Filing for bankruptcy in the United States will not affect your ability to obtain a green card or citizenship. Many Korean Americans worry that bankruptcy will negatively impact their immigration status, but bankruptcy does not constitute “moral turpitude” under immigration law, and USCIS has made this clear.
Bankruptcy and immigration status: Don't worry
Filing for bankruptcy is a legal debt relief process. It is a right guaranteed by the U.S. Constitution, and immigrants are entitled to the same protections of bankruptcy law as citizens.
- Permanent residency: Filing bankruptcy will not affect your ability to keep or renew your green card
- US Citizenship Application: Bankruptcy history does not adversely affect the “good moral character” requirement for citizenship applications (N-400)
- Visa extensions: Legal bankruptcy proceedings do not affect visa extension or change of status
Chapter 7 vs Chapter 13: Which should you choose?
Chapter 7 (liquidation type bankruptcy)
Most unsecured debts (credit cards, medical bills, personal loans) are discharged. This is a good option if you have few assets and your income is below a certain level.
- Turnaround time: 3-6 months
- Income Limit: New York State median income or less (must pass Means Test)
- Exempt property: Protects your primary residence, vehicle, and a certain amount of personal property.
- Credit history: Keep records for 10 years
Chapter 13 (reorganization bankruptcy)
Create a 3-5 year repayment plan to consolidate your debt. Ideal if you want to reduce your debt while keeping your home.
- Processing time: 3-5 years (repayment period)
- Income requirements: Must have a regular income
- Protect your home: Mortgage arrears can be included in a repayment plan
- Credit history: Keep records for 7 years
New York State Exemptions (Exemptions)
There are assets that are protected in bankruptcy (as of 2026):
- Residential property (Homestead): Queens/Kings County up to $204,825
- VehicleUp to: $4,825
- Retirement accounts: 401(k), IRA fully protected
- Personal property: Furniture, clothing, household goods
- Social Security: Fully protected
Debts not discharged in bankruptcy
Some debts are not discharged in bankruptcy:
- Tax delinquencies (with some exceptions)
- Student loans (exceptions for demonstrated extreme financial hardship)
- Child support, alimony
- Debts due to fraud
- DUI accident payouts
Special considerations for one person
Impact of Korean assets
When you file for bankruptcy, you must report your assets around the world. If you have real estate or deposits in your home country, you must report them accurately, and hiding them can be punishable as bankruptcy fraud.
For sole proprietors
For Korean American small business owners, it's important to distinguish between personal and business bankruptcy. Your strategy will vary depending on your business form (LLC, Corp, sole proprietorship).
Joint debts
If you have joint debts with your spouse, filing bankruptcy for only one of you may concentrate the debt on the other. You should carefully decide whether to file jointly as a couple.
Frequently asked questions
Q. Will I lose my home if I go bankrupt?
Not necessarily - equity in your home within New York State's exempt property limits is protected. If you choose Chapter 13, you can keep your home by incorporating your mortgage arrears into your repayment plan.
Q. Can I build credit again after bankruptcy?
Answer. You can start rebuilding your credit with secured credit cards and more immediately after your bankruptcy is completed. Many people rebuild substantial credit scores within 2-3 years.
Q. Will my bankruptcy be known at work?
In most cases, your employer isn't automatically notified. However, if you're in wage garnishment, your employer may be notified of the garnishment stop.
Q. How much does bankruptcy cost?
Chapter 7 court costs are $338 and Chapter 13 is $313. Attorney fees are additional and will be explained during your consultation. If you have a financial hardship, you can pay in installments.
Free yourself from the burden of debt and get a fresh start. To find out if bankruptcy is the right option for your situation, schedule a consultation at the Law Offices of Jin Dong Cho. We are happy to speak with you in your own language.
Phone: (718) 353-2699 | Email: jd@choattorneys.com
