It's the season of giving again which often means racking up tons of debt on top of the debt already owed. But if one of your New Year's resolutions is to consider your bankruptcy options, you will want to avoid the biggest mistakes bankruptcy filers make during the holidays.
Below are a few tips:
Consider Your Bankruptcy First
The biggest mistake that debtors make during the holidays is spending all of their cash on gifts while failing to set any money aside. If you do decide to file bankruptcy after the holidays, it is the one gift to yourself you can't charge to a credit card. You must pay cash for your bankruptcy filing, so it's prudent to avoid blowing all of your cash this holiday season - just in case.
Leave You Credit Cards Behind
The cliché "one for the road" is not and should never be applicable to credit cards during the holiday season especially not right before filing bankruptcy. Once you file bankruptcy, the trustee will have a "look back" period of 90 days to see if you charged anything to your credit cards and then failed to pay. If they see that you charged Christmas gifts to a credit card right before filing bankruptcy and failed to make an effort to pay off the debt, they might declare that debt nondischargeable.
Don't Gift Your Assets
While it's understandable that the holiday spirit may put you in a giving mood, the bankruptcy trustee won't be happy if you gift large amounts of cash and property to friends and relatives. After filing bankruptcy, the trustee will take a look at the year prior to the filing to see if there were any asset transfers. If they find that you have giving away assets they will demand that the property is return and if the transfers amount to an attempt to defraud the bankruptcy system, they may even dismiss the case.