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How Much Can I Spend on Christmas Presents Prior to Filing My Bankruptcy?

By Joseph McDaniel, Esq.

Less than you want to spend.

There is an adage in bankruptcy law: you must be fair before you are generous.

That means you must be fair to your creditors prior to being generous to those you love.

So if you are contemplating filing a bankruptcy, and you are clearly insolvent, there are at least three things you probably ought to avoid.

One is running your charge cards to the maximum prior to Christmas, if you lost your job and clearly have no way whatsoever to pay them.

Another is using the credit cards within 90 days prior to the date of filing of your bankruptcy, because that use is presumptively non-dischargeable under 11 USC 523.

And another is excessively expensive Christmas gifts in general. Excessively expensive is a subjective call, but if your gifts to one person weren't greater than two hundred dollars, many trustees won't chase them.

If you make a gift of a $4,000 car to your adult child for Christmas, and then immediately file a bankruptcy, the trustee will chase that gift until he gets the car back for the Bankruptcy Estate, he gets $4,000 for the Bankruptcy Estate, or until the world shall end.

p.s. don't even think of buying absurdly expensive Christmas gifts immediately before or after you file a bankruptcy; it looks bad, at the very least, and it will probably lead to bad bankruptcy luck in the broadest sense. No ten-carat emeralds, no Fifty-foot Yachts, and no twenty-pound Gold Ingots.

Got it?

Full post as published by Arizona Bankruptcy Attorney Blog on December 08, 2010 (boomark / email).