Many people begin to feel extra financial pressure as the holidays near. If you were already struggling to pay your debts, you might decide to file for bankruptcy after the holiday season comes to a close. While this is a popular decision among consumers, there are some things to keep in mind.
Don’t Overspend
When you decide to file for bankruptcy, you can feel fairly confident that your credit cards and other unsecured debt will get wiped out fairly soon. It may be tempting to give your family an extra-nice holiday by buying more gifts or taking a vacation you would not normally take. You might think it is okay to max out your credit cards since they will soon be discharged, right?
Wrong. Bankruptcy courts will know when you increased your debts in expectation of bankruptcy. First, the law prohibits the discharge of debts incurred within three months of filing for bankruptcy. This means that if you overspend over the holidays, that debt will not be dischargeable if you file for bankruptcy during the first quarter of 2020. Further, some people face accusations of fraud in this situation, since they used credit and never intended to pay it back.
End-of-the-Year Bonuses
Another consideration is whether or not you expect a bonus from work or another cash gift at the end of the year, as is common for many people. Know that this bonus will likely count as income for bankruptcy purposes, which might affect your eligibility for Chapter 7. In addition, you might lose that cash if you are not able to protect it with an exemption.
Contact a Bankruptcy Lawyer in Illinois for More Information
Before you decide to wait until after the holidays to file for bankruptcy, discuss your situation with Illinois bankruptcy attorney Charles T. Newland. Call 847.797.9300 or contact us online today.
