Filing for bankruptcy is one of the most stressful financial decisions that a person can make. Your bills are piling up at the same time of year that you’re supposed to be spending on holiday gifts and celebrations for friends and loved ones. With all of this going on, it’s easy to find yourself thinking that you should just forget about your troubles, enjoy the holidays and spend as much as you want, and then file for bankruptcy once it’s all over. But is that the right thing to do?

Here’s what you need to know about whether it’s better to file before or after the holidays.

The most important thing you need to know is that if you go out and run up big credit card bills right before Christmas, the debts that you incur are going to be yours to pay. That’s because debts that are incurred within three months of your filing cannot be discharged. The only exception to this rule is for expenses that you’ve charged that are considered essentials.

Another important consideration is whether your company pays out holiday bonuses at the end of the year. If you are given a big bonus check each year and you wait until after the holidays to file, then the money you receive has to be counted as income, and the more income you have to report from the 6 months prior to your filing, the less likely you are to qualify for a Chapter 7 bankruptcy that allows you to discharge all of your debts. On the other hand, if you’ve filed for bankruptcy and receive the bonus afterward, you will be able to hold onto the bonus.

Taxes are the final thing you need to consider before filing for bankruptcy around the holiday. If you are filing for a Chapter 13 bankruptcy, it is to your benefit to file for bankruptcy after your taxes are due. This is because the filing will protect you from having the IRS pursue you or debt, providing more flexibility for repayment and avoiding any interest or penalties.

As you can see, there are pluses and minuses to filing before or after the holidays, and they are situation-specific. For advice on the best time for you to file, contact our bankruptcy attorneys today.