Should I file for Bankruptcy Before or After Christmas?

Before making the call to a trustee to start the process of filing for bankruptcy this month it may be worth taking the time to consider if it is better to file for bankruptcy before the holidays or to wait until the New Year.    There is no definitive right or wrong time to file but there are some items to consider that may apply to your specific situation.

Income Tax Implications

The first item to consider is your income tax situation.  When you file a bankruptcy you are no longer entitled to an income tax refund for the year of the bankruptcy and any prior years not filed.  If you normally receive an income tax refund every year this could mean that depending on when you file for bankruptcy you may lose more than one year’s income tax refunds.

If you file for bankruptcy before the holidays, your trustee would seize the income tax refund for the income tax return due by April of the New Year.  If you were to file after the holidays, your trustee would be receive your income tax refunds for the income tax returns due that April and the refunds for the following year.

Your Well-Being

The holidays are a stressful time for many individuals and trying to manage a heavy debt load can exasperate that stress level. Take the time to consider what would alleviate your stress level the most when deciding to file for bankruptcy before or after the holidays.

If you have a lot going on during the holiday season filing for bankruptcy could increase your stress level.  Gathering the necessary paperwork, fitting in the time to meet with a trustee and taking the time to understand all of the information about filing for bankruptcy may be too much to manage before the holidays.  When you make the choice to consider bankruptcy you need to be able to focus on your financial situation and really be sure that you understand the process and are ready to make that decision.  If the thought of tackling one more thing during this busy time of year causes you anxiety then you may choose to wait until the holiday season is over.

Your well-being may benefit from filing for bankruptcy before the holidays. If you can eliminate the stress of managing your debt level you may be in for a more relaxing and enjoyable holiday season.  It is difficult to appreciate the time with family and friends when you are burdened with a lingering feeling of unease because of the high credit card balances you are trying to juggle.  By taking the time to file for bankruptcy before the holidays you are able to put that stress behind you and focus on a fresh start.

No Credit Christmas

Shopping with credit cards

When struggling with a debt problem the reliance on credit is such a familiar habit it can create a lot of anxiety to think about doing without your credit cards during the holiday season.   Many individuals choose to file for bankruptcy after the holidays so they can use their cards to get through the extra costs of the holiday season.

When you use your credit cards knowing that you are not going to be in a position to pay them back you are exposing yourself to potential issues in your bankruptcy.  The creditors do have the right to oppose your discharge from bankruptcy if they feel that you deliberately used credit to purchase items that you had no intention of paying back.  This doesn’t happen often but it is a definite risk.

A better idea may be to look at the amount of money you are paying towards maintaining your credit cards on a monthly basis. In many cases, if you were to eliminate the credit cards by filing a bankruptcy before the holidays, you can easily redirect the cost of monthly debt payments into paying for the cost of the holiday season in cash. Imagine the positive feeling created from knowing that anything you purchased did not further increase your credit problem.

There are also several other ways you can make sure you have a wonderful holidays season without the use of credit cards.  This can include pot-luck gatherings, setting limits for spending on gifts and even making home-made gifts part of your tradition.  A “no credit Christmas” may lead to some new family traditions.

Whenever you decide to file for bankruptcy, the decision has to be made with careful consideration.  There are many reasons why filing for bankruptcy before the holiday season makes sense but for some waiting until after may be a better choice.  If you have concerns about which time of year is best for your situation you can schedule a free consultation with a licensed trustee in your area.