Are holiday gifts out of the question prior to Chapter 13?

On Behalf of | Sep 19, 2023 | Chapter 13 Bankruptcy

Are you considering filing for Chapter 13 bankruptcy within the next few months to start the new year off on a more solid financial footing? That’s a good New Year’s resolution. However, you may have some concerns and questions about what this will do to your holiday plans – particularly around gift giving.

Do you buy all your presents now or do you start your commitment to living within a strict budget this year? You understandably may not want to share with friends, co-workers and even non-immediate family members that you’re going through bankruptcy. So what do you do?

Why you shouldn’t have one last blow-out

You most definitely don’t want to max out what’s left of your credit card limits on gifts. Bankruptcy courts look at expenditures in the months prior to filing. 

If it’s obvious that someone engaged in a lot of spending just prior to filing for bankruptcy when they knew they couldn’t pay the eventual bills, that could be considered fraud. It’s also simply financially unwise, and it’s going to make buckling down and following a budget even more difficult.

Be creative with your gift-giving

If you choose or only qualify for Chapter 13 bankruptcy, you’ll work out a debt repayment plan with the court. That plan will allow you to spend money on necessities like clothing, school supplies and things that you can give as gifts to the family.

As for gifts for non-family and more frivolous presents, you may want to put your baking or crafting skills to work. If you’re lacking those, consider regifting something you’ve never used or offering favors like babysitting or dog walking as gifts. If you have a large family or circle of friends that expect individual gifts, suggest doing a Secret Santa or other gift exchange that doesn’t require giving multiple gifts. There’s no shame in admitting that you’re on a tight budget this year. You don’t need to go into more detail than that. Most everyone has been in that position at some point.

The sooner you start sticking to a budget, even if you haven’t worked out your repayment plan yet, the sooner you can adjust to living within your means. If you have questions about your spending prior to or during your bankruptcy, having legal guidance can help you make good decisions.