With the holidays approaching, you might want to buy presents for family and friends. At the same time, you may need debt relief due to a job loss, business slowdown, or unexpected medical bills. If you plan to file or have filed bankruptcy, here are a few factors to know before heading to a mall or an online shopping site.

Gift-Buying Considerations When Planning to File Bankruptcy

If you plan to file Chapter 7 or Chapter 13 bankruptcy early in the new year, avoid purchasing big-ticket or luxury items as gifts, especially on credit. Seeking to discharge large expenditures can resemble fraud, which may result in the dismissal of your petition, civil penalties, or criminal charges.  

Buying Gifts After Filing Bankruptcy

Once you file a Chapter 7 or 13 bankruptcy, the trustee has the power to recover and sell expensive items you give family or friends, then use the proceeds to pay your creditors. If you owe someone money and give them more than $600 as a cash gift, the gift might qualify as a preferential transfer. If so, the trustee can bring the money back into the bankruptcy estate.

Individuals filing for Chapter 13 must get permission from the trustee to incur any new debt, so it’s best to limit your gift-buying to small cash purchases. 

Best Practices for Buying Gifts

Purchasing inexpensive gifts for loved ones or co-workers helps avoid complicating your financial situation before or after filing bankruptcy. Another option is giving your time or talent. Writing a poem or song, assembling a photo collage of a special event, or offering to host their children at your home for a weekend are low-cost ways of showing you care. Focusing on achieving debt relief now will establish a strong financial foundation that empowers gift-giving in the future.     

Whether you seek debt relief by filing Chapter 7 or Chapter 13 bankruptcy, get help from Greg Dunn, Bankruptcy and Debt Relief Attorney. Since 1996, Attorney Dunn has provided bankruptcy guidance to clients throughout the Honolulu, HI, area. If you prefer to pursue debt settlement or need to avoid a foreclosure or wage garnishment, this skilled and  compassionate debt lawyer will help you regain your financial footing. Call (808) 524-4529 or visit his website to find out more about his services.