Changing your life and immigrating to the United States is a difficult task. When you come to America, you need to spend time understanding how different types of laws work for immigrants. If you are struggling with debt after immigrating, understanding a process called “debt consolidation” can help you lower the amount of money you owe. An immigration lawyer can give you information about consolidation and other ways to solve the problem.Are You Dealing With Debt After Immigration?Starting a new life in America can be expensive. You might have spent money finding a new home, searching for a new job, and paying other expenses. The good news is that if you have a large amount of debt that you cannot pay back, an immigration attorney who also knows bankruptcy law can help you. There are several ways to solve the problem, including:
- Debt consolidation
- Debt settlement
Your lawyer will take the time to understand your situation and help you decide which solution is best for you.
What Is Debt Consolidation?
Most people who are dealing with debt owe money on many different accounts. Each of the accounts requires a different monthly payment and charges a different interest rate. This process puts the accounts together so that you only need to make one payment with one interest rate.
What Are the Benefits?
Going through this process can help you control your debt and hopefully pay it back faster. Paying many accounts each month be overwhelming, and you run the risk of forgetting about some of them. When you have one monthly payment instead of many, you do not need to deal with the stress of juggling multiple accounts.After consolidating your debt, you might find that your new interest rate is lower than the average interest on all your various accounts. This means that depending on the amounts you owe for each individual account, going through this process can reduce the total amount you owe on interest.
What Is Debt Settlement?
Debt settlement is a way to actually reduce the amount of debt you have. It involves offering your creditors a lump sum of money. In return, they promise to forgive some of your debt. The lump-sum is usually handed over all at once, but in some situations, it can be paid in a few installments.
When Is Debt Settlement Right for You?
Your lawyer might recommend debt settlement if you have a significant amount of money that you can give a creditor in a single payment. It is important to understand that creditors are not obligated to settle your debt, so arriving at this deal involves negotiation. You are much more likely to be successful with this option if you approach creditors who provide you with unsecured loans, such as a hospital or a credit card company.
What Is Bankruptcy?
Filing for bankruptcy is a legal way to receive debt forgiveness. That means that you will be relieved of your obligation to pay a large portion of the debt you owe. The order goes through a court, and it can be made upon your request.Your lawyer can help you decide if it is the best option for you. Additionally, he or she can determine whether you should file for Chapter 7 or Chapter 13.
Chapter 7 Bankruptcy
If you can show that the ratio of the money you make to the money you need to spend each month is low, you might qualify for this type of bankruptcy. It can eliminate debt with no limit to the amount that is forgiven. As part of the process, you might have to sell certain things that you own in order to pay your creditors as much as you can. However, you will not need to give up your home, your car, or any other protected assets.
Chapter 13 Bankruptcy
Instead of liquidating some of your assets, Chapter 13 bankruptcy puts you on a payment plan for some of your debt. Like Chapter 7, Chapter 13 eliminates a large portion of it outright. The payment plan usually takes 3-5 years to complete.
How Does Debt Affect Your Immigration Status?
You Cannot Be Deported for Debt
Having a large amount of debt is not a valid reason for deportation from the United States. Additionally, there is no “debtors' prison”, because it is considered a civil issue rather than a criminal one.
Bankruptcy and Immigration
If you file for bankruptcy, you are not breaking any U.S. laws. Bankruptcy is a legal right that is available to all U.S. residents, including:
- Citizens who were born in other countries
- Green card holders
- Visa holders
However, after 2019, new policies made it possible for immigration officers to take your credit history into account when you are applying for a passport or a green card. That's why it is more important than ever to work with an immigration attorney to resolve your debt issues in a way that has a minimal impact on your credit.
The Public Charge Rule
You might be aware that when you are applying for a visa, the government can refuse to grant one if you might become a “public charge” while in the country. A public charge is someone who relies on government assistance for basic needs, such as food and shelter.Before the laws changed in 2019, immigrants could pursue debt strategies without fear of affecting their immigration status or any pending green card applications. Now, however, it is important to address debt issues as soon as you can, with your credit history in mind. The process to repeal these laws is underway, but for the moment they are still on the books.
Your Credit Score and Immigration
Mounting debt and missed payments can have a negative effect on your credit score. While you cannot be deported for debt, it is important to maintain healthy credit if you are planning to apply for a green card or a passport. If such an application is in your future, your lawyer will probably recommend debt consolidation as a strategy.Of all the options, consolidation has the least immediate effect on your credit history, and the result at the end of the process can be improved credit. In addition to helping you pay off your debt faster, consolidation bundles accounts that are close to their limit into one loan. That can be beneficial because the fewer accounts you have near their limit, the better your credit score tends to be.
How Can Work With an Immigration Lawyer Help With Debt?
Given the financial strain of coming to the U.S., immigration law and bankruptcy law are two areas of the legal system that frequently intersect. Working with an immigration lawyer who is familiar with debt solutions can help protect your immigration status while finding legal ways to address your problems with debt. Your lawyer can provide legal advice, help you fill out the right documents, negotiate with creditors, and represent you in court if necessary.
Get Relief From Debt
Debt is a serious problem for anyone to have. It can be especially challenging if you are already trying to navigate the legal system as an immigrant. Speaking with an immigration lawyer is the best way to get the help you need. If you would like to learn more about how you can get out of debt, contact Thomas Kerns McKnight LLP today!