If you file bankruptcy, will it hurt your immigration status?

On Behalf of | Mar 8, 2022 | Adjustment of Status

America is supposed to be the “land of opportunity,” but opportunities – especially if you want to start your own business – can be paired with a lot of risks.

In the current economic climate, many self-employed people and small business owners are finding themselves drowning in debt due to inflation, staffing issues and a lack of customers (as everyone tightens their belts).

If your business goes bust, can you file for bankruptcy even if you’re not a citizen? More importantly, can you file bankruptcy without hurting your immigration status?

Those are tricky questions, and the answers keep evolving

There’s no rule prohibiting immigrants from filing for bankruptcy. Merely residing in the United States and/or owning a business here is enough to qualify you for this protective status. That much, at least, hasn’t changed.

However, this is where things can get tricky: Back in 2019, the Department of Homeland Security revamped its longstanding methods of determining how immigrants would be assessed according to the “public charge rule.” This is the government’s method for determining who would likely become a financial burden on the country’s resources if granted citizenship.

Prior to that time, bankruptcy wasn’t really a factor that was considered under the public charge rule. After the changes, however, everything from your credit score and bankruptcy record suddenly became part of the evaluation.

Now, it’s changed again. According to the U.S. Citizenship and Immigration Services (USCIS), the new policy has already been revoked, and agents are to use the pre-2019 criteria for deciding who will likely become a “public charge.”

Given the mercurial changes to the rules, if you’re an immigrant in financial distress, the wisest thing you can do is get experienced guidance in both areas of the law before you decide your next steps. It may take some careful planning to make sure that your financial woes don’t ruin your chances for citizenship.