Should I File for Bankruptcy During the Holidays?

The holiday season can be difficult on family finances. The costs of gift giving, elaborate family meals, and Thanksgiving travel can put many Chicago families in more debt than they are able to manage. If you are already considering filing for consumer bankruptcy, is it a good idea to do it during the holiday season? Or would you be better off waiting?
Filing for Consumer Bankruptcy in December
Generally speaking, personal bankruptcy filings are at their lowest during the holiday months, according to data from the American Bankruptcy Institute (ABI). Whether this has to do with the fact that most Illinoisans are concentrating on family activities (and putting their financial problems on hold) or simply cannot find time to speak with a Chicago bankruptcy lawyer during this season, it is important to consider the ramifications of filing for bankruptcy just after the holidays.
Most notably, there are certain exceptions to bankruptcy discharge that may prevent you from discharging debts you have accrued from Christmas shopping or purchasing other holiday items. What laws do you need to know? Section 523 of the U.S. Bankruptcy Code stipulates that many discharges sought in bankruptcy do not allow an individual to discharge the following debts:
  • “Consumer debts owed to a single creditor and aggregating more than $500 for luxury goods or services incurred by an individual debtors on or within 90 days before the order for relief”; and
  • “Cash advances aggregating more than $750 that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relief.”
In other words, you cannot make pricey credit card purchases or take out substantial cash advances on your credit card during the holiday season and then expect those debts to be discharged in bankruptcy if you file immediately afterward.
Managing Your Finances During the Holidays
If you do have debt that you cannot pay and you have already incurred additional debt as a result of the holiday season, you should learn about your options from a bankruptcy lawyer before filing for personal bankruptcy. In the short term, it is also important to consider ways of managing your finances during the holidays. An article from the National Endowment for Financial Education (NEFE) provides some useful tips:
  • Create a budget for gifts, decorations, parties, and travel and stick to that budget.
  • Make a list of people for whom you plan to buy gifts, and feel comfortable cutting people from the list if they do not fit within your budget.
  • Always do comparison shopping, both in person and online. You may be able to get a much better deal on an item at a particular website.
  • Seek out sales and wait to buy holiday items until you have a coupon or until they go on sale.
  • Avoid buying expensive gift wrap and other materials that will be discarded.
  • You may have to make concessions, which can involve cutting out travel plans or attending certain parties.
The holidays are not typically a time in which we put finances first, but they can cost many Illinoisans a great deal of money. If you have questions or concerns about filing for personal bankruptcy, you should discuss your situation with an experienced Oak Park bankruptcy lawyer as soon as possible. Contact the Emerson Law Firm today to learn more about how we can assist you.
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