Illegal immigrants could fall prey to loan sharks and other unscrupulous lenders if they pay $5,000 (3,718 EUR) in fines and thousands more in fees and back taxes as required under the immigration reform measure now before Congress.
Many immigrants work low-wage jobs and have virtually no assets. As a result, they often have poor credit and are forced to borrow on the street.
"We're real concerned about the potential for fraud," said Beatriz Ibarra, who studies Hispanic finances for the National Council of La Raza, the nation's largest Hispanic advocacy group and a tepid supporter of the draft legislation. "They'll find a way to pay, but how?"
It is not exactly clear how much time the immigrants would have to pay the fines and fees to achieve legal status and eventually obtain a green card, which confers permanent residency. But because of the backlog of green card applications, immigrants may have up to eight years to come up with the money.
"It's a lot of money, but if they gave us the opportunity, we'll see how we can get it," said a young immigrant mother of a 2-year-old U.S.-born daughter, speaking on condition of anonymity for fear of deportation.
The native of Guerrero, Mexico, said she has no idea how she would get the money - which could amount to $3,000 (2,230 EUR) for the initial visa application and $4,000 (2,974 EUR) plus back taxes for a green card. However, she said she is confident she would manage, even though she only makes minimum wage working at a Mexican grocery in Georgia.
To make it across the border, many illegal immigrants pay thousands of dollars to smugglers, who sometimes threaten them with death if they do not pay their debts. Then, many make low wages working in agriculture, construction and the hotel and restaurant industry. Out of that, they often send money back home to support their families. And because they are illegal, they tend to distrust banks.
"If you have a family of four or five, it's going to add up to thousands of dollars, and I just can't imagine anyone having that amount of money stored in a shoebox - so someone will come up with a lending scheme that will be close to usury," said Robert Moser, deputy director of Catholic Charities for the Diocese of San Diego.
About half of Hispanic immigrants have no checking or savings accounts, and those who have credit cards often pay exorbitant fees and have difficulty managing their debt, according to a study co-authored by Ibarra.
When in need of large sums of cash for emergencies or major purchases, they tend to turn to friends and family or loan sharks. Many immigrants go to predatory lenders that charge as much as 300 percent interest on short-term loans.
"Every day you see people victimized," said Guillermo Zuniga of Banuestra, a metro Atlanta financial services company that serves about 20,000 Hispanic immigrants. The company is trying to develop a loan program for some of its customers who might need to pay the fees should the reform pass.
Even if they have the cash, money transfer offices also may try to tack on exorbitant fees, Moser said. The complexity of the proposed process could also drive many applicants to get scammed while seeking assistance in doing the paperwork.
"They won't just go to predatory lenders; they'll go to predatory service providers," said Donald Kerwin, executive director of the Catholic Legal Immigration Network.
After amnesty legislation passed in 1986, storefront "immigration specialists" promised to expedite the legal process for retainers of up to $3,000 (2,230 EUR), and then would simply vanish with the money.
Under pressure from regulators and others, major banks are experimenting with offering small loans and credit cards to illegal immigrants and others without a Social Security number.
"The financial institutions are really interested in this, as this is probably the single largest untapped market" in the United States, said banking consultant Rick Fischer of the San Francisco-based firm Morrison & Forester.
If an immigrant has no traditional credit report, banks may look at the person's rent and bill-paying history as a way of determining whether the customer can repay a loan, Fischer said.
Jose Lagos, head of the Miami-based advocacy group Honduran Unity, said he believes many immigrants will find ways to pay the fines and fees without having to turn to the black market.
"People will work two and three jobs. They are going to cut their expenses. I have heard people saying, `I'm going to cut how much I'm sending home,"' he said. "I have people who have told me already, `I'm saving the $5,000. I don't care. At the end of the day I'm going to get my resident card."'
Advocates also hope the final legislation will carry significantly lower fines.
"It would be self-defeating and not encourage people to come forward if they see $5,000 as an insurmountable fine," said Jerry Gonzalez of the Georgia Association of Latino Elected Officials.