Non-citizens who file for bankruptcy are often concerned about how filing for bankruptcy under Chapter 7 will affect their immigration status or citizenship application. There is no requirement that you must be an American citizen in order to file for bankruptcy. Indeed, new immigrants are often the target of high credit card rates and predatory lending. In addition, the cost of traveling to the United States and setting up a household make immigrants prime candidates for a Chapter 7 bankruptcy.
Generally, filing for Chapter 7 bankruptcy does not affect your immigration status or citizenship application. Documented immigrants with consumer debts are allowed to file for bankruptcy just like American citizens. Undocumented (or “illegal”) aliens with consumer debt may also file for Chapter 7 bankruptcy in theory, but they run the risk of having their immigration status discovered by the federal government.
Crimes of “more turpitude,” or crimes involving fraud, can affect your immigration status and even prevent you from becoming an American citizen. Crimes such as cashing fake checks, lying on credit applications, and tax evasion are all considered crimes of moral turpitude. These are the kids of crimes that might be discovered in your bankruptcy proceeding. If it comes to light that you have committed fraud in dealings with your creditors of the federal government, it’s a short walk from U.S. Bankruptcy Court to the Department of Homeland Security.
If you are in immigrant who hopes to remain in the U.S. or become a U.S. citizen, it is very important that you are completely honest on your Chapter 7 bankruptcy petition and additional court paperwork. If you have not paid your taxes in the past, it’s in your best interest to file tax returns for the missed years as soon as possible, even if you can’t pay the debt.