During the holiday season, it’s easy to get caught up in the gift-buying frenzy. Many people at all income levels end up spending more than they had originally planned. If you’re considering filing for bankruptcy, it’s essential to approach gift-giving thoughtfully. You might be inclined to splurge on one last round of presents before seeking protection from creditors, but this type of excess could make a difficult situation worse.
Bankruptcy laws require complete transparency about your financial transactions, including gifts and donations. You must disclose all gifts given within the two years prior to filing if their combined value exceeds $600. This requirement applies regardless of whether the gifts were given to family, friends or anyone else. Whether you purchased one $700 watch for a loved one, or distributed multiple smaller gifts totaling more than $600, these transactions must be reported to the court. Likewise, charitable contributions totaling more than $600 within the two years before filing must also be included on your Statement of Financial Affairs.
People struggling with debt should remember the following tips regarding holiday gift-giving:
- Set a budget — Avoid extravagant spending on gifts before filing for bankruptcy. Overspending could raise questions about your financial priorities and may complicate your case.
- Keep detailed records — Maintain clear documentation of your gift purchases and charitable donations, including receipts and bank statements. Accurate records will make it easier to complete the required disclosures.
- Be creative and practical — Instead of costly presents, consider thoughtful, low-cost alternatives like handmade gifts or experiences that don’t strain your finances.
Whether you’re celebrating Christmas, Hanukkah or Kwanzaa, serious money troubles can be particularly painful around the holidays. No matter where you turn, it seems like someone is buying something or urging you to do the same. Fortunately, consulting with an experienced bankruptcy attorney can help you get started on a path that leads to a brighter new year.
At Jeff Field & Associates, we represent Georgia residents in all types of bankruptcy matters, including proceedings under Chapters 7 and 13. To discuss your circumstances with an accomplished debt relief lawyer, please call 404-381-1278 or contact us online. Our offices are in Douglasville, Gainesville, Bogart, Lawrenceville, Marietta and Scottdale.