Foreign debt collection in the USA works through one of three routes into a U.S. court: asking a court to recognize a judgment you already won abroad, filing a brand-new lawsuit against the debtor here, or confirming an international arbitration award. Once you have a U.S. judgment in hand, you can use domestic enforcement tools—wage garnishment, bank levies, property liens—to actually collect. The catch is that each route has its own jurisdictional requirements, its own deadlines, and its own procedural traps, and U.S. consumer protection and tax rules apply to the collection whether the creditor knows about them or not.
The Three Paths Into a U.S. Court
Which path fits depends on what you already have.
Recognizing a Foreign Judgment
If you won a money judgment in your home country, you generally don’t have to relitigate the case. A U.S. court can “recognize” the foreign judgment, converting it into a domestic judgment enforceable against the debtor’s U.S. assets. Recognition is governed by state law, not federal law. Twenty-nine states and the District of Columbia follow the 2005 Uniform Foreign-Country Money Judgments Recognition Act; a handful still use the older 1962 version; the rest rely on common law principles, including comity.1Federal Judicial Center. Recognition and Enforcement of Foreign Judgments
To qualify, the foreign judgment must be final, conclusive, and enforceable in the country where it was issued, and it must grant or deny a sum of money. U.S. courts won’t recognize foreign orders that only require someone to do or stop doing something. A pending appeal abroad doesn’t automatically disqualify the judgment, but the judgment has to be one the foreign court would itself enforce.
A U.S. court must refuse recognition if the foreign court system doesn’t provide impartial tribunals and basic procedural fairness, if the foreign court lacked personal jurisdiction over the debtor, or if it lacked subject matter jurisdiction over the dispute.2Maine State Legislature. Uniform Foreign-Country Money Judgments Recognition Act Those are mandatory grounds. Beyond them, courts have discretion to refuse recognition for fraud in the foreign proceedings, conflict with another valid judgment, violation of an agreement to arbitrate or litigate elsewhere, or a judgment that offends U.S. public policy. Punitive damages of a kind the enforcing state doesn’t recognize can be carved out on public policy grounds.3U.S. Department of State. Note on the Recognition and Enforcement of Decisions in the Perspective of a Double Convention With Special Regard to Foreign Judgments Awarding Punitive or Excessive Damages
A few states still weigh reciprocity, meaning creditors from countries that routinely ignore U.S. judgments may face resistance in those jurisdictions. Most states that adopted the uniform acts have moved past the reciprocity test the Supreme Court set out in Hilton v. Guyot.4Justia U.S. Supreme Court. Hilton v Guyot, 159 US 113 (1895)
Filing a New Lawsuit
When there’s no foreign judgment, or when the judgment is unlikely to survive recognition, the creditor can file an original lawsuit in the U.S. That means drafting a complaint, serving the debtor, going through discovery, and taking the case to trial if it doesn’t settle.
Serving a debtor who is inside the U.S. follows standard domestic rules. If documents have to cross international borders, the Hague Service Convention governs how it’s done. The Convention currently has 84 contracting parties, each with a designated Central Authority that receives service requests.5Department of State. Service of Process The process works but is slow, often several months, and paperwork errors can void the service.
Foreign creditors litigating in U.S. courts often find American discovery strikingly broad. Each side can demand documents, written answers to questions, and live depositions from the opposing party and from third parties. That breadth helps build cases and drives up costs at the same time. Discovery disputes are among the most common reasons international debt cases stretch out.
Confirming an International Arbitration Award
If the underlying contract had an arbitration clause and the dispute was resolved through international arbitration, confirming the award in a U.S. court is usually the cleanest path. The United States is a party to the New York Convention, and federal courts have jurisdiction over actions to confirm Convention awards regardless of the amount in dispute. The court must confirm unless the opposing party proves narrow grounds for refusal, such as lack of proper notice, the panel exceeding its authority, or an award that violates U.S. public policy. The petition must be filed within three years of when the award was made.6Office of the Law Revision Counsel. 9 USC Chapter 2 – Convention on the Recognition and Enforcement of Foreign Arbitral Awards Because the grounds for refusing confirmation are so narrow, arbitration awards tend to move through U.S. courts faster and more predictably than foreign court judgments.
Getting a U.S. Court to Hear the Case
All three paths require a U.S. court with authority to act. That means two separate showings: personal jurisdiction over the debtor and subject matter jurisdiction over the dispute.
Personal jurisdiction depends on the debtor’s connection to the state where the case is filed. If the debtor lives there, jurisdiction is straightforward. If not, the court can still assert jurisdiction based on the debtor’s business dealings, contracts, or significant ties within the state. The standard comes from the Supreme Court’s 1945 decision in International Shoe Co. v. Washington: the debtor must have “purposefully availed” themselves of the privilege of doing business in that state so that being sued there is fair.7Cornell Law Institute. Minimum Contact Requirements for Personal Jurisdiction A debtor with no ties to a state generally can’t be pulled into its courts.
Subject matter jurisdiction decides federal versus state court. Federal courts can hear cases between a U.S. citizen and a foreign citizen when the amount at stake exceeds $75,000, which is called diversity jurisdiction.8Office of the Law Revision Counsel. 28 USC 1332 – Diversity of Citizenship; Amount in Controversy; Costs Federal court offers uniform procedural rules that can simplify complex cross-border cases. Below the threshold, state court is the venue, with procedures and timelines that vary widely by state. Confirming a New York Convention arbitration award is an exception to the amount-in-controversy rule.
Deadlines That Kill a Claim
Every debt has a clock running on it. Miss the deadline and the right to sue disappears, even if the debt is legitimate.
For a fresh lawsuit on a written contract, limitation periods across the states range from three years to ten, with most falling between four and six. The clock can pause—”tolling”—if the debtor leaves the state or conceals their location. Some states restart the clock entirely if the debtor makes a partial payment or acknowledges the debt in writing, which is a trap for debtors who don’t realize a small goodwill payment resets everything.9Consumer Financial Protection Bureau. Can Debt Collectors Collect a Debt Thats Several Years Old?
Foreign creditors face an added complication: borrowing statutes. Many states allow their courts to apply the shorter limitation period from the jurisdiction where the debt originated. If a claim has already expired at home, a U.S. court won’t revive it just because the American window is longer. Check both deadlines; the shorter one may control.
Recognition of a foreign judgment has its own deadline. Under the 2005 uniform act, the creditor must seek recognition before the earlier of two dates: when the judgment is no longer enforceable in the country of origin, or 15 years from when the judgment took effect there. Confirmation of a New York Convention arbitration award must happen within three years of the award.
Collecting Once You Have a Judgment
A U.S. judgment doesn’t collect itself. The creditor still has to find the debtor’s assets and use legal mechanisms to reach them.
Finding the Assets
Post-judgment discovery lets creditors force the debtor to disclose their financial situation. Subpoenas for bank records, orders requiring the debtor to appear and answer questions about assets under oath, and document demands covering income, property, and account balances are all standard tools. This stage is where foreign creditors often discover the debtor has less than expected, or that assets are titled in ways that complicate seizure.
Garnishment, Levies, and Liens
Wage garnishment directs the debtor’s employer to send part of each paycheck to the creditor. Federal law caps garnishment at 25% of disposable earnings, or the amount by which weekly earnings exceed 30 times the federal minimum wage ($7.25 per hour as of 2026), whichever produces the smaller garnishment.10Office of the Law Revision Counsel. 15 USC 1673 – Restriction on Garnishment11U.S. Department of Labor. State Minimum Wage Laws At $7.25 per hour, weekly earnings up to $217.50 are fully protected. Some states impose tighter limits.
Bank account levies let creditors seize funds directly. A creditor obtains a court order, the sheriff or marshal serves it on the bank, and the bank freezes and turns over the funds minus any exempt amounts. Real property liens let the creditor record the judgment against the debtor’s real estate, which either forces a sale or ensures the creditor gets paid when the property eventually sells.
What the Debtor Gets to Keep
Federal exemptions shield certain property from seizure, though many states substitute their own schedules. Under the federal schedule updated in April 2025, the protected amounts include up to $31,575 in home equity, up to $5,025 in one motor vehicle, up to $800 per item and $16,850 total in household goods, up to $3,175 in tools of the trade, up to $1,711,975 in IRAs with no cap on employer-sponsored plans like 401(k)s, and a wild card of $1,675 in any property plus up to $15,800 of unused homestead exemption.12Office of the Law Revision Counsel. 11 USC 522 – Exemptions State exemptions can be dramatically more generous. A debtor in a state with an unlimited homestead exemption can shield an entire home from creditors. Know the applicable state’s exemption scheme before investing in enforcement.
Rules Foreign Creditors Overlook
FDCPA Compliance
Any U.S. collection agency or attorney a foreign creditor hires for a consumer debt must comply with the Fair Debt Collection Practices Act. The FDCPA reaches anyone whose principal business is collecting debts owed to another, or who regularly collects on behalf of others.13Federal Trade Commission. Fair Debt Collection Practices Act Text The U.S. agent is squarely covered even though the creditor sits overseas.
Calls before 8 a.m. or after 9 p.m. are prohibited. Collectors can’t threaten violence, use obscene language, or misrepresent the amount owed. Within five days of first contact, the collector must send a written validation notice with the debt amount, the creditor’s name, and the debtor’s right to dispute. Violations carry statutory damages of up to $1,000 per lawsuit, plus actual damages and attorney fees.
Two boundaries matter. The FDCPA generally doesn’t apply to original creditors collecting their own debts, but a foreign creditor collecting under a name that suggests a third-party collector is involved can be pulled under the Act. And commercial debts between businesses fall outside the FDCPA entirely; it only protects obligations incurred primarily for personal, family, or household purposes.
30% Tax Withholding
This is the issue foreign creditors most often miss. When a U.S. person pays interest or certain other income to a foreign person, the payer must generally withhold 30% for federal taxes. If collected funds include interest or penalties, that default rate applies unless a tax treaty between the creditor’s home country and the U.S. reduces it.14Internal Revenue Service. Publication 515 (2026), Withholding of Tax on Nonresident Aliens and Foreign Entities
Interest that qualifies as “portfolio interest,” broadly meaning interest on debt obligations not connected to a U.S. business, is exempt from withholding. Whether recovered funds qualify depends on the nature of the underlying obligation and the creditor’s relationship to the U.S.
The payer or collection agent acts as withholding agent and must file Form 1042-S reporting amounts paid and tax withheld, along with Form 1042 as the annual return. For 2026 payments, both forms are due by March 15, 2027. Late-filing penalties start at $60 per form and rise to $340 per form if filed after August 1 or filed incorrectly.15Internal Revenue Service. Instructions for Form 1042-S Talk to a U.S. tax professional before collection begins, not after funds are distributed.
Currency Conversion
When a debt was incurred in a foreign currency, the timing and method of converting to dollars affects the recovery. Roughly half the states have adopted the Uniform Foreign-Money Claims Act, which lets courts state judgments in the foreign currency; the debtor then pays in dollars at the exchange rate on the banking day before payment, protecting the creditor from currency swings between judgment and payment.
In states without the uniform act, courts typically apply either the “breach day” rule, converting at the rate when the debt was incurred, or the “judgment day” rule, converting at the rate when judgment is entered. Which rule applies can significantly change recovery when rates have moved. Factor conversion risk into the collection strategy from the start.
What Debtors Will Argue Back
Experienced debtors and their lawyers use every available angle.
The strongest defense is a jurisdictional attack. A debtor who can show the U.S. court lacks personal jurisdiction wins dismissal regardless of the merits, and courts take the argument seriously when contacts with the forum state are thin.
In recognition cases, debtors attack the foreign judgment itself: no jurisdiction abroad, no proper notice of the foreign proceeding, or a foreign court system that doesn’t meet basic due process standards. Those mandatory grounds put the burden on the creditor to show the foreign proceedings were fair.2Maine State Legislature. Uniform Foreign-Country Money Judgments Recognition Act
Public policy defenses surface when a foreign judgment includes elements U.S. law wouldn’t support, with excessive punitive damages the classic example. Statute of limitations defenses come up often, especially when a creditor waited years before pursuing enforcement here.
What It Costs
Foreign debt collection in the U.S. is not cheap. Court filing fees for domesticating a foreign judgment generally run between $45 and $360 depending on jurisdiction and claim size. Attorney fees are the larger expense. Many international collection attorneys work on contingency, taking 25% to 50% of what they recover, with the percentage climbing for older or harder debts. Hourly rates for international collection attorneys in major U.S. cities can exceed $500 per hour for complex cases that don’t lend themselves to contingency work.
Budget also for translation and authentication of foreign documents, process server fees, post-judgment enforcement costs like sheriff’s fees for executing levies, and expert witness fees if the case goes to trial. For smaller debts these costs can exceed the amount owed, and most experienced collection attorneys won’t take a case unless the debt is large enough to justify the expense. That economic reality is part of why foreign debt collection in the U.S. tends to involve commercial claims rather than small consumer obligations.