Bankrupt for the Holidays: What Do You Do Now?

It’s finally happened: you’ve just about maxed out your credit cards, you have exhausted your savings (even the Christmas Club) and if your payments are still current, it’s abundantly clear that they won’t be for long. So how do you plan for the holidays, and for the reckoning that will soon follow?

It is not easy to face the holidays when you are dealing with financial trouble. Every time you turn around there’s another expense: gifts, social obligations, travel, and so forth. I’m not going to tell you to make handmade gifts, or visit your relatives instead of entertaining yourself. Those are fine ideas, but you don’t need me to tell you that. I do have some ideas about what not to do.

First, now is not the time to max out the credit cards. If bankruptcy is a possibility in a short period of time, that could come back to haunt you. Creditors scrutinize charges shortly before bankruptcy, especially those for luxury goods. Don’t foreclose your options or create additional problems by increasing your balances if you know you can’t pay them.

Nor is this the time to hit the payday lenders. Actually, the time is never right for that kind of borrowing. It’s just too expensive, and very difficult, if not impossible, to ever pay it off entirely. If you are teetering on the edge of bankruptcy, that’s almost sure to push you over.

In fact, it’s probably not a good idea to borrow to pay for holiday expenses, unless it’s a loan from Grandma and Grandpa on favorable terms. Pay cash for what you can afford, and leave the rest in the stores. But more importantly, take a good hard look at your situation, and make some plans.

Most of us would rather not deal with financial problems at this time of year at all, but it’s a good time to think about how you want to deal with the problem. Get a jump on your New Year’s resolutions, and take stock now. It’s also a good time to see a bankruptcy attorney. It may be a bit easier to get an appointment to see a lawyer now, since many people wait until the first of the year to take that step. You may also find that the first of the year is the eaiest time to pay attorney fees and costs–from your tax refund.