Friday, March 09, 2007

Bank of America and credit cards for illegals

David Yen over at Credit Slips points out that "To a lender a borrower who it knows is undocumented is in one way more attractive than a citizen or legal resident: he or she is effectively barred from filing bankruptcy. Strictly speaking, there is no requirement that someone be in the United States legally in order to be a debtor in bankruptcy. But someone who is undocumented and wants to stay in the country would be inviting trouble if he or she filed bankruptcy. A debtor now must present a picture ID and proof of social security number at the creditors meeting. Interim Bankruptcy Rule 4002(b)(1). The debtor must also provide the most recent Federal income tax return, or explain why there is none. Interim Rule 4002(b)(3). This should be enough to deter most undocumented borrowers from filing bankruptcy. If one does file despite this risk, whether out of ignorance or recklessness, the lender has a powerful threat -- withdraw the bankruptcy or else the trustee will be told the truth. At a minimum the debtor risks denial of discharge for presenting fraudulent documents. Deportation is much more likely; even prison is a possibility."

I think that Bank of America has certainly considered the issue raised here regarding the choice that illegal aliens will be faced with when they reach the stage in their finances where bankruptcy would be considered. Even if some kind of restructuring of the credit card debt needs to happen, the bank will prefer that over the card-holder filing bankruptcy. Although the outcry now is that B of A is aiding illegal immigration, I think that this will turn out to be a way to exploiting illegal immigrants financially because of the fear of deportation.

1 comment:

CreditGuy said...

Hm. I have never considered this prospective on the issue. Everyone one sually discusses how can a bank give nobey to someone who is here illegally. Thank you.