Notice: Due to COVID-19, we will be conducting all consultations via Zoom and telephone. We are open and here to help people in these trying times.
Please don’t hesitate to call us if you have any questions!
Bach Is Your Financial Future.
555 Skokie Blvd Suite 250, Northbrook, IL 60062
PO Box 1285, Northbrook, IL 60062
Contact Us Today!(847) 440-5998
People often associate Christmas with chilly weather, warm cocoa, colorful decorations, and a heap-load of presents, presents, presents! But with the average American spending over $1,000 on Christmas gifts each December, overspending might as well be considered a holiday tradition. Unfortunately, how you manage your finances this holiday season could lead to some interesting complications in your bankruptcy case.
A successful bankruptcy case discharges any debts that you’ve incurred in the past. Consequently, many people intentionally max-out their credit cards on Christmas gifts and file for bankruptcy in January. However, you don’t want to intentionally accumulate debts that you aren’t able to pay.
According to the Bankruptcy Code, any credit card purchases for “luxury goods or services” totaling over $675 in a 90-day period are considered nondischargable. This means that you are still responsible for them even if the rest of your debts are discharged. Of course, essential expenses like food, gas, and other household necessities aren’t considered luxury goods or services.
When you file for bankruptcy, your trustee and creditors have a legal right to review your assets and pre-bankruptcy purchases. If you make too many excessive purchases, your bankruptcy case may be denied, and, in a worst-case scenario, you could even face bankruptcy fraud charges. So, before you splurge on gifts, make sure to discuss your situation with an experienced bankruptcy attorney.
You can also face legal penalties if you gift your assets and property to family and friends. For example, if you’re planning to file for bankruptcy in the new year and fear losing your assets in the Chapter 7 liquidation process, you might consider signing over a car title or property deed to a cherished loved one in need. However, this act of holiday generosity can hurt your bankruptcy case. The Bankruptcy Code prohibits any kind of pre-bankruptcy transfers. Again, if you have any questions or concerns about this legal process, it’s important to schedule an appointment with a knowledgeable legal representative.
Your friends and family members hate to watch you struggle financially. If they feel inspired by the Christmas spirit, they may decide to gift you with a little financial aid. If you receive a hefty check this holiday season, you may want to contact your bankruptcy lawyer A.S.A.P.
If you’re filing for bankruptcy in December, you need to submit a list that covers your income intake for the past six months. Any money that you’re gifted needs to be included on the median income test. Even $5,000 could be enough to push your bankruptcy from a Chapter 7 to a Chapter 13 case. Or, in an alternative scenario, turn that 3-year Chapter 13 into a 5-year affair. Your attorney can evaluate your total assets and see where you land on the median income test.
Bankruptcy can be a confusing and stressful legal process for the uninitiated. Without experienced representation, you could make a devastating mistake that impacts your quality of life for years to come. At Bach Law Offices, Inc., our knowledgeable Northbrook bankruptcy lawyers can address your concerns and help you safeguard your Chapter 7 or Chapter 13 case.