Holiday Spending and Bankruptcy

With the clock striking twelve on New Year’s Eve, the opportunity for second chances and a fresh start becomes the focus of our thoughts and efforts. You will hear many people proclaiming, “New Year, New Me!” This is true with many aspects of our lives that we desire to change. We spend much of January focusing on our health, getting our homes organized, and creating plans for achieving our goals.

After the New Year, we see a surge of people who have explored bankruptcy with months before but who weren’t quite ready to pull the trigger and take the plunge. And unfortunately, we end up having to tell many of our clients, “not yet.”

Perceived Fraudulence

You may ask, “why do we have to wait when you were eager to help us a few months before?”
Because holiday buying on credit may be tagged as fraudulent to the card issuers. It’s a principle of bankruptcy that you cannot incur debt, knowing that you don’t intend to repay it. This can be perceived as fraud. And debts that are incurred by fraud cannot be discharged in bankruptcy.

The creditor has the opportunity to file a complaint and prove its case that the debt was incurred with no intention to repay it. Occasionally, the creditor may not bother; but, many of them do.

It doesn’t look good if you saw a bankruptcy lawyer in September, treated your family to a lovely Christmas in December by using your credit cards, and then filed bankruptcy in February. Those facts make it look like you planned all along to shed the December spending in bankruptcy.

The best thing you can do if you incur new debt over the holidays is to wait a few months before you file so as not to raise any eyebrows.

Christmas on a Budget

Christmas can still be a special time even when you are on a budget. Some of my most cherished family memories are of Christmases where we were worried if we would, “Make it through December,” as Merle Haggard once sang.

Start planning now how you can scale back some of the excesses of the holidays without digging the hole deeper.

• Apply time and thought to holiday making, rather than money.
• Leave your credit cards at home.
• Give gifts of your time and or skill.
• Give one gift rather than several.
• Engage your children in making gifts rather than buying them.
• Entertain at home rather than at a restaurant.
• Recycle or make decorations.

To start the new year fresh and create a new start for you and your family contact your local Fairfield bankruptcy attorney.