Creditors and Bankruptcy/Debt in a foreign country

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Question
Dear Leon,

Thank you so much for making yourself available.

I have an outstanding balance of about $18000 on a credit card that was issued in Germany. I'm originally from Germany and live in California since 3 years back.
Last week I was contacted by a US debt collector trying to collect the money. I'm struggling with my job now I have no way of paying this debt.

My question is can they damage my credit history in US?

How far can they go since this is a debt in a foreign country?

Can they sue me?

Or should I just send them a "cease and desist' letter and not worry about it anymore?  

Thank you for your time. Please help me with this,I really appreciate it.

Regards,
Hans

Answer
Leon Bayer
Leon Bayer  
Dear Hans,

I'm sorry to hear about your hardship. I'll be able to help you with answers to your questions. And, maybe a solution.

This debt may go on your U.S. credit reports, and you may be sued for this debt in the U.S.

Your credit history is a reflection of your financial reputation. Unfortunately for you, your reputation is now a matter of international interest. U.S. banks want to know if someone has not paid debts in Germany. No one should expect to get credit from a U.S. bank if when they haven't paid a debt that is already owed somewhere else.

The reason why it will be reported here is that a foreign debt is legally collectable against any person in the United States. I would expect that the collection agency has already put this on your credit report. United States law allows a foreign entity to bring suit in the U.S. Courts against any person in the U.S. This is called "diversity jurisdiction."

Now let's talk about using a "cease and desist letter". I am no fan of cease and desist letters for people in your situation. Such a letter will not make the debt go away.

The only thing the letter can do is stop the debt collector from attempting to communicate with you. If you stop them from communicating, you leave them no choice except to sue you. Wouldn't you rather receive their phone calls than receive their lawsuit? You might want to read an article I wrote about using cease and desist letters. You can read it here: http://www.bankruptcyblogger.org/los-angeles-bankruptcy-lawyer-critisizes-cease-

Now it's time to look for a solution. We know that a foreign debt can be collected against you in America. But, that also means a foreign debt can be discharged during a bankruptcy case in America. Bankruptcy may be a valid last resort, if necessary. You should consult a bankruptcy lawyer right away. Find out if you are eligible to file bankruptcy. (A legal resident in the U.S. is eligible to file bankruptcy - but you still have to meet the same requirements as anyone else, so I want you to find out now what to expect if you file bankruptcy.)  

If a bankruptcy is feasible, then you can wait this out and see what the debt collector does. It is very rare for a credit card lawsuit to be filed in Federal court. I think there is a good liklihood they won't ever file suit, even though they could.

If you do file bankruptcy, I believe a bankruptcy discharge will protect you from this debt only in the U.S.

Good luck to you.


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Los Angeles Bankruptcy Attorney Leon Bayer

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I can answer all questions relating to debt collection, credit reporting problems, credit scores, bankruptcy, debt settlements, debt settlement scams, and dealing with debt collectors. For many years I have been one of your volunteer experts for the topic "Bankruptcy Law". I would like to receive more questions. I'm thinking that many relevant questions get asked under this catagory as well as my own. See my stats, below: Los Angeles Bankruptcy Lawyer Leon D. Bayer U.S. Available View Profile Ask A Question View Past Answers Knowledgeability9.96 Clarity of Response9.93 Politeness9.97 Response Time(hr)14.6 --Last 90 Days(hr)7.6 Total Questions1119

Experience

34 years as a practicing bankruptcy attorney, published book author on topics of bankruptcy and foreclosure. See, http://en.wikipedia.org/wiki/Leon_D._Bayer

Publications
See, http://www.nolo.com/law-authors/leon-bayer.html

Education/Credentials
BA degree, J.D., admitted to California Bar in 1979.

Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000

Past/Present Clients
Over 15,000 bankruptcy cases.

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