You feel like you are underwater in debt and do not see a way out. It can feel overwhelming, but bankruptcy is an option to get you back on your feet. Is it better to file for bankruptcy before or after the holidays? Let’s take a closer look.
When to File for Bankruptcy During the Holidays
Before you make a decision, you should consider a few things. Money comes in during the holidays when you receive gifts or bonuses at work. But money also goes out as you buy gifts for the people in your life.
Consider the following:
· Non-Dischargeable Debt: Any debts sustained during the 3 months before Christmas are identified as non-dischargeable. There are systems in place to ensure the filer does not go wild buying gifts for everyone and then filing for bankruptcy, hoping the debts are cleared. So if you want to wait until after Christmas to file for bankruptcy, hoping it clears your holiday debt as well, you are out of luck.
· Cash Bonuses: Do you receive a bonus each year with work? Some bonuses can significantly raise a person’s income level. But, even if your bonus is not nearly enough to pay off all your debt, it may affect the kind of bankruptcy that applies to you.
· The Means Test: There are two types of personal bankruptcy. Chapter 7 clears your debts and gives you a blank slate. Chapter 13 allows you to renegotiate payment plans and slowly repay your debts. The means test takes your most recent 6 months of income to determine which bankruptcy is right for you. If you receive a lot of money during Christmas, it may skew your means test. You would want to file before Christmas.
Filing for bankruptcy before Christmas would give you the fresh start you need. Try not to let it damper the holiday spirit, and know you are making necessary changes in your life to build back even stronger.
Miles & Hatcher, LLP can help you look at your options and see when it is the best time to file for bankruptcy. Call to speak with a professional: (909) 481-4080.