The debt for a payday loan (sometimes also called cash advance loans) and other short-term loans exists regardless of where you live. The obligation to repay the debt does not disappear when a person leaves the country. If you miss a loan payment, you will likely incur fees and penalties on your debt. A lender may or may not try to collect this debt depending on the existence of collateral or co-signers and the borrower’s location.
Loans Will Continue to Accrue Interest and Fees
The effective annual percentage rate (APR) on payday and other short-term loans is far greater than most other forms of debt, such as credit card debt. Payday loans often have an effective APR of 400% to 600% or higher. By comparison, APRs on credit cards can range from about 12% to 30%. Some states have rules related to how much interest a payday lender can charge; however, other states, such as Texas, allow payday lenders to charge unlimited interest and fees for nonpayment.
The Lender May Seek to Recover the Unpaid Debt
Debt collectors have a limited time during which they can sue debtors for nonpayment (see 7.5 It May Not Be Legal for the Debt to Be Collected). If a lender sues you in a United States court and wins a favorable judgment against you (which can happen even without you present, in which case it is called a “default judgment”), it will only be able to enforce the judgment in a country outside of the United States if that country has an agreement with the United States that U.S. judgments are enforceable in that country.