The winter holidays are an important time for many families. Some place a big emphasis on being together during these days. Others want to buy extravagant gifts for their friends and loved ones. One thing that some people do is make their holiday purchases on credit. This can lead to considerable debt and financial challenges throughout the year.
If you have already charged some gifts this season or know that you are going to have to, think carefully about your repayment plan. People who do decide that they are going to file for bankruptcy will need to start planning for next year’s holiday season.
Set your budget early
Typically, it is suggested that people spend 1.5 to 2% of their gross income on the holidays. This includes not only presents, but anything else you need for the season. This means that if your household income is $40,000, you should expect to spend around $600 to $800 total.
When you set your budget early, you have time to save a little each check. This helps to alleviate the pressure of trying to save everything all at the last minute. By having the cash or savings to cover the holidays, you don’t have to worry about going into debt for gifts.
Holidays after Chapter 13
Your first holiday season after filing Chapter 13 bankruptcy might be a bit unnerving. When you file this form of bankruptcy, you have to make regular payments to the bankruptcy trustee. You also can’t take any new debts on. This means that you will have to scrimp and save if you want to have a holiday since you can’t just put gifts on a credit card.
Once you have your plan for the holidays for the first year, you can tweak the plan for the upcoming years that you will need one. A typical Chapter 13 bankruptcy takes three to five years to complete, so during that time, you will need to get holiday goodies without using credit.
Bankruptcy is an option that you can use to address overwhelming debt. You must consider all the options that you have so that you can determine what’s best for your needs. This is a last resort for help, and you shouldn’t rack up massive credit card bills with the intention of filing because you could be accused of fraud or misuse of your credit accounts.