Should I file Bankruptcy before or after Christmas?

We are in the midst of prime time holiday season! As much fun as that is, for many it also means a lot of added stress, especially when it comes to finances. Most people find themselves spending more money around the holidays, not only to purchase gifts but also hosting or attending holiday parties and possibly traveling. If you are already dealing with a large amount of debt, the holiday season is extremely stressful. In fact, you might be considering filing for bankruptcy to relieve some of that stress. So should you file before or after Christmas?
   
Well, the answer is; it depends!

One big mistake that we see people making is that they acquire large amounts of debts around Christmas because they plan on including that debt in their bankruptcy and therefore have it discharged. A discharge is an order that releases you from any personal liability of debt, which means you no longer have an obligation to pay it. Here is why that generally does not work around Christmas times.

Bankruptcy courts look back at the last 90 days before you file to see if you have made any extravagant purchases. Usually that means that you charged more than $500 for “luxury goods or services”.  Luxury goods or services basically means all items or services that are not reasonably necessary for your support or maintenance. Unfortunately, Christmas gifts would likely fall under this category as they are not necessary purchases.

The credit card company can object to these charges as fraudulent and the Bankruptcy court could determine that they are non-dischargeable. Not only can this be very stressful for you if a creditor objects to the debt being discharged, it can be very expensive to try to defend against their objection.

However, if you don’t intend to spend large amounts of money around Christmas then filing before Christmas might be a better option for you. This would more than likely leave your Holiday bonuses and cash gifts would be yours to keep because income is decided based on the 6 calendar months before filing. This is especially important for those who work at the ship yard and normally receive a large bonus in December.

If you are considering bankruptcy then a chat with our experienced bankruptcy Attorney Edrie Pfeiffer will help you clear up any concerns. Call us at (757) 340-3100 to schedule your appointment!

 

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