In 2002, my finances got really bad and I defaulted on my Stafford loan with $40 K due.

I'm not a U.S. citizen and am no longer a U.S. resident either. Since I live in South America, I really don't care about my FICO score and any kind of collection effort seems unlikely to be succesful.

However, I got a call at work from Allied Interstate the other day. They had somehow managed to find out I work for a local subsidiary of a large U.S. corporation. They threatened to garnish my wages through my corporate headquarters before I hung up on them. I know they can't garnish my wages since I am employed by a local company and this country's law forbids wage garnishments without an order from a local court.

I'm concerned they will contact my headquarters in the U.S. and spoil my reputation. Considering I'm not employed by the U.S. corporation, can they still contact them and tell them about my student loan debt?

Do Collection Agencies ever sue people in courts in other countries? Do they ever serve them in other countries in order to sue them in U.S. courts and then have the ruling hold up in the foreign country's local courts? I know that technically it can be done and I know how it would have to be done in each case. The local courts probably won't accept the No Statute of Limitations issue, but you never know.

Although, depending on the answers to the above question, I might be able to run forever, I eventually want to pay the defaulted loan. Since they haven't collected a penny in over 6 years and any future collections will be difficult at best, I'm in a position to negotiate a good settlement. I need advice on how to do this. I understand that after 7 years, it goes back to the Department of Education, right? Would it be better to settle with the Collection Agency or the Department of Education? I read somewhere that if you settle with the Collection Agency, you will still owe the Department of Education. Is that so? If so, how do you settle with the Department?

I've called many lawyers to ask these same questions. Most were completely clueless about student loan issues and where of no help. Does anyone know who I might talk to for information on these specific questions?

That story is the perfect example of why I believe students with only a green card should be denied federal aid, IMHO.

I would call or write the Dept of Education and see what settlement terms you can come to. I doubt Allied is sophisticated enough to sue you in a foreign court but that doesn't mean that the Dept of Education won't sick the US Attorney's office at Dept of Justice on you. If Allied found you + your employer, just think of what the DOJ will have at their disposal.

The student loans are one issue, you didn't mention if you still valued your green card.

If you're interested in U.S. immigration issues, I can give you plenty of more important things to worry about than one guy who hasn't paid his student loan.

Regarding the student loan, I guess the real question is how to negotiate a settlement. Would I get a better deal with the Collection Agency or the Department of Education?

Sure, they could send garnishment papers to your headquarters. It would pretty well spell out that you skipped out on your loans. IMHO, they are not spoiling your reputation......you already did that. Your headquarters will probably deny them but by then the damage is done. And each time a new CA is assigned the account, the same garnishment order could be sent.


Could they sue you in your country? You bet they could.