What to Know About Filing for Bankruptcy After the Holidays

 Posted on December 27, 2024 in Bankruptcy

Few people want to file bankruptcy right before or during the holidays. For one, it can be much harder to enjoy your holidays while you have bankruptcy proceedings looming. You might be worried about losing access to your lines of credit and not having the money you need to have your customary celebration. You might need to travel to see family if you live in separate parts of the country, spending money on flights, hotels, and food during travel. Parents are usually focused on making sure their children will have presents to open and are not worried about the family’s financial situation. While enjoying the holidays with your family is important, you might be left with even more debt, some of which you might not be able to discharge. You should consult an experienced San Antonio, TX bankruptcy lawyer about how to time your bankruptcy.

Debt From Purchasing Luxury Items May Not be Discharged 

Bankruptcy courts treat luxury purchases from the last several months differently than other debt. This very much includes luxury goods purchased as gifts for others and many travel-related costs. If you know that you are likely to file for bankruptcy soon, it is best to avoid luxury purchases and consider celebrating at home this year.

If you do choose to purchase luxury items or services during the holidays, your creditor could ask the court to not discharge debt from those specific expenses. This means that even after bankruptcy, you might still be liable for paying back the cost of any luxury goods or services you purchased on credit over the holidays.

Your Holiday Bonus and The Means Test 

If your employer gives substantial end-of-year bonuses, you will want to talk to your lawyer about how the bonus might impact your apparent income on the means test. If you plan to file for Chapter 7 bankruptcy and are on the cusp of passing the means test, receiving a large bonus from your employer could artificially inflate the amount of income you appear to make.

Holiday Debt May Not be Considered a Necessity 

Debts you incur in the 90 days before you file are generally only dischargeable if the money was spent on necessities. If you were hoping to do some guilt-free holiday shopping knowing that your credit card debt is about to be discharged, you should know that most holiday-related purchases are not considered necessities. Credit card expenditures for food, necessary clothing such as new winter coats for your children, and utilities will likely be discharged. Expenditures for gifts like jewelry, perfume, or fun family outings might not be.

Contact a San Antonio, TX Bankruptcy Attorney

Law Offices of Chance M. McGhee can help you time your bankruptcy filing properly. Experienced Bexar County, TX bankruptcy lawyer Chance McGhee has been helping families faced with insurmountable debt for more than 20 years. Contact us at 210-342-3400 for a complimentary consultation.