Holiday Debt and Credit
This time of year many people are not thinking about their finances or their debts, they are looking towards the holidays and also out purchasing gifts for family and friends.
And many of those people are using credit cards, overdrafts, etc to make those holiday purchases.
They are not thinking about the amount of debt they may have or are struggling with, they just want to get through the holidays and exchange gifts and share the happy times with family and friends.
Fair enough.
They will deal with the bills and debts after the New Year and get it sorted then.
Now for some of these financial procrastinators when the New Years comes, they then find themselves in even a deeper mess and look towards bankruptcy as a way to be relieved of the stress and the debts.
Bankruptcy is the quickest way to do this; the facts show this to be true.
But in their going bankrupt and having just recently used credit over the holidays, the Official Receiver handling their bankruptcy could see the recent credit activity as a misuse of credit, which could cause a restriction order to be placed keeping them in bankruptcy longer than the usual 12 months, or cause the OR to look a bit more into their financial affairs.
It just gets a bit complicated at that point.
A true story:
A few years back I was advising a client who had used catalogs and a credit card she had to make their Christmas purchases for that year.
Shortly into the New Year they felt bankruptcy was the best option for them to be relieved of their debts, and it was the strongest option for them. However, in their bankruptcy the Official Receiver questioned the purchases that had been made using credit, just a few months prior, and had stated they would look at obtaining all the gifts/presents, back from whom they had been given.
This of course mortified the person and while the gifts were not taken back, the person did receive a restriction order, in addition to being aged 10 years by the threat.
Another tale of woe is the young lad who bought his partner an engagement ring as a Christmas gift on credit; a few months later he went bankrupt and the OR stated he had to get the ring back as it was now an asset in his bankruptcy and was worth a couple thousand Pounds.
I never heard how that case ended, but my mind went south with it and figured if he did have to get the ring back, it may have cost him the relationship as well.
So moral of all this: Be careful in your use of credit if you are already in major debt this holiday season, and also if you are considering bankruptcy anytime in the near future.
