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Obtaining a credit card has become extremely easy. Unfortunately, getting into too much credit card debt is also easy. It is important for immigrants in Massachusetts to maintain a good credit rating. Being in debt could hurt your credit score. Our Massachusetts bankruptcy attorney discusses the importance of reducing credit card debt for immigrants in Massachusetts.
The Importance of Not Falling Into Debt as an Immigrant in Massachusetts
Understanding how your credit score is calculated and the factors that could lower your credit score is essential. Credit scores are based on five aspects of your finances:
- 35% – Payment history
- 39% – Amounts owed
- 15% – Length of credit history
- 10% – New credit
- 10% – Credit mix
Reducing credit card debt can improve your credit score. Owing high credit card balances can lower your credit score. Your credit score suffers if you fall behind on your credit card payments. Sixty-five percent (65%) of your credit score is your payment history and account balances.
Maintaining good credit and managing credit card debt responsibly is vital for many reasons. Lenders use your credit rating to determine whether you are a good candidate for credit. However, your FICO score is used for much more than loans.
Your credit score can impact numerous aspects of your financial future. Other ways your credit score impacts your life include:
- Insurance companies review credit scores. A low credit score could increase insurance premiums.
- Landlords may review credit scores as part of the application process. A low credit score could prevent you from renting a home or apartment.
- A low credit score may result in a higher interest rate for car loans and other debts.
- Some employers may check credit scores as part of the application process, especially if someone will be handling money or dealing with other financial matters.
If you fall behind on your credit card payments, your credit score is not the only problem you will face. The credit card company or a debt collector may sue you for the money you owe. A debt collection lawsuit could lead to wage garnishment, liens, and other collection efforts.
If an immigrant in Massachusetts returns to their home country, the debt could follow them. Any assets remaining in the United States could be levied to pay the debt.
What Are the Options for Immigrants in Massachusetts Who Are Behind on Credit Card Payments?
Immigrants in Massachusetts have several debt relief options for dealing with credit card debt and financial problems. Debt consolidation could be an option, but if you cannot afford to repay the debt, consolidating the debt does not help.
Bankruptcy may be a better option because it can eliminate the credit card debt entirely. You do not need to be a United States citizen to file for bankruptcy relief. Section 109(a) of the Bankruptcy Code states that a person must meet one of the following requirements to file for bankruptcy relief:
- United States resident;
- Own a home or domicile in the United States;
- Maintain a place of business in the United States; or,
- Own property in the United States.
Undocumented immigrants in Massachusetts can file for bankruptcy relief. Likewise, filing for bankruptcy should not prevent someone from obtaining a visa, green card, or citizenship. Therefore, bankruptcy may be a viable debt-relief option for non-US citizens.
However, each situation is different, and immigration laws may change. It is best to consult an experienced bankruptcy attorney to discuss all debt relief options, including the pros and cons of each option.
Learn More From Our Massachusetts Bankruptcy Attorney
Filing bankruptcy can eliminate your credit card debt entirely. Call Logan A. Weinkauf, PC, to discuss whether a Chapter 13 or Chapter 7 bankruptcy is right for you.