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

Bankruptcy can be a financial lifeline for individuals or businesses that are deep in debt with no apparent way out.  

However, for immigrants—or those who sponsor immigrant relatives—the decision to file for bankruptcy is packed with questions and concerns about its potential impact on their immigration status.  

It's a complex legal combo that deserves clarity and thoughtful guidance. 

The good news is that, in most cases, filing for bankruptcy should not have immediate repercussions on your immigration status. Immigration law doesn't specifically address bankruptcy as a ground for denying a petition or application. 

The Federal Bankruptcy Code prevents the government from discriminating against a person for filing a bankruptcy petition. However, if the circumstances surrounding your bankruptcy raise concerns about your "good moral character," it could become an issue. 

Understanding Bankruptcy

Before we plunge into the intersection with immigration law, it's essential to understand what bankruptcy entails.  

Bankruptcy laws are designed to help individuals and entities who can no longer pay their debts by discharging or restructuring their financial liabilities.  

Each state has its specific laws and exemptions, but the universal goal is to both grant a fresh start to indebted people and ensure creditors are justly compensated.  

The two main types of personal bankruptcy are Chapter 7 and Chapter 13, and they differ primarily in how they discharge debt and who qualifies for them.  

Chapter 7 is a liquidation process that involves selling off assets to repay creditors, while Chapter 13 allows individuals to restructure their debts into manageable payment plans. 

Filing for Bankruptcy With an Ongoing Visa or Green Card Application

If you are applying for or renewing a visa or a green card, a bankruptcy filing could complicate your application.  

U.S. Citizenship and Immigration Services (USCIS) factors in a person's good moral character when making decisions on visas or green card applications. A bankruptcy filing, if it indicates fraudulent activity or raises doubts about your financial responsibility, could become a red flag.  

But filing for bankruptcy isn't an automatic disqualifier. USCIS also considers the reasons behind your bankruptcy. If it was out of necessity, such as a job loss or medical emergency, it would likely carry less weight than if it was due to irresponsible financial behavior. 

Bankruptcy After Receiving a Green Card 

For individuals who file for bankruptcy after receiving their green card, the impact on their immigration status is generally minimal.  

Green card holders have more significant protections under the bankruptcy code, as creditors will likely focus on assets in the US versus abroad. 

Using Bankruptcy to Try to Discharge Liabilities Acquired Illegally 

If the debts you're seeking to discharge are related to criminal activity or fraud, your immigration status could indeed be jeopardized.  

Bankruptcy is not a shield against debts incurred through illegal activities. Before proceeding with a bankruptcy filing, it's essential to consult with an immigration attorney to understand the implications fully. 

Chapter 13 Bankruptcy and Wage Garnishment 

Wage garnishments for people facing deportation or trying to remedy an immigration status could significantly impact their ability to obtain favorable outcomes.  

In this case, Chapter 13 bankruptcy, which allows for the restructuring of debts under a repayment plan, can serve as a strategic tool to prevent further asset seizure or wage garnishments. 

Tips for Protecting Your Immigration Status When Considering Bankruptcy 

It's essential to take certain steps to safeguard your immigration status or that of a relative before filing for bankruptcy. These steps include: 

• Keeping a Clean Record: For current green card holders or individuals in the process of obtaining a visa or green card, maintaining a clean financial record is crucial. Avoiding any behavior that might raise questions about your financial integrity or moral character will serve you well. 

• Consulting with Immigration Attorneys: Before proceeding with bankruptcy, consult with immigration attorneys who are experienced in handling complex cases involving immigrants. They can provide advice on possible collateral consequences of a bankruptcy filing on your or your relative's immigration status. 

• Updating USCIS of Your Financial Circumstances: If you experience significant financial hardship that could impact your immigration application, it is often advisable to provide the USCIS with updated financial information as soon as possible. USCIS officers may be more understanding of your situation if they are provided with explanations and evidence. 

More Bankruptcy & Immigration FAQs

Can a Green Card Be Canceled Due to Bankruptcy? 

Typically, a green card cannot be canceled or revoked solely because of a bankruptcy filing. However, certain bankruptcy-related activities or underlying financial behaviors could lead to a review and potential consequences for your immigration status. 

Can I Sponsor a Family Member if I Filed for Bankruptcy? 

A bankruptcy filing doesn't automatically disqualify you from sponsoring a family member. However, it might impact the determination, especially if the relative's income or assets are used as part of the sponsorship. 

How Does Bankruptcy Affect Naturalization? 

The impact of bankruptcy on naturalization (applying for U.S. citizenship) is evaluated case by case. A bankruptcy within the statutory period preceding naturalization could be viewed negatively by USCIS if it indicates poor financial choices or behavior inconsistent with good moral character. 

Will Bankruptcy Affect My Ability to Get a Visa? 

A prior bankruptcy might be considered by the consular officer when you apply for a visa. If the bankruptcy is recent and your financial situation remains difficult, this could be viewed as a negative factor in determining whether you will be a public charge or you might overstay the permitted duration of your visa. 

Can Discharging Debts in Bankruptcy Impact My Relative's Ability to Get a Visa? 

Debts discharged in bankruptcy can complicate a relative's visa application if they are a sponsor and the discharge of debts affects their ability to meet financial sponsorship requirements. 

Get Comprehensive Legal Assistance

While bankruptcy and immigration are two distinct areas of law, when you're an immigrant or sponsoring a relative, they can intertwine in unexpected ways. The key to navigating these issues is to be proactive and informed and to seek out reliable legal counsel who understands both bankruptcy and immigration law well.  

Contact The Law Offices of David K. Blazek, P.C. in Tampa, Florida, to set up a meeting to discuss your situation. The bankruptcy firm works with Florida clients throughout Miami, Jacksonville, and Orlando, as well as Georgia residents throughout Atlanta, Macon, and Columbus.