Watch That Holiday Spending

This past weekend I read a great article by Diane Loupe in Atlanta’s Sunday Paper titled “Bankruptcy’s Back.”

The article states that while national bankruptcy filings plummeted this past year after the law change of October, 2005 — experts are now predicting that consumer bankruptcy filings will again surge after the upcoming holiday season.  The article reasons that after the holidays many consumers will struggle to make their mortgage payments as adjustable rate mortgages interest rates (ARMs) continue to rise and Christmas-season credit card bills start to kick in.Â

Having practiced consumer bankruptcy law myself for many years, I whole-heartedly agree with the opinions of the experts mentioned in this article.  The 1st Quarter of any year (January-March) is always the busiest time of year for bankruptcy lawyers and the Bankruptcy Court.  Overzealous holiday spending is often the cause of this surge of filings, but there are also a couple of other reasons that I believe contribute to this phenomenon.  First, many people use the changing of the calendar as an impetus to address their deteriorating financial situation or make a “New Year’s Resolution” to get themselves out of debt and get their finances on track.  Secondly, the 1st Quarter is usually the time of year that people receive their Holiday bonuses and/or tax returns.  Often people will use this recieved lump sum of money to pay for bankruptcy attorney fees and court costs so they can get their cases filed right away.

So, the moral of the story here is to try to exercise some forethought and not overdo it while you are out holiday shopping this season. I know it can be difficult, but remember that those credit card bills will come due in January!

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