Bankruptcy

Bankruptcy and Immigration

By Richard K. Gustafson

Many of our potential clients have not only financial issues affecting their lives, but also immigration issues. It’s not uncommon for a non-citizen to need a bankruptcy case. The first question is whether or not a non-citizen can even file a case. The next question many people ask is whether or not the filing of a bankruptcy affects their immigration status or application for citizenship.

The answer to this question is yes. The Bankruptcy Code states 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” includes invididual, partnership, and corporation… [11 U.S.C. Section 101(a)(41)]. As you can see, there is no requirement of citizenship in the bankruptcy code.

The general rule is that filing a bankruptcy will not affect immigration status or citizenship applications. There are certain criminal convictions that would mandate deportation. It is not a crime to file a bankruptcy case. Crimes of “moral turpitude” such as using credit cards in other people’s names, writing “fruadulent” checks in more than one state, tax evasion, fraudulent transfers of assets, or providing fraudulent information to the federal government (such as by filing inaccurate bankruptcy petitions) sometimes come into play. Certainly if an immigrant has been working “under the table” and not paying taxes, tax evasion can certainly be an issue. It could also be a problem if an immigrant debtor has transferred money or property to another person in order to avoid creditor action. If the amount of the transfer or the amount of the tax liability that was evaded exceeds $10,000, the immigrant debtor could be considered an “aggravated felon” and is conclusively deemed deportable.

Thus, it is very important to be truthful when filing bankruptcy schedules, avoid transferring money or property to anyone (except for normal payments on living expenses), and make sure all income is reported to the IRS on tax returns.

Full post as published by Consumer Bankruptcy Blog from Legal Helpers on March 15, 2007 (boomark / email).