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Undocumented Debtors

posted by Katie Porter

Immigration issues continue to be a major political football, and the work of Jean Braucher, Bob Lawless, and Dov Cohen on race in bankruptcy garnered front-page NY Times attention this year. This makes the publication of Chrystin Ondersma's paper titled Undocumented Debtors particularly timely. The paper is the first-ever look (to my knowledge) at whether and how undocumented people file bankruptcy. The key finding is that while it seems legal--and indeed arguably explicitly contemplated by the bankruptcy system--that undocumented people may file, the rate of filings is very low--on the order of less than one percent of the rate of debtors in the general population. Ondersma also provides a good overview of the credit systems available to undocumented people, ranging from those offered by large national entities, such as ITIN mortgages, to informal mechanisms such as tandas.

The empirical approaches used in the paper are novel but not perfect, as Ondersma acknowledges. In particular, I wanted to know more about what clerks of court responded to her inquiry. While about half did so, without the Central District of California and some similar places, the implications seem unreliable to me. Ondersma finds substantial local variation in procedure and practice, echoing over two decades of research on the disuniformity in the uniform U.S. system.

While the recommendation to repeal BAPCPA was a bit tired (I bet 75% or more of consumer bankruptcy scholarship since 2005 has the same thing), I found the discussion of building walls between the bankruptcy system and Homeland Security, similar to the approach used in the tax context, to be very thought provoking.


One large hurdle or barrier to filing or not having the a case promptly dismissed is the requirement to produce a social security number on an official document. I have not seen an ITIN used, and if a debtor used someone else's SSAN at any time it would be a red flag for dismissal, or a non discharge or dischargeability action. Any question about the debtor's identity or SSAN is required to be referred to the United States Trustee. Obviously the undocumented debtor would have to weigh the clear threat of having the system investigate their financial affairs vs. handling creditor harrassment. Interesting article.

A significant practical complication is that navigating these challenging waters calls for expertise in two distinct specialties that do not often reside in the same lawyer or firm, and doing so on behalf of clients who rarely have the resources to custom-build a team of lawyers.

Thanks for the post Katie! Chrystin and I also are doing an NCBJ-sponsored study of the overall financial condition of undocumented immigrants, paper to come out later this year!

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