With Christmas just around the corner, chances are your spending is a little – or a lot – higher than it normally is. After all, purchasing your loved ones nice gifts that you know they’ll appreciate is just one of the ways you can show them that you’re thinking about them this time of year. That goes especially for the children in your life, who may be expecting “big” gifts from both Santa Claus and you this year.
If you know you can’t afford the kind of money that you’d like to spend on your loved ones this time of year, chances are you’ve thought about how bankruptcy can help. You might have thought that you could spend like crazy in December and declare bankruptcy in January to get rid of the debt – but you wouldn’t be the first.
Unfortunately, it’s just not that simple.
Christmas & the Three-Month Rule
Many people go to bankruptcy attorneys like us around the holidays looking for a solution to their Christmas shopping debt. Unfortunately, there’s a rule that prevents the discharge of any non-essential debts incurred three months before and after Christmas.
In other words, if you spend a ton of money on Christmas presents or other non-essential items any time from September through March, bankruptcy won’t help.
Also, it’s unrealistic to expect to be debt-free by the end of January when you file for bankruptcy in December, even if you’re trying to get rid of older debts. Any given bankruptcy case can go on for up to six months before settling, which means it could be May or June by the time your case concludes.
Necessities vs. Luxury Items
It’s important to point out the distinction between what the bankruptcy court would consider a “necessity” and what it could consider a “luxury item.”
Starting with the latter, the court considers luxury items to be any goods or services that aren’t a reasonable necessity that support the bankruptcy filer or their dependents. By contrast, a necessity is any item or service that one would need to provide for a basic need, such as food, clothing, medical care, shelter, etc.
That said, it would be difficult to argue that expensive designer clothing or costly grooming services fall more on the side of “necessity” than “luxury.” If one makes any luxury purchases exceeding a total of $625 within 90 days of filing for bankruptcy, their creditors are likely to ask the judge to not consider the debt for discharge, which leaves the debtor on the hook.
Do You Need a Bankruptcy Lawyer?
It’s not easy to decide when it’s time to file for bankruptcy. There are a lot of variables at play and many details to consider. Whether you are determined to get rid of your debt or are still exploring your options, our attorney at Nguyen Law Group can provide reliable and accurate legal guidance.
For more information about our services, please contact us online!