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Is Bankruptcy an Option Even if You Are Not a Citizen of The United States?

Feb. 17, 2014

Yes, you may file bankruptcy if you are in the U.S. no matter what your citizenship status may be.

What Does It Take to Be a “Debtor” in Bankruptcy Court?

The federal law that governs bankruptcies in the U. S., the Bankruptcy Code, puts no citizenship limits on who may file bankruptcy. Section 109(a) of the Code states that “only a person that resides or has a domicile, a place of business, or property in the United States . . . may be a debtor . . . .” for filing bankruptcy. “Person” is defined to include an “individual” (as well as a “partnership and corporation”). So there is no requirement about needing to be a citizen, or even of being legally in the country. So everyone, citizen or not, legal or not, who is living in, runs a business in, or has property in the U.S. can file bankruptcy here.

What Does it Take to Have a “Domicile... in the United States”?

To have a “domicile” means that you are physically present in one location while having the intention of making that place your present home. It doesn’t take much. But it helps if you have been in one place—in the same general area not necessary at a single address within that area—for a period of time. And the more you can show facts indicating your intention to stay here—such as signing an apartment rental agreement, getting a state driver’s license, enrolling your children in school—the easier to show that you’ve established a domicile.

Do You Have “Property in the United States”?

If you have any meaningful amount of property–a bank account or other kinds of financial accounts, a vehicle, and/or other personal possessions—located with you in the U.S., that alone may well be enough for you to qualify as a debtor.

Social Security and Individual Taxpayer Identification Numbers for Your Bankruptcy Documents

The documents that must be prepared and filed in your bankruptcy case ask for a Social Security number. The Bankruptcy Code actually does not explicitly require this, but if you have a valid Social Security number appropriately issued by the Social Security Administration, use it.

Otherwise, get an Individual Taxpayer Identification Number (“ITIN”) from the Internal Revenue Service (IRS), and use that. This is what the IRS says about ITINs in its website:

An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service. . . . IRS issues ITINs to individuals who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain a Social Security Number (SSN) from the Social Security Administration (SSA). ITINs are issued regardless of immigration status because both resident and nonresident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code.

IRS issues ITINs to foreign nationals and others who have federal tax reporting or filing requirements and do not qualify for SSNs.

Proof of Identity for the “Meeting of Creditors”

Beyond the bankruptcy paperwork, you will also need to show proof of your identity at the so-called “Meeting of Creditors” which happens about a month after your case is filed. The purpose of this is to enable the bankruptcy trustee presiding at that meeting to determine if you are the same person who filed the bankruptcy case. At that meeting (which usually lasts only 5-10 minutes) you will need to answer a few questions under oath, and the system needs to verify that you are a real person and are the right person. There have been occasions of identity fraud of this sort, which this proof of identity requirement is intended to prevent.

To prove your identity you usually need to produce two documents at this meeting: 1) one showing your SSN or ITIN—such as the original Social Security card it that’s available, or some other document or formal paperwork received from the government or from an employer showing the number (such as a paycheck stub with your name and your SSN or ITIN); plus 2) some form of photo identification—such as a driver’s license or passport.

If you are not a citizen but meet these conditions, you can file for bankruptcy.

Other Tough Questions

For some people, that’s all that you need to know.

However, if you have debts from another country, or if you are seeking to become a citizen, or if you are not in the U.S. legally, three other important questions need to be considered. 1) Would you be able to discharge (legally write off) debts from another country? 2) Would filing bankruptcy hurt a legal non-citizen’s efforts to become a citizen? 3) Would filing bankruptcy increase an illegal immigrant’s risk of deportation?

We’ll address these in our next blog post. If these situations apply to you, please come back to this website in a week, or call us in the meantime.