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Fear of Damage To Your Credit Stopping You From Filing For Bankruptcy?

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Many of my clients were initially very hesitant to consider bankruptcy protection as a solution for their financial woes. Bankruptcy connotes all sorts of bad things for many different people. For some people, bankruptcy labels one as a failure.

Many do not understand that bankruptcy is not a scarlet letter than labels one as a failure; but, rather it is a “protection” given to consumers. In the Philippines, for example, there is no such thing as a bankruptcy law.  If one were in debt and unable to pay for their debts in the Philippines, one would have a hard time ever recovering from their financial woes as creditors would be able to come after the debtor for whatever assets or earnings they now own; as well as whatever assets they will accumulate in the future. It is not hard to understand why this is so considering that many of our representatives in Congress are from big business and financial sector whose interest they protect.

One of the biggest reasons clients are often hesitant to file for bankruptcy is because of the fear that it will ruin one’s credit score; and, hence jeopardize their ability to buy a home or obtain credit in the future. Reprinted below is an article in one of the forums by the NACBA (National Association of Consumer Bankruptcy Attorneys) discussing why fear of damage to your credit score is oftentimes misplaced:

“A bankruptcy filing will show up on your credit score for 10 years. In fact, damage to credit and a perceived inability to access it post-filing is one of the biggest reasons people shy away from filing for bankruptcy.  Give it some thought and this might prove to be a mistake, especially if you are experiencing widespread defaults on a host of bills. You see, often a potential bankruptcy candidate’s credit has already been damaged by an inability to pay their debts as they come due. Perhaps a few mortgage payments have been missed or a credit card account has been closed due to non-payment or is being reported as 90 days past due. Even a delinquency on a utility bill or an old speeding ticket that has been sent to collections can have a negative impact on your credit. Fact is that people who are struggling financially often have poor credit and there isn’t much more that a bankruptcy can do to bring down their score. Once damage to credit is taken off the table, what reason do you have not to file? If you are facing a mountain of debt the reasons start to diminish quickly.

Believe it or not, there is quite a bit a bankruptcy can do to help people start to improve their credit. How? Well for starters, one factor in any credit score is an individual’s debt to income ratio. If you are earning far less than you owe to your existing credits, it is a sign that you don’t have the ability to take on new debt …. You are therefore not creditworthy. Bankruptcy eliminates or discharges most old debts leaving your balance sheet with a lot less red on it. The bankruptcy discharge can properly be viewed as a foundation upon which to build a new financial future. Keep this in mind, if you are already late on your bills, your credit is suffering regardless of whether you file bankruptcy; Staying out of bankruptcy court to “salvage” an already bloodied credit report doesn’t make much sense. If you’re stuck with a hit on your credit score you might as well get out from under the debt that is putting pressure on you and your family at the same time.”

Here, in the U.S., consumers are luckier as we are given more protection by law. Bankruptcy is one of these laws that protect consumers. It gives us a chance to recover from our financial misfortunes by discharging debts we can no longer afford to pay and start out again on a path to financial recovery. Do not let labels (or mislabeling) keep you from taking advantage of protections provided by law.  

(DISCLAIMER: material presented above is intended for informational purposes only. It is not intended as professional advice and should not be construed as such. Rey Tancinco is a partner at Tancinco Law Offices, a professional corporation with offices in San Francisco, Vallejo, and Manila. The law office website is at: tancinco.weareph.com/old.  Rey Tancinco can be contacted at (800) 999-9096 or (415) 397-0808 or via email at: attyrey@tancinco.com

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Global Pinoy

Advocating Not Condoning Illegalities

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A couple of years ago, a California Highway Patrol officer stopped me for speeding. I was issued a ticket where it clearly stated a violation of the specific provision of the motor vehicle code. It was also in that ticket where I was instructed to attend a hearing before a traffic court. The clerk of court, where I reported said that I was eligible to attend a traffic school to clear my record of the speeding violation.

In compliance, I attended traffic school.  Rushing from work, I was careful not to be caught again for speeding. So I arrived late for traffic class. The instructress stared at me as I was entering the room and yelled out loud, “here comes another criminal! Take your seat.”.  I was surprised by her remarks. Sure, I violated the vehicle code. But does that make me a criminal? From the instructress’ perspective, I was a criminal and so be it.

This is the same backlash I received from readers who commented negatively on my May 16, 2010 column. One of the readers said “it is a crime to be illegal in America just as in every other country in the world”.  A few more readers emphasized that “any person who is in the US illegally has broken some law, therefore they are criminals”. Just like my traffic school instructress, if you believe they are criminals; then from your perspective, they are.

From a practitioner’s standpoint, we all know that undocumented immigrants violate immigration laws and they are responsible for the consequences of their acts. Sometimes, however, the actions that led to their violations are involuntary and are the result of circumstances beyond their control. I have, for example, served countless clients who were victims of domestic violence perpetrated by their abusive US citizen spouses.  Many of these victims find themselves in unlawful status after running away and refusing to take any more abuse from their US citizen spouses.  There are also countless situations of workers who  become victims to unscrupulous employers who refuse to extend their visas in order to force their employees to continue working for them (at virtual slave terms and wages) by threatening to report these employees if they do not comply with the employers’ demands.

In applying for a green card, an applicant  is asked to respond to a question in the immigration application form whether or not they have committed a crime. There is a distinction between committing a crime (which means the violation of a penal law) and violation of an immigration law (which is also a violation law but is not a crime). In both cases, they are violations of the law.  Being a convicted criminal may disqualify one from getting a greencard. However, being an illegal alien does not, of itself, disqualify one from getting a greencard.  Hence, even under US immigration law, there is a clear distinction between being merely an illegal alien as opposed to being a “criminal”.  

In any case, an illegal alien breaks the law and must suffer its consequences. This is what I have always emphasized to immigrant clients and their families.  That the reality is that while immigration laws may be harsh, it is still the law and must be followed.

Approaches to Fix the Law

Passing a comprehensive immigration law is one of three options for fixing the broken immigration system. In one of her school visits this week in Silver Spring, Maryland, First Lady Michelle Obama responded to a second grader who asked if her mom is going to be deported. She expressed her fear in a soft voice, “my Mom…says that Barack Obama is taking everybody away that doesn’t have papers.” The First Lady’s simple response was that it is up to the US Congress to fix the broken system, referring to a comprehensive immigration reform.

The second approach was utilized by the past Bush administration, which is the heightened border security and stronger immigration enforcement.  With this approach, the Bush administration allocated a $2.7 billion budget to enhance enforcement of immigration law. This resulted in an increase in worksite immigration raids, denial of driver’s licenses and engaging more employers in the e-verify program. This program mandates employers to check newly hired employees against the Department of Homeland Security databases to determine whether they are authorized to work in the US. This is basically intended to make life difficult for the undocumented so that they are left with no choice but to leave or “self deport.” However, instead of compelling undocumented to “self deport”, the E-verify was not effective in detecting fraud and sent inaccurate information on both US citizens and undocumented aliens. Aside from costing billions of dollars to implement, the desired result of reducing undocumented aliens was not achieved.

The third approach, which I previously mentioned in my May 16, 2010 column, is the mass deportation of the 12 million undocumented aliens. Aside from being too costly, there is a potential for serious impact on US businesses which will loose millions of workers, who are also at the same time consumers of goods and services in the US.

Reason to Advocate

President Obama, in his recent press conference during the State visit of Mexican President Calderon, reiterated that US immigration law is broken and needs a fix. The increase in undocumented immigrants through all these years is a result of an outdated system. There is a very small pathway to legalization that will allow those who are already in the US to become legal residents.

Laws should evolve to conform to the realities of the times. Advocacy for change does not necessarily mean advocating for violation of current laws just because they are bad laws. What we advocate for is a change.  We advocate for change because we believe that US immigration law can be better.  Laws need to change to confirm to the  current realities. If laws had not changed with the times, maybe, women would still not be able to vote today. Without advocates for change maybe segregation would still be the law today and we may never even have a black US President in our lifetime. If there were no advocates and no changes in the law for the better, US society will not be where it is today..

Immigration reform is currently a very contentious issue in the US. Opinions vary between the conservatives and the liberals. Until, the majority of the policy makers are convinced of the need for change, the number of undocumented aliens will continue to rise.  

(Tancinco may be reached at law@tancinco.com  or at (02)887 7177)

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Updates

Nebraska Service Center Now Accepting Applications for Naturalization for Qualifying Members of Deceased Service Members

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USCIS recently posted a notice that they are now accepting applications
for naturalization from qualifying members of deceased service members
at their Nebraska Service Center (NSC). All eligible applications that
are received at the NSC will be handled by a team dedicated to
processing these types of applications.

Spouses, children and parents of a deceased service member who was a
citizen (even those who received citizenship after they passed away)
and was serving honorably in active duty at the time of their death may
submit their Applications for Naturalization (Form N-400) to the NSC at
one of the following two addresses:

U.S. Postal Service Deliveries

Nebraska Service Center
PO Box 87426
Lincoln, NE 68501-7426

Express Mail and Courier Deliveries

Nebraska Service Center
850 S. Street
Lincoln, NE 68508

Members of the military seeking naturalization (and their spouses)
should also submit their Applications for Naturalization to the
applicable address listed above.

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Updates

USCIS Revises the Employment Authorization Document

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USCIS announced yesterday that it has revised Form I-766, the
Employment Authorization Document (EAD) to include the addition of a
machine-readable area on the back of the card. This update is part of
USCIS’s goal to limit cases of immigration fraud. The federal agency
began issuing the revised EAD cards on May 11. The new card is
compliant with International Civil Aviation Organization standards.

In addition to the new area on the back of the card, USCIS has also
removed the two-dimensional bar code on the backside of the EAD and has
moved the informational box of text to just beneath the card’s magnetic
strip. These changes to the card are part of an extensive collaborative
effort of various sections of the Department of Homeland Security,
including USCIS, Customs and Border Protection and U.S. Immigration and
Customs Enforcement.

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Is There Debt Relief For Me?

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The other day, a husband and wife came to my office holding a Summons and Complaint. It was a lawsuit for collection of a credit card debt that they owed. They were not expecting this lawsuit as they had signed up with a debt relief agency about 6 months ago.

This couple was paying the debt relief agency a certain amount of money monthly which, they thought, would be used to take care of their credit card bills. As they had been on time and up-to-date in their payments to the debt relief agency, they had thought that their credit card bills were also being taken cared of and they did not worry about those bills.  Hence, the lawsuit against them by the credit card company was a surprise.

Unfortunately, for this couple, they did not understand or it was not properly explained to them how this debt relief agency works. They had been receiving mailers and seen TV ads about these debt relief services with promises to lower their monthly payments, reduce their interest rates and make them debt-free. Drowning in debt they had a hard time paying, this couple was naturally attracted to these offers.

They signed up for the debt relief service. The arrangement was that the couple would pay about $600 per month to the debt relief service. They thought that their monthly payment to the debt relief service would be immediately used to pay their monthly bills to the creditors. They were wrong.

Debtors have to understand that the goal of these debt relief services is to obtain a debt settlement for you in an amount less than what you owe. For example, if you owe $10,000 the goal of these debt relief services is to have you end up paying, maybe around $6,000.  Likewise, it may also be to lower the interest rate to an amount that the debtor can reasonably pay off in a shorter period of time rather than just paying interest without making any dent on the principal.

Creditors obviously will not just lay down to debtors who demand for lower payments. This is especially true if debtors are paying off their obligations diligently. Creditors would not mind you paying off just your interest monthly and continue doing so indefinitely. The way for debtors to put the creditors in a position to negotiate is when debtors fall behind in their monthly payments. Once a debtor is behind in payments, creditors may then be more willing to negotiate terms.

The husband and wife were asked by debt relief services to give them their monthly payments of $600. The money paid by the debtor to the debt relief agency was then supposed to be accumulated over a period of time, say, about 18 to 36 months. Once, there was enough money accumulated, the debt relief agency would then negotiate with the creditor to make a cash pay-off for the debt in return for a certain percent discount.  

Unfortunately for this couple, they did not understand that creditors are under no obligation to bow to the demands of a debt relief agency. Just because a debtor signs up with a debt relief agency does not necessarily mean that creditors will now lower their payments.  In this case, the debt relief agency did not even get to do anything for this couple.  All they did for those 6 months was collect their fees. No negotiation with the creditors was even initiated as they were still trying to accumulate money to pay-off the debts. The worse thing is that this couple is now finding it impossible to have the debt relief agency return the money accumulated for them the past 6 months. This is on top of the fact that they are now facing a collection lawsuit in court from the creditor.

The lesson to be learned is to do your homework. Do not fall for sales ads which may or may not have full disclosure. Don’t trust companies simply because they promise you debt relief.  Understand what it is they are doing for you and what your obligations are.

(DISCLAIMER: material presented above is intended for informational purposes only. It is not intended as professional advice and should not be construed as such. Rey Tancinco is a partner at Tancinco Law Offices, a professional corporation with offices in San Francisco, Vallejo, and Manila. The law office website is at: tancinco.weareph.com/old.  Rey Tancinco can be contacted at (800) 999-9096 or (415) 397-0808 or via email at: attyrey@tancinco.com

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Updates

New Research Article on the Importance of the H-1B Visa Program

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The National Foundation for American Policy (NFAP) recently published a
research article on the future of the H-1B visa program. In the report,
NFAP calls for greater availability of H-1B visas to ensure that the
U.S. remains competitive in a global market. H-1B visas enable skilled
foreign-born workers to enter and work under that nonimmigrant visa
status in the U.S. for three years, enabling U.S. companies to recruit
and hire from an international pool of talent.

NFAP comments that even when the economy is uncertain (as it is now),
employers still consistently need talented persons on an ongoing basis
and the annual cap of 65,000 H-1B visas will most likely be met before
the end of the fiscal year.

The full article can be read online at http://www.nfap.com/pdf/1003h1b.pdf.

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Updates

Department of State Interim Final Rule Changes Fees for Certain Visas and Border Crossing Cards

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The Department of State has just published an interim final rule that
proposes to change the fees for consular services for nonimmigrant
visas and border crossing card application processing fees. The rule
proposes to raise the fee for processing most non-petition-based
nonimmigrant visas and Adult Border Crossing Cards from $131 to $140.

In addition, the rule creates new tiers of application fees for certain
categories of petition-based nonimmigrant visas and treaty trader and
investor visas. Additionally, the interim rule proposes to increase by
one dollar the $13 Border Crossing Card fee for Mexican citizen minors
who apply in Mexico and whose parent or guardian already has a card or
is applying for one.

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How Long Does Bankruptcy Stay In My Credit Report?

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When people are deciding whether or not to file for bankruptcy one of their main considerations is the question of how long a bankruptcy will affect their credit report.  Under the Fair Credit Reporting Act (FCRA), information included in your credit report can stay for seven years. However, there are exceptions……

-information about criminal convictions can be reported without time limits

-bankruptcy information can be on your record for 10 years

-information reported in response to an application for a job with a salary of more than $75,000 has no time limit

-Information reported because of an application for more than $150,000 worth of credit or life insurance has no time limit

-information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations run out, whichever is longer.

Thus bankruptcy filers can have negative information on their credit report for 10 years. However, in Chapter 13 cases, some creditors do leave the negative information for only 7 years in order to encourage people to pay part of their debts under Chapter 13 rather than having all their debts discharged in a Chapter 7 filing.

One’s credit report, of course, is an important consideration as almost all of us use credit to purchase our house or our cars while many of us use credit cards for everyday purchases. However, it oftentimes gets more consideration than it should.

Even after a bankruptcy filing most people can just build up their credit again. Of course, if one is unemployed and has no means of income, it will be impossible to get new credit regardless. For most people who are gainfully employed and with a capacity to pay, it will not be hard to get credit even with a bankruptcy filing on their record.. They may not get the best interest rates or they may otherwise just be able to open limited amounts of credit. However, in due time credit records can be built up again. After all, many of us immigrants had no credit record whatsoever when we first arrived in the US. All immigrants went through this path of building up their credit in the US. It is just a matter of doing it again.

(DISCLAIMER: material presented above is intended for informational purposes only. It is not intended as professional advice and should not be construed as such. Rey Tancinco is a partner at Tancinco Law Offices, a professional corporation with offices in San Francisco, Vallejo, and Manila. The law office website is at: tancinco.weareph.com/old.  Rey Tancinco can be contacted at (800) 999-9096 or (415) 397-0808 or via email at: attyrey@tancinco.com

Categories
Global Pinoy

US Immigration Policies Need Fundamental Changes

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The Filipino immigrant community is not spared from the fear brought about by the Arizona’s anti immigrant law. This recent legislation makes being an illegal alien a crime.

Sonia entered the United States as a fiancé visa holder. Mark, a US citizen twenty years older than her, petitioned her. When Sonia began residing with him in their small condo unit in Los Angeles, she noticed something unusual in Mark’s activities. She witnessed how Mark meet different people and hand them small packages in exchange for cash. Later on, Sonia confronted Mark and the latter admitted to selling marijuana. He also had an illegal marijuana plantation. To avoid getting into trouble she decided to leave Mark. She went to Arizona to live with an acquaintance.

Mark and Sonia were never married. Under the law, fiancé visa holders marry their petitioners in ninety (90) days so that they may obtain their green cards. In the case of Sonia, since she did not marry Mark she is prevented from obtaining the green card.

While in Arizona, Sonia met Philip, also a US citizen. They married and have two minor children. Sonia is still an undocumented alien because the immigration law does not provide a way for fiancé visa holders to obtain green card except through their fiancé visa petitioners.

With the Arizona anti-immigrant law, Sonia is at risk any time from being taken into custody. Unless this law is rescinded and a comprehensive immigration law is enacted in Congress, Sonia remains to live in fear of being deported.

Criminalizing the TNTs

Illegal immigrants are not criminals except in the State of Arizona. Governor Jan Brewer of Arizona signed into law the Anti Immigration Enforcement Law or SB 1070 making illegal immigrants criminals. According to the provision of this law, a state or local police may investigate status of an individual based on “reasonable suspicion” that a person is in the country illegally. This new state law is due to take effect sometime in August 2010 unless the constitutionality of the law is successfully challenged in court.

This anti immigrant State law gives law enforcement officers the authority to stop and question people about their immigration status based on ‘how they look.’ Although the provision of the law specifically prohibits the use of race or nationality as the sole basis for immigration check, still the question remains on what the standards for ”reasonable suspicion” are.  There are no racial neutral criteria for determining who are reasonably suspicious. A Filipino and any ‘nonwhite’ is a suspect. One may be questioned based on her appearance, strong foreign accent or simply just looking different. Obviously all ‘ nonwhites’ may be racially profiled. A police officer may stop and question a Filipino in Arizona who is simply driving her car or walking through the mall about her immigration status pursuant to the new law. This now creating fears among immigrants especially the TNTs.

Different civil rights group and concerned citizens criticized this legislation and actually caught the attention of most legislators.  There is a realization that the immigration system needed a fix not from individual states but from the Federal government who has sole jurisdiction over the country’s immigration.

The Broken & Outdated Law

Last week, the New York Times featured a story about a member of the US military, Lt. Kenneth Tenebro, a Filipino national but who is now a US citizen. He was previously deployed in Iraq and wants to serve another tour of duty either in Afghanistan or Iraq again. Lt. Tenebro may be courageous fighting terrorism as a solider, but is apprehensive about the fate of his spouse. Wilma is an undocumented alien who is not able to legalize status because the immigration law prevents seaman visa holders from adjusting their statuses to permanent residents.  Since Wilma is a TNT, she runs the risk of being deported back to Manila despite the fact that she is married to a US citizen. Just like Sonia, she is left with no legal recourse to obtain the green card because law clearly prohibits them from doing so. These are among the many provisions of law that needs to be amended through a comprehensive immigration law.

Wait for the New Law

Since the enforcement of immigration law became the focus of the Department of Homeland Security, a significant number of undocumented aliens are being put into removal proceedings. Despite having established a lengthy, stable and productive life in the US, there are very limited provisions in the immigration law that provides path to legalization. Those seriously impacted are the immigrant families who have US citizen children and whose lives may be ruined by separation as a result of the deportation of one of their parents.

Referring to the Comprehensive Immigration Law that will provide earned legalization, I find it deeply frustrating advising those who have no other legal recourse to “wait for the new immigration law” to pass in Congress.  The dysfunctional immigration system is yearning for a fixed. US immigration policies need fundamental changes lest they find it practical to mass deport 12 million undocumented aliens.

(Tancinco may be reached at law@tancinco.com or at 887 7177).