Your financial situation may be looking grim, but you don’t want to contemplate filing for bankruptcy until after the holidays. That’s entirely understandable — but you need to exercise some caution so you don’t make some common holiday mistakes that could later affect your claim.
When you know that you may need to file for bankruptcy soon, it can be tempting to make use of the remaining credit you have available, first. However, any “luxuries” you buy on credit during the 90 days immediately prior to filing your petition can be considered fraudulent purchases. Those won’t be dischargeable in bankruptcy. Similarly, debts from any cash advances you take within 70 days of filing for bankruptcy may also be yours to keep.
In practical terms where the holidays are concerned, that means things like:
- Don’t charge a plane ticket to go see your folks. While being far from your family during the holidays can be hard, that plane ticket would definitely be considered a luxury by the trustee.
- Don’t go wild with gift-giving. You naturally want to give your close family members and friends a token of your affections during the season, but charging those gifts to your credit cards right now could be a very bad idea.
- Don’t indulge in retail therapy with the holiday sales. Skip Amazon Prime day and eschew the sales in the stores. Don’t make any last-minute purchases on electronics or anything else for yourself that you don’t absolutely need.
Keep in mind that the court considers non-luxury items that were purchased in the 90 days prior to your filing in a different light. You probably don’t need to panic if you have to buy groceries, gas for your car or new shoes for work on credit — but it pays to be as cautious as possible. When in doubt, talk to a bankruptcy attorney before you make any moves.