Bankruptcy & Holiday Shopping Debt

woman holiday shopping holding many bags

The holidays often mean a lot more spending than usual, and a lot more spending can mean a lot more debt. As the New Year approaches, it’s not uncommon for issues with debt to arise – or come to a head – as people focus more on purchasing the perfect gifts or providing the best experiences for their loved ones.

For many who may feel pressured to spend more during this time than usual, there’s a common misconception that bankruptcy can wipe out debt incurred because of holiday spending. Even if you max out your credit cards, the myth tells us, you can simply wipe out your debt with Chapter 7 bankruptcy.

We stress that this is a bankruptcy myth, and a potentially devastating one to go around this time of year. According to the U.S. bankruptcy code, luxury debt of $600 or more incurred three months before ­or after Christmas can’t be discharged in bankruptcy. The reason for this is to prevent fraudulent bankruptcy filings intended to absolve people of Christmas and holiday-related spending debt.

Even so, you can seek a discharge of any amount for necessary expenses. Anything that might look like an optional purchase related to the holidays, however, may not be up for discharge. Also, keep in mind that attempting to pass off a luxury expense as a necessary expense is considered fraud, and you can face criminal charges if accused of bankruptcy fraud.

Consult with an experienced bankruptcy lawyer for guidance on what may or may not be considered a necessary expense that you can discharge during bankruptcy.

Bankruptcy Isn’t a Quick Fix for Debt

Some bankruptcy cases can be resolved fairly quickly, but “quickly” means at least several months. This is another reason why you shouldn’t look at bankruptcy as a way to alleviate holiday-related spending debt. Put simply, even if you file early in December, your case could last well into April or May.

Try to Spend Less During the Holidays

If you are struggling with debt or fear your problems with debt may soon get out of control, try to spend less during the holidays. You can’t count on bankruptcy to help you get rid of this debt, so the most important thing to do now is to limit your spending to prevent falling into debt that cannot be discharged in the near future.

Remember that the holidays are foremost about spending time with friends and family, which doesn’t have to cost anything at all. Keeping this in mind can help you work through your problems with debt during the holidays and protect your right to seek a discharge for other qualified debts in your life.

We Can Help with Bankruptcy

Buchalter & Pelphrey Attorneys At Law is here to help people get through bankruptcy. We understand that this can be an intimidating and confusing topic to approach, especially during the holidays, but rest assured that our experienced attorneys can provide the legal support you require to reach the best possible outcomes.

For more information about how we can help, contact Buchalter & Pelphrey Attorneys At Law online now.

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