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The Christmas holidays and the bankruptcy woes: What to know

| Oct 18, 2017 | Bankruptcy, Bankruptcy |

If you’re already struggling financially, there’s probably no greater danger of putting yourself over the top and complicating your life unnecessarily than Christmas shopping.

American consumers put an average of $1,003 on their credit cards in 2016, which was just slightly more than the damage they did in 2015. The odds are good that 2017 won’t be much different.

It’s hard not to get caught up in all the holiday hoopla. There are some tempting sales going on everywhere you look. People are in a mood to be festive and a lot of folks end up buying something that catches their eye for themselves while they’re out shopping for other people.

Stores also push consumers hard to take those bargains. It isn’t unusual to see a store offer “no payments until February” or “6 months same as cash” on in-store credit.

However, it’s time to be realistic. If you’re already struggling with the bills, are you really going to have the extra money to pay off that new bill when it does come due? Will it just go into the mountain of other debts that you are already trying to juggle?

Unless you anticipate a big tax return or another windfall that will help you pay off your debt, those additional bills could just be what finally forces you into bankruptcy.

If that happens, you could be facing another unfortunate situation. Your recent holiday shopping may not be able to be discharged under a Chapter 7, or total bankruptcy. Lenders will often effectively challenge recent purchases that are unnecessary or “extravagant” — like the stack of gifts that you bought your kids or the new ring you bought for your wife. If you can’t discharge all of your debt, or the challenges from creditors makes it impossible for you to get a Chapter 7, you may be forced into a Chapter 13, which can drag out the bankruptcy process on a payment plan for 3-5 years.

Play it smart this holiday season. If you’re still in a position where you can pull out of your current economic situation, limit your spending to cash only. If you’re already financially underwater, a bankruptcy attorney can provide assistance and information. Think about this before you even start shopping.

Source: www.bankrate.com, “Don’t spend money before bankruptcy,” Justin Harelik, accessed Oct. 11, 2017

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