Can Illegal Aliens File Bankruptcy? The Answer May Surprise You

Submitted by Rachel R on Thu, 04/09/2015 - 3:41pm

Can Illegal Aliens File Bankruptcy? The Answer May Surprise You

Illegal immigrants can use bankruptcy protection

Image Source: Flickr user Elvert Barnes

There's no denying that the United States has thrived because of immigration, but illegal immigration in today's era is hotly debated. No matter where you stand on the issue of undocumented workers, the fact is that there is a significant influx of illegal aliens into our state. Between 1990 and 2000, North Carolina was the state with the greatest increase of immigrants with a 274% boom during that decade. Roughly 7.5% of our state's population is made up of immigrants or a little more than 750,000. The question at hand is whether these undocumented workers can file bankruptcy if their debts grow to be unmanageable.

The short and simple answer is – yes, so long as they meet very basic requirements. Here's why. The bankruptcy laws in US Code Section 109 do not mandate any citizenship requirement to use bankruptcy protection - there are just two standards. First, you need only have a domicile in the state where you plan to file. A domicile is “the physical presence of a person at the place of the domicile claimed, couple with the intention of making it his present home.” Second, you need a social security number or a taxpayer identification number.

How to meet the domicile requirement for bankruptcy

There are two questions to consider when determining your legal domicile for bankruptcy purposes. The first is: Where do you live now or where have you been living? The second is: Where are your principal assets located? The court will usually consider the six months (180 days) prior to your filing. If you have lived in the same state for the past six months, it's a no-brainer.

If, though, you've moved recently, it's the state you've lived in for the majority of the past six months that determines where you're eligible to file. If you haven't been in the state for more than three months (90 days), you will have to file where you lived previously or wait until you've exceeded 90 days in your current location. The asset question isn't critical for most undocumented workers, just the domicile.

How to meet the Social Security number requirement for bankruptcy

Some undocumented workers use other people's SSN or a fake SSN. You should not use either one for a bankruptcy filing because this would be considered bankruptcy fraud. Instead, if you don't have an SSN and can't get one, you should apply for a Taxpayer Identification Number (TIN). This is a number issued strictly by the IRS for purposes of paying taxes if you don't have a Social Security number. Some undocumented workers already have TINs that they use to pay taxes on their wages even though they are technically illegal workers.

Other illegals obtained Social Security numbers as part of an immigration executive order initiated by President Obama. Under the Deferred Action for Childhood Arrivals (DACA), the President has roughly 90,000 SSNs issued to undocumented aliens before a court injunction suspended the program. Until the court case is resolved, a TIN is the only option to get an identification number. Once you have a TIN, you can file a Chapter 7 or 13 if you're an illegal alien who needs to seek debt relief under the bankruptcy laws. You will also have to provide several past years of tax returns. If you didn't file your returns, you must catch up on these.

To find out more about the debt relief options available in North Carolina, contact the experts at the law offices of John T Orcutt. We have offices in Raleigh, Greensboro, Fayetteville, Wilson, Garner and Durham. Call +1-919-646-2654 for a free consultation. Be sure to ask about zero down bankruptcy plans.

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