Does Bankruptcy Prevent You From Becoming a Citizen?
No. The good news for non-citizens is that filing a bankruptcy generally will not affect immigration status or citizenship applications. The issues that may negatively impact immigration status are criminal activity and other evidence of negative moral character.
It is not a crime to file bankruptcy. In fact, filing bankruptcy is a legal and common way to deal with serious financial problems.
And while in times past the act of filing bankruptcy may have been considered an act of questionable moral character by some, with over one million consumer bankruptcy cases being filed on an annual basis these days, bankruptcy has become a common, accepted practice.
If you are a person who has serious debt problems, bankruptcy may be a good option for you. The United States government understands this and therefore bankruptcy can actually work to benefit a non-citizen who is seeking to become a U.S. citizen.
Can you file for bankruptcy if you are undocumented?
The Bankruptcy Code pronounces clearly that “…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” [11 U.S.C. Section 109(a)]. The term “person” incorporates individual, partnership, and corporation… [11 U.S.C. Section 101(a)(41)].The bottom line is there is no requirement of citizenship in the bankruptcy code.
Even if you are not permitted to be in the country, you are a resident, and if you own a business or any property, you pass the test required of the bankruptcy code. To be a resident, you need to be physically present in-state for the 180 days.
The issue for most undocumented debtors is when it comes time to prove identity. You still must provide valid photo identification, Social Security number, or an Individual Tax Identification Number (ITIN). If you provide a fraudulent identification—often a Social Security number not assigned to you—you will not only fail to prove your identity but you will also be committing perjury, a felony that could result in your incarceration. Additionally, if you use a false identity on any of your debt instruments, the bankruptcy court may disallow you a discharge.
If you have not yet become a citizen make sure that you speak with a bankruptcy attorney who is familiar with these issues.