It’s that time of year again—the holidays will be here before you know it. Though this time is joyous for many, the financial pressure of buying gifts, hosting holiday meals, and spreading cheer can make the holidays stressful for those struggling to make ends meet.
If you are struggling financially and feel bankruptcy is the only option for removing holiday stress, you need to make sure you file at the right moment. Choosing the wrong time to file for bankruptcy can tremendously impact your case in a negative way, including the possibility of dismissal.
When you file for bankruptcy, creditors evaluate pre-bankruptcy spending to ensure that you are not trying to take advantage of the bankruptcy process. Unnecessary large purchases made on credit within 90 days of filing, including holiday spending, are often not dischargeable and can cause significant issues for your case. Even after 90 days, large purchases or cash advances made on credit, at a point where a debtor knew or should have known that they did not have the wherewithal to repay the debt, can lead to the creditor filing a complaint to ask the court to make that debt non-dischargeable.
If you file for bankruptcy after making significant holiday purchases, you may give creditors a chance to accuse you of fraud. Being found guilty of fraud can have detrimental effects on your bankruptcy filing, including the complete dismissal of your case. Filing earlier in the year eliminates the possibility of discharge resulting from excessive holiday spending.
You have enough to do during the holidays without worrying about creditors calling to collect their debt. One of the best ways to keep the creditors from contacting you during your festivities is to file before the season. When you file, a court injunction known as automatic stay protects you from debt collectors.
Filing earlier in the year means the automatic stay injunction will protect your holiday celebrations from being affected by things like:
- Foreclosure and eviction from your home
- Repossession of your vehicle
- Utility disconnection
- Contact from credit card and other collectors
Choosing to file for bankruptcy earlier in the year gives you peace of mind that collections companies will leave you alone during the holiday season. As a result, you can spend your holidays focusing on those that matter most to you instead of worrying about debt.
If you choose to file for bankruptcy after the holidays, you may run the risk of making your case last much longer than needed. Many employers give bonuses during December, which can falsely inflate your income. This can have an effect on the income-based test that dictates the chapter of bankruptcy that you are eligible to file.
To prevent your income from being inaccurately evaluated, file for bankruptcy before receiving any potential bonuses or monetary gifts. Filing earlier in the year ensures that the people reviewing your case have the most accurate representation of your financial situation. However, a bonus earned but not yet paid can be an asset in a Chapter 7 bankruptcy case.
Dealing with debt alone can be time-consuming and overwhelming. With the holiday season right around the corner, you shouldn’t have to worry about debt alone. Choosing someone to help you through the bankruptcy process and be by your side ensures that you take the proper steps when filing for your bankruptcy. At Sawin & Shea, we help you choose the right time to file so that you can enjoy your holidays without unneeded financial stress.
Remember that filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of the overwhelming debt and advise you on life after bankruptcy. We are here for you during this life-changing process. Please do not hesitate to call us today at 317-759-1483 or send an email for a free consultation. We are ready to help.