With Christmas just around the corner, many of you will be squeezing your paycheck to cover the extra expenses of gifts for friends, family, and coworkers. This struggle can lead to a hard look at your finances for the new year, and maybe even deciding that 2016 if finally the year to become debt free.
However, Christmas can be a tricky time if you are planning on filing for bankruptcy in the new year.
1. Watch Your Spending: Of course, it’s normal to spend more on average during the holiday season. But for many, it is also the time to finally pay back friends and family for help throughout the year. Maybe paying back mom and dad for letting you stay at their house while you were between jobs, or finally paying off that loan to your significant other to fix your car. Giving back to family and friends can feel like the right thing to do, but large payments can be construed as a preferential payment. In some cases the Court will go after loved ones to get that money back during a bankruptcy.
2. Watch Out for That Christmas Bonus: When filing for bankruptcy, the Court will look at your average monthly income for the last 6 months. This average is very important and will determine what chapter of the bankruptcy code under which you are allowed to file. So, if your income is already on the cusp of the means test, a large bonus might push you over the Chapter 7 limits and into a Chapter 13 reorganization.
3. Gifts: Have any gift items that have been passed down to you or inherited? Your great aunt’s fur coat? Your uncle’s signed baseball cards? Well during bankruptcy, you must disclose all of your personal items and their worth. In order to protect these family heirlooms, always inform your attorney of their existence before the signing — even things that you might consider to not have any real value.
4. New Year, New Forms: This last year the US Bankruptcy Court release new bankruptcy filing forms. These new forms went into effect on December 1st of this year. The Court will not accept bankruptcies submitted using the old forms. Prevent frustration and delay and make sure that your bankruptcy is filed on the correct forms.
5. Increased Prices: Bankruptcy prices might change in 2016. If you want to become debt free in 2016, get started today.
We hope that you have a great Christmas and a happy New Year. Please call the office at (916) 333-2222 if you have any questions about getting a fresh start through bankruptcy in 2016.