Financial problems can put a big damper on your holiday season — but you may not be ready to file for bankruptcy just yet. Maybe you haven’t decided that bankruptcy is the best option, or maybe you simply can’t bear the thought of dealing with all that paperwork and stress on top of the holidays.
But is it really a good time to wait? Here’s what you should consider first:
- Your holiday shopping could come back to bite you. Charges for luxury goods (read “almost anything except food and shelter items”) within 90 days of your bankruptcy petition and cash advances taken within 70 days of filing are all subject to scrutiny. You could find yourself stuck with those debts.
- Gifts of cash from your relatives and year-end bonuses could keep you out of Chapter 7. Most people prefer to file Chapter 7 bankruptcy because that allows for a much broader, faster discharge of their debts. To do so, however, you have to pass a means test related to your income over the prior six months. A generous gift from a relative or a big year-end bonus from your company could put you over the limit.
- Your holiday could still be disrupted by creditors and legal action. You may want to wait until the holidays are past to deal with your financial situation, but your creditors don’t. Bankruptcy will put an automatic stay into effect that will stop harassing phone calls, emails and letters demanding payment and lawsuits over your debts. All of that can make your holidays very unpleasant.
Bankruptcy could be just the right gift to give yourself this holiday season. If you’re uncertain whether it’s right for your situation, you lose nothing by asking an attorney for a consultation to discuss the specifics of your case.