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Filing for Bankruptcy in Luverne, MN, Before or During the Holiday Season

December 8th, 2017 · No Comments

The holiday season is a time spent with family and friends, giving gifts, and attending festive gatherings. It’s also a time when the entire country greatly increases its spending. The pressure of spending more money during this time can place undue stress on those struggling with debt or going through a bankruptcy proceeding. However, the holiday season is actually the best time to file for bankruptcy. Behm Law Group, Ltd.  offers legal advice and assistance if you’re considering filing for bankruptcy in Luverne, MN, this holiday season.

It may seem counterintuitive and in un-holiday-like spirits to file for bankruptcy during this time of cheer and abundance, but because of the timeline involved, filing before December 31st may be your best option.

There are several reasons why you may benefit from filing for bankruptcy before December 31st, and some are directly linked to what happens during the holidays. For example:

  1. Christmas or year-end bonuses give you an overall increase in your income. These bonuses are considered verified parts of your total income, and they are subject to scrutiny in your bankruptcy case.
  2. Gifts as cash or check are also added into your gross income, even though they are personal non-employment related transactions. These gifts from family and friends can be considered as income in your bankruptcy case.

This change in your income comes into play when you complete the Means Test. To qualify for Chapter 7 liquidation bankruptcy, you must satisfy the Means Test, meaning your income must be lower than the state median for a similar household size. The slight increase in your income during the holiday season might be the difference between filing for Chapter 7 and being forced into Chapter 13.

The timeline for the bankruptcy Means Test takes into account the last six months of your income. However, the six-month period prior does not end directly on the date you file for bankruptcy relief. Instead, if you file your petition on or before December 31st, the six-month period ends at the end of November. This means that the income as calculated for the preceding 6 months (June – November) would be less for purposes of completing the Means Test, giving you a better chance of qualifying for Chapter 7 bankruptcy.  If you were to file bankruptcy after December 31st, all of the income you would receive in December from bonuses, profit sharing, commissions or gifts would be included in the 6 month look-back period (July – December).  Your income could be artificially inflated by these sources such that you would not satisfy the Means Test and you would have to file a chapter 13 bankruptcy.

If you’re considering filing for bankruptcy in Luverne, MN, the date you file may affect your petition. For more information about bankruptcy and the Means Test, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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