These days, besides financial issues, people are also suffering from immigration issues. Often a non-US citizen needs to file bankruptcy. Secondly, can bankruptcy filing affects their migration status or application for citizenship?

The answer is yes. According to the Bankruptcy Code, “…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” describes any individual, partnership, and corporation… [11 U.S.C. Section 101(a) (41)]. Therefore, there is no necessity of citizenship in the bankruptcy code.

Usually, filing a bankruptcy will not harm immigration status or citizenship applications, as it is not a crime. Crimes of “moral turpitude” like writing “fraudulent” checks, using credit cards in another person’ name or providing deceptive information to the federal government can affect immigration status. Further tax evasion can also be an issue in rejection of citizenship. There can be another problem if an immigrant debtor shifts money or property to another person to evade creditor action. If the shifted amount or the amount of the tax liability that was avoided surpasses $10000, the immigrant debtor can be deemed as an “aggravated felon” and might finally considered deportable or inadmissible.

Therefore, it is very significant to remain honest while filing bankruptcy schedules. Stay away from transferring money or property to anyone. Also, make sure you inform the IRS about your every income on tax return.

Disclaimer: No tax advice is being given by this article. Information provided is purely educational.