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Immigration Law MCLE Meeting
DuPage Judicial Center - ARC 3/7/19
11:45 AM – Noon Welcome/Introductions Neil Levine – Immigration Law Section Chair
Noon – 1:30 PM Program – Bankruptcy & Immigration
Claudia Farfan Badillo – Badillo Law Group
Claudia will discuss the impact of filing for Bankruptcy for people who are undocumented, including their immigration status
See Attached for Speaker Bio
Next Meeting: 4/10/19 – Speaker: John Quinn
DCBA Events: 3/12/19 – 5th Annual Lawyers Lending a Hand/DuPage Cty Agencies Blood Drive
3/15/19 – St. Patrick’s Day Luncheon
3/21/19 – Happy Hour at Clubhouse in Oak Brook
Earn CLE Online!
DCBA OnDemand CLE is Now Powered by IICLE The Illinois Institute for Continuing Legal Education (IICLE®) and the DuPage County Bar Association (DCBA) are excited to offer a new IICLE®Share collaboration to provide DCBA members a high quality and reliable online learning experience. Members can find the link to The Illinois Institute for Continuing Legal Education (IICLE) on the DCBA website under “Legal Community”OnDemand CLE Online CLE Catalog
View & Print All CLE Certificates through the DCBA Website:
Manage Profile -> Professional Development (under content & features) and choose the icon to the left of each meeting to print your certificate directly or choose to have them emailed to you to save to your computer (you MUST be logged in to view this feature)
About Us – Badillo Law Group P.C. http://badillolawyer.com/about-us/
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1. Bankruptcy and Immigration
2. Bankruptcy basics
3. Who may be a debtor
4. Process of filing
5. Qualifying for Chapter 7‐ income, assets, ID
6. FAQ
7. Credit basics
8. How to get credit for non residents
9. 3 types of SS cards
10. Credit issues for non residents (SSn, ITIN) 11. Risks to BK attorneys‐ IL rules of conduct 12. Criminal and Fraudulent prohibited
13. BAPCPA requirements
14. Rule 9011 sanctions 15. Practical applications – yes you can still file 16. Option to list SSN OR ITIN 17. Risks v benefits 18. Immigration concerns
19. Take away 20. Contact info
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Claudia F. Badillo
Badillo Law Group, P.C.
Consumers (Individuals) can file Chapter 7 or Chapter 13
Chapter 7‐ dissolution, eliminates debt No assets/Low income Discharges unsecured debt Some debt is non‐dischargeable You can file every 8 years Keep your house/car/assets with no equity
Chapter 13‐ repayment plan Keep assets, repay debt (%) Repay priority debt (child support, taxes) Repay parking tickets Reinstate driver’s licenses Save homes in foreclosure Must have income
Chapter 11 Reorganization For businesses or very high earning individuals Or over debt limits in Chapter 13 Repay creditors over time Save the business
*SEE HANDOUTS 1 and 2
Bankruptcy Basics
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BROAD definition
(a)Notwithstanding any other provision of this section, only a person that resides or has a domicile, a place of business, or property in
the United States, or a municipality, may be a debtor under this title.
Who CANNOT be a debtor?‐ A railroad/Most banks/Foreign insurance companies/Stockbrokers in Chapter 11/13
NO CITIZENSHIP REQUIREMENT
1. Meet with attorney2. Fill out intake3. Pull credit4. Provide documents:
Taxes, bills, paystubs, do credit counseling
5. File bankruptcy petition6. Attend 341 meeting creditors7. If Chapter 13‐make payments8. Discharged after 60 days if Chapter 7 or 3‐5 years if Chapter 13
Process of Filing
Meet with Attorney
Provide paperwork
File Petition
Attend 341 meeting with trustee
Discharge of case
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Valid photo ID
‐ State license/ID
‐ US passport
‐ Military/gov ID
‐ Resident alien card
Proof of SSN
‐ SS card
‐ Tax transcripts (NOT tax returns)
‐ 1099/W2 (maybe)
1 earner: $52,945
2 people: $69,871
3 people: $81,199
4 people: $96,252*
*Add $8,400 for each
additional person
*SSI doesn’t count
Income limits in Illinois
Qualifying for Chapter 7
Forms of ID needed Assets
House‐ $15k‐30K equity exemptCar‐ $2,400 exemptPersonal Property‐ $4,000 exemptRetirement accounts‐ Generally exemptLawsuits/Causes of action‐ PI: $15K/WC‐ unlimitedInheritances not exemptTransfers/Preference Payments‐ Must disclose
‐How do I know if I qualify for bankruptcy?‐How much is a consultation with a lawyer?‐What kinds of paperwork do I need? ‐How much debt should I have to file?‐Can I keep my house and car? ‐What if I’m behind on my home or car?‐What about taxes, student loans, and child support?‐Can I use my credit cards right before filing?‐Can I transfer assets before filing bankruptcy?‐Should I take money out of my 401k to pay my debt?‐Can I file pro‐se?
Typical client questions
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FICO score‐ 3 digit number estimating credit risk Can influence whether you get credit
Open end credit‐preapproved loan can be used repeatedly up to limits
Closed end credit‐loan where funds are dispersed in full and when closes loan must be paid back by a specific date
Credit report‐ detailed report of credit history Transunion, Experian, Equifax www.annualcreditreport.com www.creditkarma.com
Terminology
Credit cards (open/revolving) Fill out CC application (college) Unsecured/secured cards
Installment loans (closed) Auto loans/student loans/furniture/appliances/payday loans
Personal loans Mortgage loans (closed)
HELOCs (open) SBA/business loans (closed)
*see Handout 3
Types of credit
Credit Basics
A permanent address.Lenders want to know they’ll be able to find you if necessary.
A taxpayer ID number or SSN.ITIN is a federal ID number that takes the place of a Social Security number for people who aren’t eligible for Social Security benefits.
(In general, only U.S. citizens and people authorized to work in the U.S. can get a Social Security number, according to the SSA)
A job.Lenders want to see that you have income to pay back money you borrow on your credit card.
A bank account.This helps lenders know that you can pay your account each month and can verify income and expenses you listed on the credit card application
How to actually get credit for non-residents
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Shows your name and Social Security number and lets you work without restriction.
SSA issues it to:
U.S. citizens; and
People lawfully admitted to the United States on a permanent basis.
3 Types of SS cardsShows your name and Social Security number with the restriction,
ʺVALID FOR WORK ONLY WITH DHS AUTHORIZATION“
Issued to people lawfully admitted to the US on a temp basis who have DHS authorization to work.
Shows your name and Social Security number with the restriction, "NOT VALID FOR EMPLOYMENT“Issued to people from other countries who: are lawfully admitted to the US
w/out work authorization from DHS, but have valid non‐work reason for needing a SSN; or
need a number because of a federal law requiring a Social Security number to get a benefit or service.
Do they use a fake SSN? Most non‐residents work with a “fake” SSN but file taxes with an ITIN
SEE their W2s
Did they use fake SSN for credit acquisition? (usually YES for credit cards)
Using an ITIN to acquire credit‐ is possible Car dealerships (no SSN required for some), riskier lending, payday loans, MEDICAL DEBT
Buying a home with an ITIN ITIN specialized loans (NACA), First National Bank of America (higher down payments required)
2009 survey: 35% unauthorized immigrants own homes RAKESH KOCHHAR, ANA GONZALEZ‐BARRERA & DANIEL DOCKTERMAN, PEW HISPANIC CTR., THROUGH BOOM AND BUST: MINORITIES, IMMIGRANTS AND HOMEOWNERSHIP (2009).
ATTORNEY ISSUE: Accessing credit reports with fake SSN? Cannot access CR with ITIN!
Credit issues for non-residents
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When a client has a fake SSN and an ITIN
SHOULD NOT FILE BK PETITION WITH FAKE SSN
Potential fraud, does attorney know of the fraud or further the fraud?
*Attorney issue: IL Rules of Professional Conduct
RULE 1.2: SCOPE OF REPRESENTATION AND ALLOCATION OF AUTHORITY BETWEEN CLIENT AND LAWYER
(d) A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may
(1) discuss the legal consequences of any proposed course of conduct with a client,
(2) and may counsel or assist a client to make a good‐faith effort to determine the validity, scope, meaning or application of the law, and
(3) counsel or assist a client in conduct expressly permitted by Illinois law that may violate or conflict with federal or other law, as long as the lawyer advises the client about that federal or other law and its potential consequences.
RISKS to Bankruptcy Attorneys?
Criminal, Fraudulent and Prohibited Transactions
[9] Paragraph (d) prohibits a lawyer from knowingly counseling or assisting a client to commit a crime or fraud. This prohibition, however, does not preclude the lawyer from giving an honest opinion about the actual consequences that appear likely to result from a client’s conduct. Nor does the fact that a client uses advice in a course of action that is criminal or fraudulent of itself make a lawyer a party to the course of action. There is a critical distinction between presenting an analysis of legal aspects of questionable conduct and recommending the means by which a crime or fraudmight be committed with impunity.
[11] When the client’s course of action has already begun and is continuing, the lawyer’s responsibility is especially delicate. The lawyer is required to avoid assisting the client, for example, by drafting or delivering documents that the lawyer knows are fraudulent or by suggesting how the wrongdoing might be concealed.
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BAPCPA requirements for AttorneysBankruptcy Abuse Prevention and Consumer Protection Act of 2005
‐ More accountability on the part of Attorneys including: ‐ By signing petition, pleading or motion atty is deemed to have
‐ (i) performed a reasonable investigation into circumstances that gave rise to the petition
‐ (ii) determined that such doc is well grounded in fact and warranted under law‐ Signature constitutes a certification that atty has no
knowledge after an inquiry that info. In schedules filed is incorrect. ‐ 707 dismissal for abuse
http://bankruptcybill.us/category/cartoons/bapcpa‐man/
Rule 9011 of Federal Rules of Bankruptcy Procedure
Rule 9011. Signing of Papers; Representations to the Court; Sanctions; Verification and Copies of Papers(b) Representations to the Court- by signing an attorney is certifying the information is not being used to harass, claims are warranted by law, allegations or denials have evidentiary support
-SANCTIONS may be proper against attorneys
In re Beinhauer (Bankr E.D.N.Y. Case No. 14-74450-las, April 13, 2017-attorneys must independently verify facts
In re Parikh, 456 B.R. (Bankr. E.D.N.Y.2011)-attorney’s conduct relating to filing was sanctionable because attorney didn’t
look at prior Chapter 13 petition in new Chapter 7 filing
DUE DILIGENCE REQUIRED- Difficult for undocumented debtors and can lead to findings of fraud- namely using fake SSN (duty to disclose as an attorney???)
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Should fully discuss options with attorney –urgency of filing
Attorney should review: Immigration status/application Paystubs (do they have fake SSN on it) Review taxes for ITIN validity
Proper filing statuses HOH, Married
Credit reports‐ if you can review Bills, collection letter, lawsuits Wage garnishment orders – CAN STILL proceed
against debtor using fake SSN *see handout 4
CAN Debtor provide BAPCPA requirements? LOCAL PRACTICE
big cities, Chicago, LA, NY do it all the time KNOW YOUR COURTS AND TRUSTEES
Most undocumented people CAN still file (but many do not)
Practical applications
By providing an option for debtors to list an ITIN in lieu of a SSN on Form B-21 OR check a box stating they do not have a SSN, the bankruptcy system implicitly recognizes that undocumented people using an ITIN may file bankruptcy petitions.‐ When debtors state that they are not eligible for a social security
number, the trustee will need to inquire further in orderto verify identity. In this situation, proof of an Individual TaxIdentification Number (ITIN) issued by the Internal RevenueService for those people not eligible for a social securitynumber would be acceptable documentation.
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Benefits Fresh Start
Being able to save for retirement‐ important for undocumented people
Important because no unemployment, food assistance
Eliminating Debt Especially for those in poverty Good for eliminating medical debt Business debt
Avoiding garnishments Avoiding bank liens Stopping foreclosure Reinstatement driver’s license Eliminating tax debt
Risks Committing fraud
Not disclosing fake SSN
Having information reported to Homeland Security Rare
Being audited by court Then having to disclose W2s/bank
statements/etc. WILL LEAD TO DISCREPANCY IN ITIN
and SSN
Debt not discharged if obtained with false SSN
Difficult time at 341 meeting? Immigration status? See next slide
Should an undocumented person file for bankruptcy?
IMMIGRATION CONCERNSAlways encourage HONESTY in their bankruptcy petition and schedules
Criminals can file bankruptcy as long as debt was not FRAUDULENTLY incurred
For immigration purposes: GOOD MORAL CHARACTER REQUIRED
Can you SPONSOR someone if you filed BK? Yes but see affidavit of support
Immigration Forms‐ N‐400 example require: Communism disclosed Back due taxes owed Committed crimes Failed to support dependents Made misrepresentation to obtain public benefit Part 12, #31‐ EVER GIVEN ANY US GOVERNMENT
OFFICIALS ANY INFORMATION OR DOCUMENTATION THAT WAS FALSE, FRAUDULENT, OR MISLEADING Fraud and Willful Misrepresentation
IMMIGRATION FORMS do not directly ask about bankruptcy filings.
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Take away• Undocumented individuals participate in the labor market and their participation is necessary and
should be deemed as desirable
• They are entitled to workplaces protections and should be allowed to get a Fresh Start
• The most recent IRS data, from 2015: Agency received 4.4 million income tax returns from workers who don’t have Social Security numbers
• Undocumented immigrants paid $23.6 billion in income taxes
• IRS does NOT REPORT SS fraud from fake SSNs on W2s
Bankruptcy Code permits undocumented debtors in theory but practically attorneys should exercise due diligence and caution.
University of Michigan Journal of Law Reform, Volume 45 | Issue 3, 2012Undocumented DebtorsChrystin OndersmaRutgers University School of Law‐Newark
Badillo Law Group, P.C.8745 W. Higgins Rd., Suite 110
Chicago, IL 60631Ph: 773‐716‐7736Fax: 312‐631‐2899
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