Are you pretty certain that your financial situation is unsustainable? Do you anticipate filing bankruptcy eventually?
If so, you’re hardly alone. For most people, all it takes is a couple of missed paychecks or a few unexpected medical expenses to put them on the brink of economic disaster. It isn’t uncommon for the start of the holiday season to trigger a sense of financial panic. A lot of people respond by deciding to put off filing for bankruptcy for a few months longer — until the holiday season is over.
That can be a huge mistake. Once someone realizes that they’re financially underwater with no hope of recovery except through bankruptcy, there’s an enormous amount of temptation to go ahead and spend money that they don’t really have.
Some people figure that they might as well have one last good time before buckling down under the rules of bankruptcy and will continue adding to their credit card debt. Others, knowing that they might not have the opportunity again for a while, will charge tickets on a plane to go visit their relatives. Some will indulge in one last moment of “retail therapy” during the Christmas sales. Some will take a practical approach to things and hurry to replace big-ticket items, like their washer and dryer, on credit while they still can.
All of those actions can end up causing you significant problems during and after your bankruptcy once you do file it. When you file bankruptcy, your purchases for the prior 90 days are scrutinized. Anything that can be deemed a luxury item can be considered an act of fraud — or a deliberate attempt to evade responsibility for your debts. Similarly, any cash withdrawals you make up on your credit cards are also suspect.
If you anticipate filing bankruptcy but have decided to wait until after the holidays to act, don’t let your holiday shopping damage your case. For more information, contact our office to discuss your situation.