More specifically, when someone takes out the highest loan amount from the bank that they can & then flees the country in order to not pay it back, what exactly happens in such cases?
In: Other
It depends on the country the debt is incurred.
For the US, loans are civil agreements between two parties. The creditor accepts that risk when they loan you the money. Fraud is only an issue if you knowingly lied or misrepresented yourself on the application. You can not be arrested in the US for unpaid debt.
If you leave the US with unpaid debt, the creditor will likely attempt to get a judgement against you. That judgement would be enforceable, possibly as asset seizure or as a wage garnishment if you work for an American company.
If you leave the US, have no American assets, and don’t work for an American company, then the judgement will sit there until it expires. The expiration varies by state; usually 4-20 years. After that, the debt is not enforceable.
Student loan debt never goes away, however foreign income would never be garnished for American student loan debt. If you claim social security benefits, a small percentage is garnished. I believe 25%.
Taxes are not debts, but legal obligations. You can go to jail for not paying that, however it would have to be a big enough amount to make it worth the IRS’s limited resources and time to prosecute you.
TLDR: if you leave the US and don’t work for an American company, nothing. Especially once the judgement expires.
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