Managing your finances during the holiday season is challenging enough. When you are in the process of filing for bankruptcy or already in the repayment process, it can be exceptionally difficult, especially if you have kids.
Being Responsible with Disposable Income
If you are in the process of filing for bankruptcy, you will need to disclose all your expenses, including disposable income that you spend on things such as holiday gifts. Bankruptcy trustees view disposable income as money that is left over after meeting reasonable and necessary expenses. You’re expected to direct your disposable income toward paying your creditors.
Being in bankruptcy does not mean you cannot buy gifts during the three to five years of your Chapter 13 repayment plan, but it does mean you will need to be fiscally responsible. Recent changes to bankruptcy laws also may prevent debtors from taking on new debt If you still have an active credit card, avoid using it, or, if you have to use it, pay it off in full every month.
A Strategy for Saving for the Holidays
Instead of running afoul of bankruptcy requirements, a good strategy is to put aside money in small increments. You need to start early in the year. Many banks offer “Holiday Clubs” where you can make small deposits that add up to give you a nice little cushion for holiday spending.
With a little planning and awareness of what you can and cannot do during a bankruptcy, the holiday season can be made a little easier for you and your family.
Dealing with bankruptcy? Contact The Law Office of Larry Karandreas today.