You Better Watch Out…Bankruptcy and Christmas Spending

When I was a kid I remember my Dad mentioning how stressful Christmas is.  I didn’t understand how the greatest time of the year could be stressful.  But now as a father to six kids, I know what he was talking about.  Frankly, Christmas is expensive.  Even if you don’t spend a lot of money on the holidays you are spending more than you do in any of the other 11 months.  For most, Christmas spending is not in the budget, so we compensate by putting gifts on the ol’ credit card.

If you know that bankruptcy is in your near future the money you put on a credit card now could cause you problems in your bankruptcy down the road.  Here are a few things to keep in mind while you tackling this years Christmas list:

Avoid Putting Gifts on Credit Cards

If you know bankruptcy is just around the corner be careful on how you use your credit card.  If you purchase luxury goods or services totaling more than $600 in the 90 days prior to your bankruptcy filing there is a presumption that those specific debts will not go away in your bankruptcy.  This means that your credit card company could come in and object to the charge on your credit card for that slick new iMac computer.  While the rest of your debts will still likely be discharged (eliminated) in your bankruptcy, those charges within that 90 day window prior to the filing may have to be paid back.

Don’t Take Out Cash Advances

Like the charges on your credit card, if you take out a cash advance on a credit card within the 70 days prior to your bankruptcy that totals more than $875 you may end up paying that one back as well.  Again, the credit card company can come in and object to those specific cash advances being discharged in your bankruptcy.

What Should You Do?

So is there a solution to this dilemma   Of course, you could just not use your credit cards at all and the problem is solved.  But what if your Black Friday was one to be remembered!?  Then you can simply wait.  Wait at least 90 days from the day you made the charges or took the cash advance to file your bankruptcy case.  This would mean that if you made a bunch of charges on Black Friday that you shouldn’t file your bankruptcy until February 21, 2013.