Founding Attorney
Arriving in a new country can be an overwhelming experience–with new rules, customs, money, and sometimes even a new language. It’s understandable that an immigrant may need some assistance in getting their financial house in order. Whether you are just starting out, or have found yourself in some financial trouble, our Massachusetts bankruptcy attorneys are here with some financial tips for immigrants.
Building a Strong Financial Foundation
For immigrants, as well as U.S. citizens, there are three fundamental steps in ensuring a strong financial foundation.
Budgeting 101
The most critical financial advice we can give is this: create a budget and stick to it. A budget can be as simple as tracking income and expenses (like rent, utilities, and groceries) on paper or using a free or low-cost budgeting app like Mint or Monarch. The key is to understand how much money you have coming in and how much you are spending.
Create an Emergency Fund
It’s always a smart move to set aside money for unexpected events like car repairs or medical emergencies. Even if your income is low, setting aside $10-$20 from each paycheck can add up and make a big difference over time.
Build Credit
In the U.S., a good credit score can help you rent an apartment, get a loan, and can sometimes even help you get a job. The best way to build a good credit score is to:
- Open a secured credit card with your bank.
- Ask your landlord to report your rent payments to credit bureaus like TransUnion, Equifax, and Experian.
- Pay your bills on time.
These simple steps can help you build a solid financial foundation and open up more opportunities for you in the future.
Avoiding Debt Mistakes
While building a good credit score may sound easy, it can be just as easy to become overwhelmed with debt–even with careful planning and the best intentions. Here are some common mistakes people make when trying to build credit:
- Getting saddled with high-interest debt (like payday loans, which often have a 400% interest rate). Instead, explore lower-interest personal loans from credit unions or assistance from local nonprofits if you are experiencing temporary financial difficulties.
- Not knowing when they are in true financial trouble. For example, if you are using credit cards to pay for everyday necessities or are falling behind on your bills, it may be time to get help.
If you are becoming stressed out by your level of debt or are getting collection calls from creditors, it’s a good idea to talk with a free financial credit counselor in your area.
What About Bankruptcy for Immigrants?
If you find yourself overwhelmed by bills and aren’t able to make ends meet, bankruptcy may be an option for you. For individuals and couples, there are two primary types of bankruptcy in Massachusetts: Chapter 7 and Chapter 13. Both can help relieve some of you financial stress, but there are some key differences. Let’s take a look.
Chapter 7 Bankruptcy
This type of bankruptcy generally allows you to get rid of all of your debt–you essentially get to start over with a clean slate. Chapter 7 bankruptcy requires you to pass what’s called a “means test” to see if you qualify, and you may have to liquidate some of your non-essential assets to repay creditors. This option is designed for people with little to no disposable income.
Chapter 13 Bankruptcy
For those with a steady income and who want to keep their property, Chapter 13 bankruptcy allows them to set up a repayment plan with their creditors to repay their debts over a period of three to five years. While not offering a “clean slate,” this type of bankruptcy will stop foreclosures and wage garnishments.
Does Bankruptcy Affect Immigration Status?
Immigration status is not directly affected by bankruptcy. With that said, bankruptcy may be used as evidence of financial instability or poor moral character for certain types of visas. If you are an immigrant considering bankruptcy, it is wise to speak with an immigration lawyer, in addition to a bankruptcy lawyer, to address your specific situation.
Taking the Next Step
At Logan A. Weinkauf P.C., we specialize in helping immigrants and other Massachusetts residents navigate financial challenges. Whether you’re exploring bankruptcy or looking for other solutions, we’re here to guide you every step of the way.Take the first step toward financial peace of mind. Contact us today for a free consultation to discuss your options.