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Bankruptcy Attorneys Serving Southern California
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Should I File For Bankruptcy Before or After the Holidays?

Filing for Bankruptcy After the Holidays

It’s official. The holiday season has begun. While you may be making your list and checking it twice, if you are planning to file for bankruptcy in the next few months, you could be putting yourself at a disadvantage after making holiday purchases. Read on to learn more about how your holiday spending could affect filing for bankruptcy.

How do Bankruptcy Laws Work?

Whether during the holiday season or not, bankruptcy laws are strict when it comes to making luxury item purchases before claiming bankruptcy. Luxury items are defined as any goods or services that are not a reasonable necessity to support the debtor or the debtor’s dependents. So, if you are considering making any purchases of luxury goods or services that total more than $625 within 90 days of filing for bankruptcy, your creditor could very likely ask the court not to dismiss that debt.

While you may think taking out a cash advance is a workaround, think again. The same rules apply when taking out cash advances on your credit cards. Any cash advances that are more than $950 within 70 days prior to bankruptcy may also be disputed.

Can Your Holiday Bonus Impact The Means Test?

First, it’s critical to understand what the means test is and how it works. The means test is a tool used in bankruptcy to determine whether your income is low enough to file for Chapter 7 bankruptcy. The means test formula takes your current monthly income and deducts your current monthly expenses to determine your disposable income. The more disposable income you have, the less likely Chapter 7 bankruptcy could be an option. You may be required to use your disposable income to pay off your outstanding debts. With that said, your holiday bonus adds to your disposable income, thus making your income appear to be higher.

Contact a Southern California Bankruptcy Attorney

Deciding to file for bankruptcy isn’t an easy one. It’s complicated, and navigating bankruptcy laws without experience can be frustrating. Having a skilled bankruptcy attorney in your corner can make all the difference in the outcome of your case.

The holiday season is stressful enough. Let us ease your concerns. Contact Wadhwani & Shanfeld today at (800) 996-9932 for a free consultation to learn more about how we can help you ease your financial burdens.