Christmas and Bankruptcy

Silent Night is not just a traditional Christmas carol. It is also what most bankruptcy offices sound like in the time between Thanksgiving and Christmas. Virtually no one wants to file for bankruptcy right before the holiday and invite Court scrutiny over what Santa might bring to little Johnny.

While that is a normal response, there are other factors to consider:

• Depending on your arrangement with your credit card companies and how you use your credit pre-filing, you may create nondischargeable debt (debt you cannot get rid of in bankruptcy).

• By waiting until after the holidays, you are almost certainly going to push your filing in to a new tax year, which can have consequences on your eventual filing.

• If you receive a holiday bonus from work or a cash gift from friends or family, that can increase your “income” for purposes of qualifying to file certain types of bankruptcy which can limit your options later on.

Most people who file around Christmas do so because they have to because a car is going to be repossessed or their house will be foreclosed on. But for other people who know they need to file soon, but do not have a definite date by which something has to be done, it may make the most sense to file before some of the above-named events occurred or it could be worth it to wait and file later.

For an analysis of the pros and cons of filing immediately or waiting, contact a licensed bankruptcy attorney.