Usually not. But in some limited situations the indirect consequences can be huge.
Considering what’s at stake, if you are either a legal or illegal immigrant considering filing bankruptcy, this is definitely an area where you need the advice of both a bankruptcy and immigration attorney. It’s my job to give my clients advice, but part of that same job is to tell them when they also need the help of another professional. This is one of those situations.
When you go to meet with each attorney, here are some general principles that can guide your consultation with them:
1) Just as the bankruptcy documents don’t ask you directly anything about your citizenship status, your naturalization application will not ask directly anything about filing bankruptcy. Bankruptcy is a legal method for dealing with your debt, and in fact may even help you avoid being tempted to deal with your financial circumstances in more desperate ways which could directly hurt your immigration prospects.
2) To become a lawful permanent resident or citizen, an immigrant must establish “good moral character.” It is conceivable, although not likely, that your bankruptcy filing could be seen as an issue of moral character. Immigration is considered on a case-by-case basis, so you need to talk with an immigration attorney thoroughly familiar with current practices.
3) If you have been convicted of one of a certain set of crimes, or you reveal during your bankruptcy proceeding that you committed one of these crimes, this could adversely affect your immigration status, and could even result in deportation. Examples include crimes of “moral turpitude” like using credit cards in other people’s names, writing fraudulent checks in more than one state, tax evasion, fraudulent transfers of assets, or providing false information to the federal government (for example, bankruptcy petitions!).
4) Your citizenship application will ask if “you have ever failed to file a required federal, state or local tax return,” and whether you owe any overdue taxes. Bankruptcy can legally write off some taxes, but there may well be adverse immigration consequences for doing so. This is especially problematic if you have been working and getting paid “under the table,” and not having taxes withheld.
5) If you’re not legally in the U.S., you are definitely exposing yourself to the legal system by filing bankruptcy. False social security numbers—either on the bankruptcy documents themselves or even on prior credit applications—would likely lead to huge problems. In some parts of the country, U.S. Attorneys appear at the Meeting of Creditors to ask about these and other immigration related matters. You are under oath and may find yourself in a very dangerous position.