul 19, 2010)

I am a US citizen who moved to the UK about three years ago to be with my husband who is a British Citizen. I plan to live in the UK permanently. I have recently been contacted by a debt collector regarding my student loans, and they said that they may attempt to garnish my wages if I do not start making payments. I just want to know if it is possible for my US student loan debt to be garnished from my wages while working here in the UK?


----------



## DavidO (May 3, 2010)

*Very unlikely!*



mofo23 said:


> I am a US citizen who moved to the UK about three years ago to be with my husband who is a British Citizen. I plan to live in the UK permanently. I have recently been contacted by a debt collector regarding my student loans, and they said that they may attempt to garnish my wages if I do not start making payments. I just want to know if it is possible for my US student loan debt to be garnished from my wages while working here in the UK?


To the best of my knowledge there is no way to enforce U.S. debts in the U.K. Nobody would have that kind of jurisdiction, especially collection agencies. I've never heard of such a thing.

To be safe though, I would recommend expert legal advice on this. Student loans are a government debt and carry some special clauses that makes them hard to hide from. But I'd still be very surprised if they can be pursued in the U.K.


----------



## Joppa (Sep 7, 2009)

DavidO said:


> To the best of my knowledge there is no way to enforce U.S. debts in the U.K. Nobody would have that kind of jurisdiction, especially collection agencies. I've never heard of such a thing.
> 
> To be safe though, I would recommend expert legal advice on this. Student loans are a government debt and carry some special clauses that makes them hard to hide from. But I'd still be very surprised if they can be pursued in the U.K.


They need UK court order for an attachment of earnings, and they are unlikely to pursue it because of the costs, and in any case no English or Welsh court will enforce payment of US taxes or fines. There is otherwise no mechanism for enforcing US judgment, government order etc in the UK. But as a US citizen you will have to file your tax return every year for life wherever you are in the world, and they can get US court judgment to seize whatever assets you have in the States, or deduct payment from any US income source.


----------



## Splinter (Feb 22, 2011)

*Can Defaulted US Student Loans be garnished from my wages in Spain?*



Joppa said:


> They need UK court order for an attachment of earnings, and they are unlikely to pursue it because of the costs, and in any case no English or Welsh court will enforce payment of US taxes or fines. There is otherwise no mechanism for enforcing US judgment, government order etc in the UK. But as a US citizen you will have to file your tax return every year for life wherever you are in the world, and they can get US court judgment to seize whatever assets you have in the States, or deduct payment from any US income source.


Just wondering the same question, but in my case I'm living and working in Spain. Could it grant a collection agency (or the US Government itself???) any kind of avenue to garnish my Spanish wages if I'm working for a Spanish company which is a subsidiary of a multi-national with presence in the USA (though not based there) ?

Thanks for any advice you can provide.


----------



## Punktlich2 (Apr 30, 2009)

Joppa said:


> They need UK court order for an attachment of earnings, and they are unlikely to pursue it because of the costs, and in any case no English or Welsh court will enforce payment of US taxes or fines. There is otherwise no mechanism for enforcing US judgment, government order etc in the UK. But as a US citizen you will have to file your tax return every year for life wherever you are in the world, and they can get US court judgment to seize whatever assets you have in the States, or deduct payment from any US income source.


Some, but not all, of the above is true: an English or Scottish or NI court order recognising and enforcing the foreign (US state or federal) judgment is needed to call in the baliffs or make one bankrupt. 

That is easy when the foreign judgment is a EU/EEA/Swiss non-tax debt (Brussels Regulation, Brussels Convention (Denmark), Lugano Convention (EEA)). It is a big deal for a US judgment.

Here's a case where a claim for unpaid Canadian student loan debt was sought enforcement in county court in Queens, NY but the clever judge refused on the grounds that the file showed the kind of fraudulent and forged documents that we've become used to lately in foreclosure proceedings: the process servers in Saskatchewan and in Queens both seem to have lied when they swore they made personal service, and default judgments were sought in both cases: Att-Gen of Canada v. Gorman (Enforcement in Queens denied)

Note that a student loan debt is not a public-law debt like a tax claim and Lord Mansfield's Dictum (on non-enforcement of such claims) does not apply.

Whether US student loan debts are dischargeable in bankruptcy in England even though they would not be in the USA is an unanswered question. See two contradictory, conflicting Canadian cases: In Re Bialek, 25 C.B.R. (3d) 271 (S.C. Ont.) and Re Taylor (Any discharged obtained in England would not prevent future enforcement of such a US claim against assets in the USA, say a future inheritance. Issues of statute of limitations may or may not apply.

For the rest: _There is otherwise no mechanism for enforcing US judgment, government order etc in the UK._ is simply wrong. There have been hundreds of US judgments, including many in favor of the US Government, enforced in Britain. But no tax judgments, except that if a person is made bankrupt for debts that include both foreign taxes or public-law claims and other, enforceable, debts those foreign tax debts might possibly be paid at least in part as a dividend of the bankruptcy proceeding. Or see this VAT fraud case: "Bullen v Her Majesty's Government of the United Kingdom 553 So 2d 1344 (Fla App 4th Dist 1989) (petition for review denied) 567 So 2d 434 (S Ct Fla 1990); enforcing judgment of proceeding reported at R v Garner [1986] 1 WLR 73. In the Florida proceeding there was no recourse by the defendant to US bankruptcy law." (This is the opposite of the case considered here: a UK public law debt indirectly enforced in Florida.) http://www.uniset.ca/lloydata/553So2d1344.txt )

To answer your question: it's surprising and unfortunate that a debt collector seems to have found you in Britain. But if s/he calls again say that you have had advice from counsel and that s/he is not licensed in the UK, that you refuse to talk to him or her, that you maintain your rights under the US Fair Debt Collection Act, and that you deny owing any money, that the original claim is fraudulent. (You don't need to give any reason, but if you studied at one of those profit-making schools and never learned anything, you should know that Kaplan University (Washington Post Co.) and all those truck-driving, medical-billing, health-care and other fake schools are now under investigation.) And tell them not to call again. More than likely they are blowing smoke and mirrors.

Avoid having assets in the USA, except that you should make sure that you have, in due course, 40 quarters of coverage for Social Security and Medicare. Social Security can't be garnished anyway; and one hopes by the time you are 65-69 the student loan debt collectors won't still be after you. (If you don't quite have 40 quarters yet, you can claim self-employment on Sched. C and SE for the minimum amount of earnings needed: http://www.ssa.gov/oact/cola/QC.html even though potentially exempt under the US-UK Totalization Agreement. By and large the credits are a bargain.)


----------



## Joppa (Sep 7, 2009)

With all due respect to Punktlich2's legal and financial expertise, the OP need not worry. It's most unlikely you will be made to pay your US student debt from your UK income.


----------



## Punktlich2 (Apr 30, 2009)

Joppa said:


> With all due respect to Punktlich2's legal and financial expertise, the OP need not worry. It's most unlikely you will be made to pay your US student debt from your UK income.


I agree. But the points I made (and this is something in which I have professional expertise and licences) needed to be made: the OP is not free of the debt, which will follow the OP forever in the USA and could theoretically (if sold to a speculator-debt collector in the USA) be made the object of a US judgment sued upon in the UK.

US debts are often sold for pennies in the dollar. At that point, a clever buyer can afford to pursue the debtor in England. 

Sir Lawrence Collins, now a Supreme Court judge in England, edits the definitive work on Conflict of Laws. Hundreds of pages there are devoted to this subject. Foreign non-tax, non-fine judgments are easily enforced (in fact, within Europe some tax and some criminal fines could be enforced, and there are moves to make this even easier: there's one seemingly unused treaty on enforcement of traffic fines but the UK isn't a signatory).

One should be aware that a decade or more in the future a creditor could come calling. It is possible to ring-fence assets to protect against that, and (in England) to make property (houses) invisible, buy titling them in the name of a trustee. If the unpaid student loan is (as is often the case) many thousands of dollars or even hundreds of thousands of dollars, not dischargeable in bankruptcy in the USA, then the OP should be especially careful. Creditors often sue in the UK on US judgments for, say, $10,000.


----------



## Joppa (Sep 7, 2009)

Punktlich2 said:


> I agree. But the points I made (and this is something in which I have professional expertise and licences) needed to be made: the OP is not free of the debt, which will follow the OP forever in the USA and could theoretically (if sold to a speculator-debt collector in the USA) be made the object of a US judgment sued upon in the UK.
> 
> US debts are often sold for pennies in the dollar. At that point, a clever buyer can afford to pursue the debtor in England.
> 
> ...


Your details only serve to confuse and frighten the OP. I'd say the chance of any of what you've written happening to OP I should say is close to zero.


----------



## Splinter (Feb 22, 2011)

Hi Joppa, Have you heard anything about US debt following expats in Spain? I know it's not exactly the topic of this thread...just in case you've heard anything about this during your time in España?


----------



## Joppa (Sep 7, 2009)

Splinter said:


> Hi Joppa, Have you heard anything about US debt following expats in Spain? I know it's not exactly the topic of this thread...just in case you've heard anything about this during your time in España?


I'd imagine it's the same as in UK, though that depends on the amount of your debt, how you incurred it and persistence of the creditor or debt collection agency.


----------



## Punktlich2 (Apr 30, 2009)

Joppa said:


> Your details only serve to confuse and frighten the OP. I'd say the chance of any of what you've written happening to OP I should say is close to zero.


OK. I'm a practising attorney, a member of the NY Bar with a doctorate in European law. My daughter is an English barrister. I see this kind of issue litigated all the time. It all depends on whether the creditor or the successor to the creditor sees English litigation as worthwhile. Usually she doesn't. But the situation changes over time, and there is no doubt that an American judgment (repeat: judgment, not claim) can be enforced in England. Or, to answer a subsequent query, Spain.

You will not be allowed to interpose a substantive defence to an enforcement of judgment case.

It is true that the UK was convinced (by Lloyd's of London, no less) to abandon a negotiated mutual enforcement of judgments treaty with the USA in the 1970s. Funnily enough, Lloyd's later sought and obtained enforcement of dozens, maybe hundreds, of English judgments against their investors in the 1990s and 2000s: http://uniset.ca/lloyds

To fail to warn a client, even a nonpaying inquirer, of future risk is malpractice. Without seeing the original loan documents for the US student loan I can only assume there is a choice of forum clause allowing suit in a US state even if the borrower lives in England. I know (as a former bankruptcy lawyer) how such debts can cascade from tens of thousands of dollars into hundreds of thousands, which can then be reduced to judgment and sued upon in England.

I assume you are an English solicitor. It is clear that you have not, however, had the exposure I have had to vicious debt collectors who buy claims for pennies on the dollar and are willing to take risks to make profits.

But then I'm retired now, living in Europe. Perhaps these debt collectors have found Jesus and are turning the other cheek now.


----------



## shahalp (Mar 8, 2011)

hi punktlich,

i am very interested in your posts on this topic. let me ask, how safe are the assets accumulated in the UK or Australia from the debt collectors trying to recoup defaulted student loans?

thanks.


----------



## Crawford (Jan 23, 2011)

Why don't you just pay off your debts like any moral and honest person would? 

You were provided the loans in good faith ( in the case of student loans out of tax payers money) and presumably you benefited from them. Student loans are usually very low interest and you have ample time in which to pay them back.

Just walking away from them is wrong.

...... and in the US your student loans stay on your record for ever. There is a recent case here of a guy having his Social Security garnished because of non-payment of his loans. He went to court to appeal and he lost.


----------



## izzysmum04 (Nov 26, 2007)

Crawford said:


> Why don't you just pay off your debts like any moral and honest person would?
> 
> You were provided the loans in good faith ( in the case of student loans out of tax payers money) and presumably you benefited from them. Student loans are usually very low interest and you have ample time in which to pay them back.
> 
> Just walking away from them is wrong.


*Absolutely agree with this! I am almost 42 and still pay on my school loans, even though living in the UK for the past 7 years. I would love to just run away from it and forget, but know it is not the right and honest thing to do. My conscience wouldn't allow me to just "forget" about paying on it anyway. Believe me...we don't have a lot of money...hubby is the only wage we have coming in, and we have 2 children to boot! Every school loan person I have spoken with have been very kind in working with me. If we have problems paying on it due to hardship, they allow me to forebear on it for a month...or for however long I need. I do all of this online, including requesting a forebearance, and it is easy peasy! If you just show that you are willing to make an effort to pay back at least a little something, they will return the favour and work with you. So instead of running from it, why not do the right thing?*


----------



## stormgal (Sep 30, 2009)

Crawford said:


> ...... and in the US your student loans stay on your record for ever. There is a recent case here of a guy having his Social Security garnished because of non-payment of his loans. He went to court to appeal and he lost.



That's true, but I think that recent rules were made where a student loan is forgiven after ten years if the person works in public service or so. I think that for everybody else, the student loan is forgiven after 20 years  

I highly doubt that a collection agency will go international to collect a debt. Believe me, these people have other "in house" fish to fry where they can make thousands, instead of having to spend all sorts of money chasing people overseas.

It all depends on the type of loan you took out. For instance, was the loan federal , or private?? If you have taken out a federal loan, or gone by way of FASFA - then it wouldn't surprise me if the IRS comes after you. As an American, you still have to file taxes overseas. I think there's a section on the tax returns where you have to report the interest you paid on the loan.


----------



## mrpaulman (Jun 2, 2011)

*not paying of UK loan?*

I am in a similar situation, I am from the UK and SLC are contacting me for 172 GBP a month and my loan is in arrears of 350 GBP. I cannot pay this off, I have car loans, a house etc etc. What can SLC do? Would they ever expect me to go to court? 
I could start paying it back in January, but cannot clear the arrears in one hit. Does anyone have any advice? Should I pay it? Will they find me when I enter the county? Will becoming a U.S citizen help? 
Ideas….thought?


----------



## Joppa (Sep 7, 2009)

mrpaulman said:


> I am in a similar situation, I am from the UK and SLC are contacting me for 172 GBP a month and my loan is in arrears of 350 GBP. I cannot pay this off, I have car loans, a house etc etc. What can SLC do? Would they ever expect me to go to court?
> I could start paying it back in January, but cannot clear the arrears in one hit. Does anyone have any advice? Should I pay it? Will they find me when I enter the county? Will becoming a U.S citizen help?
> Ideas….thought?


AFAIK, UK student loan doesn't affect your credit standing, and you cannot be compelled to pay by court order, like a fine or tax. UK government is thinking about changing the status of student loans to make them enforceable, but nothing has been decided yet. If you are working in UK, they can contact your employer through HMRC and deduct repayment through your pay, but they cannot do that while you are outside UK. Becoming a US citizen doesn't change anything. You are still liable to pay your outstanding loans, and since you haven't kept up repayment, the debt will not be written off, after 25 years or when you reach 65, depending on when you took out the loans.


----------



## enigma56 (Nov 3, 2011)

*US Student Loans*

Im wondering if they could garnish my wages in NewZealand for student loans incurred the USA?


----------



## daitmul (Apr 4, 2012)

Hello
Very interesting facts etc you are raising and it is something that I am interest in. My story is as follows.

I lived in the states for 10 years and during that time I attend the University of Phoenix and secured a student load for that. I moved back to Ireland 7 years ago and prior to moving back I topped up a bank account so that student loan repayment were made every month. But unfortunatly that account with Wells Fargo ran dry and that was a couple of years ago. I am married to a US citizen and both of us now live in IReland - I do not have citizenship. The thing is that a company called NCO (debt collector) called my in-laws in florida recently looking for me - not sure how they got my in-laws contact number. My mother in-law did not give them any information but got their number.

I called that number last night and I found out that the student loan now stands at $33k and they are looking to payments. As I am residing in Ireland they are going to send me out paperwork to my irish address. Over the phone the person mentioned that they would require the following

1) $1,000 downpayment with $275 monthly payments for 9 months
2) After that my loan will be passed onto another lender and I would be able to re-negioiate another payment plan
3) They want to know where I worked and I refused to give them that information

Reading your thread on the profit-education (Kaplan) I googled and it looks like that University of Phoenix falls into to profit-for-education category also. Some interesting articles on that topic

My current situation is not great, I work fulltime, and my wife part time and we have 3 kids to feed so as you can imagine it is though

So my questions are

1) Am I legally entitled to tell to go away and if I do would chase my in-laws
2) As I live in Ireland can they come after me for payment
3) I could possibly afford to pay them $100-$150 a month, do you know would they accept 
4) Is there a statute of limitations for student loans in California

Appreicate any feedback as I am getting really scared and worried about this


Regards


----------



## usa2france (Sep 22, 2013)

*Same situation living in France*



mofo23 said:


> I am a US citizen who moved to the UK about three years ago to be with my husband who is a British Citizen. I plan to live in the UK permanently. I have recently been contacted by a debt collector regarding my student loans, and they said that they may attempt to garnish my wages if I do not start making payments. I just want to know if it is possible for my US student loan debt to be garnished from my wages while working here in the UK?




What are debt collector options for persons living in France? Is there a precedent for taking action? Could I be prosecuted when I periodically return to the states for being in default AND for NOT declaring a TAX Return for the last 20 years (Didn't know it was the law AND this is where I now live PERMANTLY!)?


----------



## gdbulles (Sep 12, 2014)

*Also problem in France*



usa2france said:


> What are debt collector options for persons living in France? Is there a precedent for taking action? Could I be prosecuted when I periodically return to the states for being in default AND for NOT declaring a TAX Return for the last 20 years (Didn't know it was the law AND this is where I now live PERMANTLY!)?


Hi! I am a dual citizen (US/France) and I live and work in France; I am a civil servant here. I've recently been contacted by a bill collector about a defaulted student loan. Have you had any further information on what to do, rights, how the French government handles/handled it (if it even came to that?
Merci beaucoup!


----------



## Crawford (Jan 23, 2011)

The US authorities are unlikely to get anything out of you while you are in France, however, student loans are never deferred and if an when you get Social Security from the US it WILL be garnished from that.

Why don't you just pay your bills.


----------

