Moved to Europe… stuck with US debt and running out of options

Debt Management
1

I moved to Europe seven years ago and still have a pile of debt from before and after the move. Here’s what I’m dealing with:

  • $36k in credit card debt (Chase, Amex, Wells Fargo, Citi)
  • $50k in student loans
  • $50k left on a mortgage for a house in Michigan

I already took out consolidation loans, but then I maxed out my cards again. On top of that, I have $80k in loans here in Europe with about 5% interest.

I have around $160k in my US 401(k) and $120k in my European pension. Most likely, I’ll be working another 34 years to qualify for a full state pension.

Chapter 7 isn’t an option because of the house—I have too much equity, and I don’t want to risk losing it. My mom lives there, and I promised she wouldn’t have to move unless she couldn’t live on her own anymore. A lawyer suggested taking out a second mortgage or transferring the house to her, but both options feel risky.

Some people in expat groups have said I should just stop paying my credit cards, let them default, and wait for the statute of limitations to kick in since I’m overseas. I’m tired of juggling all these payments, but I don’t know if that’s really the best route. Before moving, I was making enough to stay on top of things, but my income is way lower now because of job market differences and cost of living.

I’m in therapy for a shopping addiction (and other things), and my partner and I have put safeguards in place so I don’t rack up more debt. But getting out of this hole feels impossible, and I don’t want to ask my partner to bail me out.

Anyone have ideas?

2

You could just stop paying and let it default, but that’s a big risk. If the house is in your name, they might come after it.

3

Winslow said:
You could just stop paying and let it default, but that’s a big risk. If the house is in your name, they might come after it.

That’s what I’m worried about. If I can hold off a few years and get my mom to move in with us, I’d sell the house. But I don’t know if I can keep making these payments that long.

4

That’s a lot to keep up with for another couple of years. If you default, it might take a while, but they will come for the house. Selling might be the best way to avoid that, even though it’s tough with your mom living there.

5

It’s good you’re going to therapy for this. Does your mom know everything about your financial situation?

6

Chen said:
It’s good you’re going to therapy for this. Does your mom know everything about your financial situation?

Yeah, she knows. She doesn’t seem to think it’s that bad and thinks I should just keep moving balances around with transfers.

7

Try calling a credit counseling service. They can help work out a plan with your creditors, and some will even get them to drop interest charges.

8

How old are you? That’s a pretty solid amount saved in your 401(k).

9

Cameron said:
How old are you? That’s a pretty solid amount saved in your 401(k).

I’m 40, but it feels like I’ve been dealing with this forever.

10

If your debt is in the US and you live overseas, they probably won’t be able to collect. You could just stop paying and wait it out, as long as you stay in Europe.

11

Harlow said:
If your debt is in the US and you live overseas, they probably won’t be able to collect. You could just stop paying and wait it out, as long as you stay in Europe.

That’s what I’d love to do, but I’m scared they’ll go after the house.

12

@Hollis
If you own property, they’ll come for it eventually. This strategy only works if you don’t own anything and don’t plan to for the next several years.

13

@Hollis
They’d have to sue you first, get a judgment, and then go after the house. If there’s still a mortgage on it, they’d have to pay that off first before getting anything from a sale. So it’s not as immediate as you might think.

14

Harlow said:
If your debt is in the US and you live overseas, they probably won’t be able to collect. You could just stop paying and wait it out, as long as you stay in Europe.

That’s not really how it works lol.

15

@Luca
Which part?

16

If you have a 401(k), why not take a loan from it? At least that way you’d be paying yourself back instead of throwing money at interest.

17

Jesse said:
If you have a 401(k), why not take a loan from it? At least that way you’d be paying yourself back instead of throwing money at interest.

I don’t work for a US company anymore, so that’s not an option. The fees would be too much. I also can’t borrow from my pension here.

18

@Hollis
If it’s an old 401(k), you’d have to roll it into an IRA before withdrawing. Just something to consider.

19

@Hollis
Are you planning to stay in Europe permanently? Why keep the house in Michigan?

20

Jesse said:
@Hollis
Are you planning to stay in Europe permanently? Why keep the house in Michigan?

Yeah, I’ll be here long term. I have Swedish citizenship and small kids. Originally, we thought we’d split time between here and the US, but then the pandemic happened. My mom offered to move in and take care of the place. She’s 76 and still independent, but she hates moving. So I’m keeping it for her.