I know this sounds really strange but a bankruptcy case can get really messed up sometimes because of Christmas gifts. I absolutely love Christmas and I don’t like the Grinch but it is my job to tell you truth about how Christmas can really wreck a case.
Let me give you an example. Let’s say you have a married couple who is going through a difficult financial situation. Their parents decide to help them out during this Christmas season by giving them $5,000.00. I realize that very few people ever get this kind of gift from their parents but you would be surprised how often this happens when parents see their children struggling.
The problem is that this $5,000 gift must be counted on the median income test. Everyone who files for bankruptcy must list all of their income for the six month period that precedes the date of the filing of the case. Thus, if you receive the gift in December and we file your case in December, then this income won’t count because this six month period that matters is June through November.
However, most people delay filing bankruptcy until the last possible second. As a consequence, most people who receive gifts of money from their parents don’t file until a few months later.
Sometimes, even a small gift can mess us up on the median income test. For example, if you are right on the border of going over the median income test, a small cash gift may be just enough to change your three year Chapter 13 bankruptcy into a five year Chapter 13 bankruptcy.
What is the solution? The solution is to meet with me before you take the gift so that we can see where you land on the median income test.
In addition to the median income test, we need to take a look at the value of your assets. Under Georgia bankruptcy exemptions, you can claim up to $5,600 of a wildcard exemption to protect cash gifts. However, you may need this wildcard exemption for some other asset like your house.
If you have more than $10,000 equity in your house and you are a single filer, you most likely will not have any wildcard exemption that will be left over after you file bankruptcy.
Take advantage of a free consultation with me and call 770-809-3099 so that we can sit down and review your entire economic situation.
3. How much does it cost to file?
4. How do I stop a garnishment?