If you’re in the process of filing Chapter 13 bankruptcy, you may think this holiday season will have to be one with no gifts. That doesn’t have to be the case. You just need to adhere to the requirements of the repayment plan you’ve set up.
If you’re tempted to deviate from the restrictions of the plan, keep in mind that large purchases may attract the court’s attention. That means they can put your bankruptcy at risk.
Chapter 13 allows for spending – and even gifts – within reason
Chapter 13 debt repayment plans include money for mortgage payments, food, clothing and other necessities. There’s likely a line item for small miscellaneous expenses as well. There’s no reason why your holiday gifts – at least for your kids and spouse – can’t be clothes and other practical items.
Of course, this is the time to start embracing the value of homemade gifts and regifting. If you’ve got a big family where everyone gives (and gets) something, suggest a Secret Santa or White Elephant exchange so that people only have to worry about one item.
Sometimes, you just need to be honest with people about not being able to spend as much as you have in the past. You don’t have to tell people about your bankruptcy. Many people have had to cut back on spending over the past couple of years. You’re not alone. Likely, more than a few people will be relieved when you suggest limiting the dollar amount on gift exchanges – for example, at work or school.
Be careful even if you haven’t filed yet
If bankruptcy is in your plans for early next year, don’t plan on one last big Christmas spending spree. The bankruptcy court will look at your recent credit card purchases. If it looks like you were trying to get in some last-minute spending before filing, the court could determine that you were trying to commit fraud.
If you have any questions about spending, either before or during your bankruptcy, it’s wise to get legal guidance. This can help you avoid doing anything that could risk or prolong your bankruptcy repayment plan.