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Will Bankruptcy Affect My Immigration Status or That of a Relative?

Law Office of Robert L. Firth June 27, 2024

Moving to a new country and building a new life is tough. It is even tougher if you're having trouble managing your finances and worried about the impact filing for bankruptcy might have on your or a relative's immigration status. 

At the Law Office of Robert L. Firth, we provide workable solutions to your financial and immigration issues. Read on to learn how bankruptcy might affect your immigration status. 

Understanding Bankruptcy 

Bankruptcy is a federal process that helps individuals and businesses eliminate or repay their debts under the protection of the bankruptcy court. It offers a fresh start for those overwhelmed by financial burdens.  

There are various types of bankruptcy filings, the most common being Chapter 7 and Chapter 13.  

  • Chapter 7 bankruptcy, also known as liquidation bankruptcy, involves selling assets to repay creditors and typically discharges most unsecured debts.  

  • Chapter 13 bankruptcy allows individuals to create a repayment plan to pay back all or a portion of their debts over three to five years, without liquidating assets.  

Other types of bankruptcy filings include Chapter 11 and Chapter 12.  

  • Chapter 11, often referred to as reorganization bankruptcy, is typically used by businesses and individuals with substantial debt and assets. It allows them to continue operations while repaying creditors through a court-approved plan.  

  • Chapter 12 bankruptcy is specifically designed for family farmers and fishermen. It permits them to propose a repayment plan to settle their debts. 

The process of filing for bankruptcy involves several steps, starting with counseling sessions from an approved credit counseling agency. After filing a petition, an automatic stay comes into effect, prohibiting creditors from pursuing collection actions against the debtor.

This period gives the debtor time to regroup and reconstruct their financial situation. Debtors must also attend creditors' meetings where they discuss their financial affairs under oath.  

Does Bankruptcy Affect Immigration Status? 

The short answer is no—bankruptcy itself does not directly impact your immigration status.  

U.S. bankruptcy laws are designed to protect all individuals, regardless of their immigration status. Filing for bankruptcy is not a criminal issue and does not constitute fraud if all the assets and liabilities are accurately reported. Hence, it should not negatively impact your immigration status. However, while U.S. immigration laws do not require financial stability for most immigration benefits, financial issues might complicate matters indirectly. 

And since every case is unique, consulting with a knowledgeable attorney could help you fully understand the implications based on your circumstances. 

Financial Stability and Immigration Applications 

While bankruptcy will not automatically lead to deportation or the denial of a visa, green card, or citizenship application, financial stability can be a factor in certain immigration processes.  

The Public Charge Rule 

The Public Charge Rule is a key consideration for immigrants. It is a ground for inadmissibility that can affect those applying for certain visas. The rule considers whether an individual is likely to become primarily dependent on the government for subsistence. Filing for bankruptcy does not automatically make someone a public charge, but it can be part of the overall assessment of financial health. 

Bankruptcy and Sponsorship 

Sponsoring a relative for a visa or green card often requires an affidavit of support, which includes demonstrating financial stability. If you have recently filed for bankruptcy, you might need a co-sponsor who meets the financial requirements. This co-sponsor must be a U.S. citizen or permanent resident who can prove that they can provide financial support for the sponsored individual. 

Bankruptcy and Citizenship 

Financial responsibility is one of the factors considered under the "good moral character" requirement when applying for naturalization. However, filing for bankruptcy does not disqualify you from becoming a U.S. citizen. That said, any past fraudulent activity, including concealing assets in a bankruptcy case, could negatively impact your citizenship application. The key is transparency and following the legal process. 

Credit Reports and Immigration 

U.S. Citizenship and Immigration Services (USCIS) does not typically check credit reports for immigration applications. However, certain affidavits of support and other financial documentation may reflect your bankruptcy. You should be honest and provide all necessary information during your application process.  

Misconceptions About Bankruptcy and Immigration 

Here’s what you need to know: 

1. Bankruptcy will automatically lead to deportation 

Bankruptcy is a civil matter, not a criminal one. The U.S. legal system allows individuals, regardless of immigration status, to file for bankruptcy to manage financial difficulty. There are no laws suggesting that filing for bankruptcy will automatically lead to deportation proceedings.  

2. Filing for bankruptcy disqualifies immigrants from becoming U.S. citizens 

The naturalization process considers many factors under the "good moral character" clause. If the bankruptcy was filed legally and there was no fraudulent activity involved, it should not impact the eligibility for naturalization. 

3. Immigrants cannot file for bankruptcy in the United States 

Any individual residing in the United States, including non-citizens, has the right to file for bankruptcy if they meet the legal requirements. The U.S. Bankruptcy Code does not distinguish between citizens and non-citizens. All individuals facing unmanageable debts have access to the same protections and do not face exclusion based on their immigration status. 

4. Bankruptcy will negatively affect an immigrant's visa status 

Immigration authorities do not deny visa applications solely based on an individual's financial history. Visa decisions are based on a range of factors, including the specific type of visa being applied for. While chronic financial instability may raise concerns, it is not the act of filing for bankruptcy that jeopardizes visa status. 

5. Bankruptcy is a sign of criminal activity and will be reported to immigration authorities 

 It is a legal procedure designed to help individuals and businesses manage overwhelming debt. Honest filing for bankruptcy is not an indicator of criminal activity, and immigration authorities do not view it as such. The bankruptcy court monitors the process to ensure all actions are legal and transparent, protecting the filer from misconceptions of criminal behavior. 

Speak With a Bankruptcy Attorney in Cathedral City, California 

With over 35 years of experience in law, business, real estate, government, and politics, the Law Office of Robert L. Firth is your trusted guide through complex legal and financial issues. We have drafted more than 1,500 living trust agreements, offering compassionate legal support with a personal touch. Together, we can work through your issues with confidence and care. Call today to discuss your situation and receive advice tailored to your needs.