Bankruptcy is always difficult, but never more so during this “most wonderful time of the year” when we look forward to giving gifts to friends and family — and are expected to do so. Whether you file for Chapter 7 or Chapter 13 bankruptcy, you will find your ability to spend severely limited, but that doesn’t mean that you need to turn into the Grinch!

There are two different types of personal bankruptcy, and each will impact you differently. People who file for Chapter 7 may end up having the majority of their debts discharged, but they also will have a hard time qualifying for new credit cards. And if you purchase a bunch of gifts on credit immediately before filing for bankruptcy the courts are likely to disallow those purchases from your filing — and you may even be charged with fraud. If you’ve gone through a Chapter 13 bankruptcy your debts will have been reorganized rather than discharged. Not only will new credit card bills not be included in the new payment terms that have been negotiated but there are also restrictions on how you’re able to spend.

Chapter 13 filers are not supposed to take on more debt unless it is approved as absolutely necessary, so all purchases need to be made in cash, and the likelihood of having much extra is slim when you are trying to stick to a tight Chapter 13 budget plan. If you are set on buying gifts, the best thing you can do is to spend the month or two before the holidays trying to cut back on what you spend with the little household budget that you have and look for low-cost items, discounts, gently used items and items on sale.

Remember that there is a $600 limit on how much you can spend on any one gift, and you may also need to limit your gift-giving to your immediate family. If there are others that you want to remember during the holidays, consider homemade gifts, a tray of cookies, or planning to spend quality time together doing something unique rather than an expensive gift.

In the face of bankruptcy, it can be very rewarding to tap your own creativity and find inexpensive ways to tell people how much they mean to you. If you need guidance about how to get out from under extreme debt, contact us today to set up an appointment to discuss your situation.