Bankruptcy Around the Holidays: What Should I Consider?

As the holiday season approaches, it is important to consider a range of issues if you are thinking about filing for personal bankruptcy. Depending upon your circumstances, it could make sense to file for bankruptcy before the holidays, or it could be more sensible to file for bankruptcy after the holidays. You should discuss your specific circumstances with a bankruptcy lawyer in Oak Park before you make any decisions. In the meantime, the following are some important considerations to keep in mind when you are thinking about bankruptcy around the holiday season.

Debt Accumulated Close to a Bankruptcy Filing Will Not Be Dischargeable

If you use your credit card to make charges for holiday gifts, holiday travel, holiday decor, or other expenses close to the time when you are planning to file for bankruptcy, you should know that these debts are unlikely to be discharged in a consumer bankruptcy case. Under the U.S. Bankruptcy Code, any purchases that are made within 90 days from the date of your bankruptcy filing that are for “luxury goods” will not be dischargeable in a bankruptcy case. You should know that the term “luxury goods” essentially includes charges for anything that you do not need, so Christmas gifts of any type would likely be considered “luxury goods” and would be non-dischargeable.

Similarly, any cash advances you take out on a credit card within 70 days of filing for bankruptcy will not be dischargeable. As such, you cannot avoid the “luxury goods” issue discussed above by taking out a cash advance and making purchases in cash instead of on your credit card.

Using Your Credit Card During the Holidays Before a Bankruptcy Filing Could Result in Fraud Concerns

Not only will certain “luxury goods” charges and cash advances be non-dischargeable if they are made close to a bankruptcy filing, but they could also lead to concerns about bankruptcy fraud, which can be serious.

Reorganization Bankruptcy Could Ease Some Financial Concerns During the Holidays

If you are planning to file for a type of reorganization bankruptcy (which is usually Chapter 13 bankruptcy for individuals), filing for bankruptcy as soon as possible could potentially make the holiday season a bit easier. For example, if you are worried about losing your home to foreclosure during the holidays, a Chapter 13 bankruptcy case could stop the foreclosure and could allow you to catch up on mortgage payments so that you will be able to remain in your house long after the holiday season ends. However, it is important to know that this benefit of Chapter 13 bankruptcy does not apply to Chapter 7 bankruptcy cases in the same way.

Contact an Oak Park Bankruptcy Lawyer

If you are considering personal bankruptcy as the holiday season approaches, it is important to discuss your circumstances with one of our experienced Oak Park bankruptcy attorneys as soon as possible. Many complications can arise with bankruptcy cases around holiday spending, and it is essential to take steps to ensure that you will be eligible for a bankruptcy discharge and to make certain that you do not make any decisions that could impact your ability to have a successful bankruptcy case. Contact the Emerson Law Firm today for more information.



See Related Blog Posts:
Inflation and Consumer Bankruptcy
Converted, Closed, and Dismissed Bankruptcy Cases: What is the Difference?

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