Planning for Bankruptcy During the Holidays

Christmas is expensive. With the holiday season is full swing, many people are feeling the pressure of buying gifts and wanting to to give to others. However, if you are considering filing for bankruptcy, it is important that you do not go crazy with your credit cards and take out large amounts of new debt.

Under current bankruptcy laws, if you make any new debts for luxury goods of more than $550.00 within 90 days before filing for bankruptcy, they cannot be discharged. Normal purchases such as food, gas, or other necessities are not considered luxury goods. Buying a diamond ring or designer handbag would be considered luxury goods.

Also, any cash advances totaling $825.00 made within 70 days of filing bankruptcy will not be discharged as well. Unusual purchases can also raise questions, and should be avoided. Creditors can claim that when the charges were made, you had no intention to pay it back, therefore your debt should not be discharged through bankruptcy.

If you have made new debts or cash advances and are needing to file bankruptcy, we recommend to continue to pay the minimum payments on the accounts while you wait out the 70 or 90 day period.

Categories: Chapter 13, Chapter 7