The decision of whether or not to file for bankruptcy is always a stressful one, but when you have to make it around the holidays, it’s even worse. You might be wondering whether it’s better to just get it over with or if there are smart reasons to wait until after. While consulting with experts such as Brent George Law in person is probably your best bet, here are some of the things that will need to be considered.
There are two types of bankruptcy, Chapter 7 and Chapter 13. In order to determine which you are eligible for, your income for the six calendar months prior to filing will be taken into consideration. This means that if you file in December, Christmas or end of year bonuses will not be included. This is true whether the bonuses are in the form of check or cash. If you wait until after the holidays, then this additional income will be included in your income determination.
No matter how poorly you’re doing financially, you’re probably going to be spending some money on gifts. According to the laws surrounding bankruptcy, anything you purchase within three months before or three months after the Christmas holiday cannot be included in the bankruptcy filing, meaning it is debt that won’t be forgiven. Whether you pay that debt off immediately or agree to a payment plan, you must pay for these debts unless the purchases during these months were for things you legitimately needed.
Income tax is another area to consider when deciding when to file for bankruptcy. The IRS always gets paid eventually, no matter what type of bankruptcy you file. If you’re filing Chapter 7 bankruptcy and you have no assets, you’ll have to make a payment plan with the IRS. If you do have assets, then they can be sold off to pay your debts, of which that owed to the IRS comes first. If filing a Chapter 13 bankruptcy, you’ll likely want to do it after taxes are due. Among the benefits to this are that you will be able to pay off other debts first and you will avoid penalties and interest added during your case.
There are much more intricate details that you will want to think about when determining when you should file for bankruptcy, but these are a few of the key items to bear in mind when making the decision around holiday time. Because of the complexity and fine legal print involved, meeting with a specialist in bankruptcy like Brent George Law can help you decide if you are a good candidate for filing and when the best time to do so would be.
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