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Struggling financially this Christmas?

Tips for families considering bankruptcy

The end of year can be financially draining. Gifts, dinners and traveling can all increase expenses. For people who are already in significant debt, this can add a great deal of additional stress.

Bankruptcy provides a way out from unmanageable debt. While bankruptcy filings in December are typically lower than at other times of the year, filings resume per usual in January. If you are struggling financially and considering bankruptcy, below are some tips for getting through the holiday season before getting a truly fresh start.

Don't increase spending

There can be a temptation to increase credit card spending if you plan on filing for bankruptcy in the new year. After all, credit card debt can be discharged (erased) in bankruptcy, right?

Bankruptcy laws are complex. While credit card debt is indeed dischargeable in bankruptcy, the bankruptcy court may not discharge items spent on "luxury" goods. So that new television you bought as a Christmas gift for your spouse may very well be something you have to pay in full.

Avoid the temptation to give up on your budget. In preparation for filing for bankruptcy, it is more important than ever to show financial restraint.

Ignore the pressure to spend. Consider "white elephant" gifting.

From advertising to family members who always seem to up the ante every year, it can be difficult not to get caught up in the pressure to spend. It helps to be reminded that almost every family has a budget, and that many people experience times with little disposable income. Your nieces and nephews will be fine without expensive toys.

You might suggest a "white elephant" gift party with a strict budget limit, for example. It can be more fun than traditional gifting and can greatly cut down on the cost of gifts.

Avoid comparisons and shame

You are not a failure because money is tight or you need to file for bankruptcy. A number of successful people and businesses have filed for bankruptcy. Bankruptcy laws are in place because it benefits society to allow people who are in debt to begin again without overwhelming debt.

Comparing yourself to others and feeling inadequate is a main reason why people fail to file for bankruptcy even when it makes financial sense to do so. Try to avoid these feelings and remember that bankruptcy is often the most financially responsible thing to do.

Talk to a bankruptcy lawyer

Your circumstances will vary, so if you are considering bankruptcy or wondering how finances will work with all of your obligations, it can greatly reduce stress to speak with a bankruptcy lawyer and understand your options.

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