Will Bankruptcy Affect My Immigration Status or That of a Relative
At EH Law Group, we understand that your financial well-being is a priority in your life. We also know that filing for bankruptcy is not a decision you take lightly, and the process can often feel overwhelming.
One of the concerns that often arises when considering bankruptcy is how it might impact your immigration status. Before we dive into the details, it's important to note that bankruptcy is available to anyone residing in the United States, regardless of their citizenship status.
No matter where you’re at in your debt relief journey, we’re here to guide you every step of the way. Our team of bankruptcy attorneys offers over 30 years of combined experience in helping citizens and immigrants navigate the ins and outs of bankruptcy laws. We're based in San Mateo, California, and are proud to serve clients throughout the surrounding areas. Contact us today to schedule a free consultation and start exploring your options for financial freedom.
Do I Have to Be a U.S. Citizen to File for Bankruptcy?
The simple answer is no, you do not have to be a U.S. citizen to file for bankruptcy. U.S. Bankruptcy laws allow anyone residing in the United States to file for bankruptcy, regardless of their citizenship status. Rest assured, filing for bankruptcy won't affect your ability to stay in the U.S., apply for citizenship, or obtain a visa or green card. The U.S. Citizenship and Immigration Services (USCIS) is more concerned with you having good moral character than indebtedness when considering applications.
Whether you're a U.S. citizen, permanent resident, temporary resident, or undocumented immigrant, you have the right to file for bankruptcy. This means that you can seek financial relief through bankruptcy without worrying about your citizenship or immigration status being affected.
Understanding “Good Moral Character”
When seeking U.S. citizenship, the USCIS carefully evaluates your moral character, taking into account various factors such as criminal history, honesty, and financial responsibility. While bankruptcy may show that you have accumulated debt, it does not necessarily reflect poorly on your moral character. In fact, filing for bankruptcy can actually demonstrate your willingness to take responsibility for your debts and work towards a better financial future.
More examples of good moral character could be:
volunteering in your community,
paying taxes, or
being actively involved in your children's education.
Filing for bankruptcy does not automatically disqualify you from having good moral character, and it should not prevent you from seeking citizenship or obtaining a visa or green card.
Ultimately, what USCIS officers prioritize is your tax payment history, rather than your financial status. It is important to note that filing for bankruptcy does not automatically classify individuals as a public charge under federal immigration law. This distinction is significant because the USCIS holds the authority to reject visa applications from individuals who may potentially rely on public benefits such as food stamps.
Filing for Bankruptcy as an Immigrant
The Administrative Office of the U.S. Courts has reported that bankruptcy filings reached a total of 418,724 in the fiscal year ending in June 2023, marking a 10% increase from the previous year's 380,634 cases. So if you're seeking a fresh financial start, please understand that you're not alone.
Whether you're an undocumented immigrant or a U.S. citizen who's thinking about filing for bankruptcy, it's crucial to understand the two main types of personal bankruptcy: Chapter 7 and Chapter 13. Chapter 7, also known as liquidation bankruptcy, allows you to wipe out most of your debts, but you may have to sell some of your assets to pay back creditors. Chapter 13, on the other hand, is a reorganization bankruptcy that enables you to keep your assets but requires you to follow a three to five-year repayment plan. The type of bankruptcy you choose largely depends on your financial situation and long-term goals.
Additionally, understand that bankruptcy will impact your credit score, and this can affect your ability to secure loans or credit cards in the future. However, with responsible financial habits, it's possible to rebuild your credit over time. Also, you should know that not all debts can be discharged in bankruptcy. Financial matters like as student loans, child support, and certain tax obligations typically cannot be eliminated through bankruptcy.
Possible Identification Numbers to Use
According to federal law, filing for bankruptcy does not require you to have U.S. citizenship. However, it is necessary to have either a Social Security number (SSN) or an Individual Tax Identification Number (ITIN) to proceed with the filing.
While SSNs are typically issued to U.S. citizens, permanent residents, and temporary residents, having an SSN is not mandatory for bankruptcy. An ITIN, which is commonly issued to non-citizens, can fulfill the minimum requirement for personal identification. Rest assured, many immigrants possess an ITIN, and it serves as a valid option for pursuing bankruptcy.
When filing for bankruptcy, there are several identification numbers that you might need to provide for tax purposes. These include:
SSN (Social Security Number) - This is used for citizens, natural-born, foreign-born, and naturalized individuals.
ITIN (Individual Tax Identification Number) - A nine-digit number used to identify individuals by the IRS for tax purposes. It is assigned to individuals who need a taxpayer identification number but are not eligible for SSNs.
EIN (Employer Identification Number) - A nine-digit number used by the IRS to identify business organizations like corporations or LLCs.
TIN (Tax Identification Number) - Used by the IRS for businesses. The only significant difference between an EIN and a TIN is that the IRS only assigns TINs to companies with employees.
So, if you're not a U.S. citizen, don't let the fear of bankruptcy affecting your immigration status hold you back from seeking financial relief. Remember, bankruptcy laws can be complex, and the decisions you make can have lasting impacts. It’s recommended to consult with a bankruptcy attorney to understand all your options and their respective consequences.
Debt Relief Alternatives
Before filing for bankruptcy, it's important to consider other debt-relief alternatives that may be more suitable for your situation. Some alternatives to bankruptcy include:
Debt Settlement - A negotiation process that allows you to pay off your debt for less than the full amount. This option can lower your overall debt and, consequently, improve your credit score.
Credit Counseling - A financial management program where a counselor works with you to create a debt repayment plan and offers guidance on managing your finances.
Debt Consolidation - A process that combines all your debts into one loan with a lower interest rate. This option can make it easier to manage your debts and may even save you money in the long run.
Negotiating with Creditors - In some cases, creditors may be willing to work out a repayment plan with you directly. It never hurts to ask and see if there are any potential options available.
Each of these alternatives has its pros and cons, and it's important to thoroughly explore all your options before making a decision.
We're Here to Answer Your Questions
At EH Law Group, we're not just experienced, we're compassionate and responsive. We don't pass on any work — everything is done by our attorneys who are dedicated to giving you detailed attention. Contact us today if you have any further questions about the inner workings of bankruptcy and immigration, or if you'd like to discuss your situation in further detail. Our law firm is based in San Mateo, California, and we're proud to serve clients throughout San Francisco, Santa Clara County, Oakland, Daly City, and South San Francisco.