Can I File Bankruptcy If I Am Planning to File for Citizenship and Could It Affect My Immigration Status?

by Richard S. Feinsilver on October 19, 2010

Earlier this year, I wrote a post on the topic of Bankruptcy and it’s affects on immigration, but wanted to address it again, as I frequently get asked about it. I often get to witness firsthand how complicated and exhausting the immigration process can be. Add financial duress to the situation, and it can be too much to handle. I regularly have clients that cannot afford the minimums on their credit cards who are resident aliens and are planning to apply for citizenship who wonder if they can even file for bankruptcy. The answer is YES.

The Bankruptcy Code clearly states that a “person” may file bankruptcy so long as they own a property or business in the U.S., regardless of citizenship [11 U.S.C. Section 109(a)]. The term “person” includes an individual, partnership and corporation [11 U.S.C. Section 101(a)(41)]. In other words, under the law, a citizen of a foreign country can file for bankruptcy while operating their business and personal affairs in the United States in order to address their finanical difficulties and protect their home and/or other property.

Filing for bankruptcy itself will not affect immigration status or citizenship applications as there is no specific question on Form N-400 – Application for Naturalization – inquiring into bankruptcy. However, there are certain criminal activities, if resulting in a conviction, that could result in the denial of citizenship. It could also be a problem if a resident alien has transferred substantial sums of money or property to another person in order to avoid creditor enforcement actions.  If the amount of the transfer outside of the United States exceeds $10,000, this could be considered an “aggravated felony” which could result in possible denial of citizenship. Therefore, as a general note, it is very important to be completely truthful when filling out any governmental documents, whether as part of the immigtaion process or in bankruptcy, avoid transferring money or property to anyone (except for normal payment of living expenses), and make sure all sources of income are reported to the taxing authorities on any tax returns your may file.

It is advisable to speak to an experienced attorney if you are considering bankruptcy in any situation, whether you are a citizen or not. I offer a free consultation to all new clients. Contact me today to set up an appointment to discuss whether bankruptcy would be beneficial for your individual situation.

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