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The timing of a bankruptcy filing can become a critical consideration for individuals who have decided to pursue bankruptcy to resolve credit card bills and other debts. Financial pressures can increase during the holidays, as people in debt may further increase credit card balances to afford gifts and holiday meals or parties.
If you’ve determined that bankruptcy can give you the best chance of resolving your debts, you may wonder whether you should file before or after the holidays.
Factors to Consider When Timing Your Bankruptcy Filing
Some of the factors you should consider when deciding whether to file for bankruptcy before or after the holidays include:
- Your Current Financial Situation – You should evaluate your current financial situation to determine the appropriate time to file for bankruptcy. If your situation has become particularly dire, you may need to file sooner rather than later.
- Expected Holiday Expenses – The holidays’ financial costs may worsen your financial situation, potentially weighing in favor of starting bankruptcy before the holidays.
- Potential Time Constraints – Finally, consider time commitments and constraints you will have during the holidays or after the New Year, as a bankruptcy case can put significant demands on your time and attention.
Pros and Cons of Filing Before the Holidays
Filing for bankruptcy before the holidays has various advantages and disadvantages. Pros of filing before the holidays include:
- Stress Relief – Filing for bankruptcy can provide peace of mind and ease stress, allowing you to enjoy the holiday season free from collection calls or legal action.
- Protection Under the Automatic Stay – The automatic bankruptcy stay can stop potentially devastating debt collection efforts, such as wage garnishment or foreclosure, meaning you have access to income or can stay in your home during the holidays.
At the same time, downsides to filing before the holidays include:
- Loss of Access to Credit – Banks typically freeze or cancel a person’s credit cards when they file for bankruptcy. Filing before the holidays may mean you do not have credit cards to pay for gifts or other seasonal expenses.
- Negative Effects on Holiday Spirit – The bankruptcy process can become emotionally taxing, dampening the joy of the holidays.
Pros and Cons of Filing After the Holidays
Filing for bankruptcy after the holidays also has pros and cons. Advantages to filing after the holiday season include:
- Flexibility with Holiday Spending – Choosing to file for bankruptcy after the holidays will mean you continue to have access to credit cards that can help you pay for holiday expenses.
- Ability to Discharge Holiday Debts – If you incur additional debts due to holiday spending, you may be able to discharge those debts by waiting to file after the holidays.
Downsides to a post-holiday bankruptcy filing include:
- Accruing More Debt – Additional debts incurred during the holidays may complicate a bankruptcy filing, especially if you incur a debt ineligible for discharge.
- Delayed Financial Relief – Waiting to file after the holidays may mean dealing with financial stress during the holidays and continued exposure to the risk of debt collection activities like repossession, foreclosure, or wage garnishment.
Legal Consideration and Tips for Making Your Decision
Other considerations you should evaluate when deciding when to file for bankruptcy include:
- If you file after the holidays, the bankruptcy court may scrutinize large purchases you make during the holidays.
- The timing of your filing can affect your eligibility to file for Chapter 7 or 13 bankruptcy due to changes in your debt levels, assets, or income.
- Minimizing your holiday expenses can help with your bankruptcy case if you file after the holidays.
Contact a Bankruptcy Attorney Today for Help
When you decide to file for bankruptcy, choosing the right time can make the process less stressful and more manageable. Contact Toronjo & Prosser Law today for a free, confidential consultation with an experienced bankruptcy attorney to discuss whether you should file before or after the holidays.