The banking laws of many countries permit expats to finance cars and other large ticket items. What most expats don’t realize is this: When you take out a loan in a foreign country and then fail to pay it off in full, you may end up in prison.
It has been reported to ISR that more than one expat is now serving prison time for failure to repay a loan, reporting that their banker never disclosed the severity of the consequence associated with an inability to make timely payments and/or pay in full.
If you are planning to go into debt overseas, you definitely want to have assets available from friends/family to pay off your loan should it become necessary to leave the country. Some countries won’t allow you to depart the airport unless all debts are satisfied in advance. And be aware: Selling off the car you bought to pay the loan is not an option since you cannot sell the car until the loan is satisfied. Obviously, a situation like this adds an entirely new dimension to the sense of being trapped at a school you may wish to leave.
Of course, there’s also the scenario where an expat debtor pretends to be leaving on vacation and then never returns. Although this strategy sounds viable, it’s not advisable as such debt can follow you around the world. For example: The UAE is a signatory to the Riyadh Convention and as such has the right to enforce a judgment in all other signatory nations. Furthermore, banks in Dubai have successfully sold debts to collection agencies in the UK, and the UK-based agency then successfully sued the debtors in their own country with significant collection fees added!
A “pro tip” on the Qshield web site warns that expats leaving Qatar should contact their bank 2 days in advance of departure in order to ensure a banking fee has not been levied that could result in being detained at the airport. You thought you had closed out your bank account, paid off any debts, utilitity/phone bills, etc., only to find the bank levied a minuscule fee which suddenly surfaced at departure time. Imagine being detained at the airport in Qatar for a few cents you owe your bank!
In an article entitled The Dark Side of Dubai, Karen Andrews tells how her husband’s health deteriorated while overseas and during that period debts mounted. Karen’s husband had planned to use a “pay off” he was slated to receive upon leaving his employment to satisfy his debt. But he ended up getting far less “pay off” than his contract indicated. For this he was sentenced to one year in prison and Karen is living in her car until he gets out. Not surprisingly, it has been reported that expats are found sleeping in the airport and behind the sand dunes as debtors’ prison applies not only to car loans but to local credit cards, personal loans and co-signing a loan for someone else (such as a host-national friend).
It’s never a good idea to get in over your head financially, but when moving abroad debt has a way of sneaking up on us. If you must buy a car or another expensive item overseas, it is highly recommended you take advantage of the personal loans many schools make available to their teachers. Often these loans are interest free with very manageable payments proportioned for the length of your teaching contract. At the very least, try to get your school to co-sign should you deal directly with a bank.
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