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Citizenship & Immigration Issues in Bankruptcy

Citizenship & Immigration Issues in Bankruptcy

To file for bankruptcy relief, you do not need to be a U.S. citizen or even have a Green Card—you just have to reside in the United States. The act of filing bankruptcy does not, by itself, threaten one’s immigration status or future entitlement to immigration benefits. However, the application of this country’s immigration laws can be very discretionary and nuanced, and it would be wise discuss your particular circumstances with your immigration lawyer prior to filing a bankruptcy petition. A principal tenet of the Hippocratic Oath is that a physician should “first do no harm,” and bankruptcy attorneys can learn from these wise words. The basic interplay between bankruptcy law and immigration law is as follows:

Bankruptcy and obtaining citizenship

There is no question on the USCIS Form N-400 Application for Naturalization asking whether the Applicant ever filed for bankruptcy. The only financial-type questions on the Form N-400 pertain to the filing of required tax returns and whether there are any unpaid taxes, alimony or child support. The focus of this Application is to determine whether the Applicant has “good moral character”– a vague standard that can mean whatever your USCIS case worker wants it to mean. Major road blocks to obtaining citizenship seem to be owing back income taxes or failing to pay Court-ordered child support, having a criminal record and/or lying on the naturalization application. While past due income tax debt and child support debt often can be successfully dealt with in a Chapter 13 bankruptcy, a Chapter 7 bankruptcy would offer no relief for child support arrears and only older (i.e. more than three years old) tax debt can be discharged in Chapter 7. The major way a bankruptcy filing can negatively impact an Application for Naturalization is if it is discovered the Applicant committed a “bankruptcy crime” such as lying under oath, supplying false financial information or failing to disclose essential information or assets to the Bankruptcy Court.

Bankruptcy and obtaining a green card

There is no question on the USCIS Form I-485 Application to Register Permanent Residence or Adjust Status asking whether the Applicant ever filed for bankruptcy. The only financial-type questions on the Form I-485 pertain to whether the Applicant ever received any public assistance in the past, and whether they are likely to receive public assistance in the future. The focus of this Application is to determine whether the Applicant, at any time in the future, is likely to become a “public charge”–someone whose survival will be dependent on US government benefits rather than their own resources. This is a very subjective determination based upon the Applicant’s age, health, family status, education, employment skills and history, etc. As in applying for citizenship, the major way a bankruptcy filing can negatively impact an Application for a Green Card (i.e. permanent resident status) is if it is discovered the Applicant committed a “bankruptcy crime” such as lying under oath, supplying false financial information or failing to disclose essential information or assets to the Bankruptcy Court.

Bankruptcy and undocumented persons

An undocumented person can file for bankruptcy, but some very tricky issues can be presented. An all too common scenario is for an undocumented person  to first obtain a fake Social Security number to obtain work and thereafter obtain from the IRS an Individual Taxpayer Identification Number (“ITIN”) to use when filing tax returns. When a bankruptcy is filed the debtor must prove their identity to the Court, generally by  production of a valid government issued picture identification (such as a driver’s license) and a valid Social Security card or valid ITIN card.  DO NOT FILE FOR BANKRUPTCY USING A FAKE SOCIAL SECURITY NUMBER AND A FAKE SOCIAL SECURITY CARD–this is bankruptcy fraud. Another troubling scenario can occur if an undocumented person incurs debt under multiple identification numbers, first using a fake Social Security number and thereafter using their ITIN (some credit card companies will issue credit based upon an ITIN). Bankruptcy is not comfortably fit in this scenario, and this activity runs counter to the “good moral character” requirement for obtaining citizenship. While I have had successful Chapter 7 bankruptcies involving debtors who have used  fake Social Security numbers in their past, such cases have only been filed after testing the waters via a hypothetical (i.e. no names used) discussion with the US Trustee’s Office about the bankruptcy issues brought to play by the particular facts of the case, to determine what kind of “blow back”, if any, might be expected. These scenarios are very fact-specific and fact-driven and must be discussed in detail with your bankruptcy attorney. If the fact pattern is not a favorable one the prudent move may be to not file for bankruptcy.

Contact our skilled lawyers in Middletown, NY

Notwithstanding the complexity of the issues presented when bankruptcy and immigration law intersect, the skilled legal representation provided by Michael O’Leary, Esq. of Hayward, Parker & O’Leary, Esqs. can help you navigate these challenging waters. Contact the firm’s office in Middletown, NY today.

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    225 Dolson Avenue
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    Middletown, New York 10940
    Phone: 845-343-6227
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