Moving to a new country is a significant decision, often accompanied by questions and concerns. One such concern is whether your US debt will follow you to Canada. This article will delve into this topic, offering a comprehensive analysis.
1. Cross-Border Financial Obligations
Let’s begin by understanding the concept of cross-border financial obligations. Many people, especially those living in border towns or those who have attended school or worked in the US, may have accrued debt.
1.1. The Debt Trail
The question that arises is, Does US debt follow you to Canada? The short answer is no, your credit history usually doesn’t automatically transfer when you move countries. However, if you have income or assets in the US, the collection process for your debt may commence there.
2. Pursuing Debt Across Borders
The process of collecting debt across international borders is not straightforward.
2.1. Collection Calls and Legal Action
If you default on an American debt while residing in Canada, the initial step your US creditor will likely take is to begin collection calls. However, pursuing legal action against you across the border can be costly for them.
2.2. Legal Hurdles in Cross-Border Debt Collection
To legally collect debt from you in Canada, your American creditor would need to obtain a judgement in the US and then take that judgement to a Canadian court. This process is time-consuming and expensive, making it unlikely for creditors to pursue smaller debts.
3. Bankruptcy Across Borders
Understanding how bankruptcy works when moving from the US to Canada is crucial.
3.1. Filing for Bankruptcy
In Canada, a Licensed Insolvency Trustee can only file bankruptcy or a consumer proposal in Canada. Similarly, a US bankruptcy lawyer can only file bankruptcy in a US court.
3.2. Including US Debts in Canadian Bankruptcy
If you have significant debt in the US and are moving to Canada, it may be beneficial to include your US debts in a Canadian bankruptcy or consumer proposal.
3.3. Protection from Creditors
Filing for bankruptcy in Canada provides you with a stay of proceedings, which protects you from creditors in both Canada and the US. However, if you have income or assets in the US, your American creditors can still pursue you there.
4. Credit History and Moving Countries
When you move to Canada, your US credit history doesn’t automatically transfer.
4.1. Separate Credit Systems
Both countries have separate credit reporting systems with their own rules. This means that credit information isn’t shared across the border.
4.2. Creating a Credit History in Canada
As a result, you’ll need to create a new credit history in Canada aligned with Canadian credit bureaus. If you have a good credit score in the US, it could be beneficial to create a copy of your US credit reports to show to potential Canadian lenders.
5. Establishing Credit in Canada
Moving to Canada without a credit history means you’ll need to start from scratch.
5.1. Transferring US Bank Accounts to Canada
If your US bank operates in Canada and you have a good credit history, they may be able to transfer your account.
5.2. Secured Credit Cards
Secured credit cards can be a good option for you if you’re finding it hard to get approved for a regular credit card.
5.3. Co-signing and Authorized Users
Having a family member or loved one co-sign your account, or becoming an authorized user on their credit account, can also help you establish credit history in Canada.
6. Getting Help with Debt
Dealing with cross-border debt can be complicated, and it’s important to get the right help.
6.1. Licensed Insolvency Trustees
Licensed Insolvency Trustees in Canada can help you navigate the intricacies of dealing with US debt.
6.2. Free Consultations
Many Licensed Insolvency Trustees offer free consultations. This can help you gain an understanding of your options.
Conclusion
In conclusion, while US debt doesn’t automatically follow you to Canada, there are scenarios where you could still be pursued for repayment. Understanding your financial obligations before moving can save you a lot of stress. If you’re unsure, consider consulting with a financial advisor or Licensed Insolvency Trustee.
