When you are no longer able to afford your monthly payments, you may consider filing for bankruptcy. There are different kinds of bankruptcy options available to you, but all have the same general rules. The same goes for gift-giving. With the holiday season approaching, you may be wondering, “Can I give gifts before filing for bankruptcy?” The answer is not so simple.
A modest gift is thought of as one without significant lavishness. Bankruptcy systems will likely not care about small, cheaper gifts that you give to people. They might not even notice that you wanted to give your coworkers a $20 gift card to their favorite store or purchase your children toys for Christmas. When you start purchasing gifts more often or give people more expensive gift options, bankruptcy agencies might ask for an explanation.
When you purchase gifts for a large number of people, or if you spend a lot of money on gifts, you may be required to report these to bankruptcy agencies. This goes for both physical gifts and monetary gifts. In general, bankruptcy agencies require that people who are filing for bankruptcy report all people who received gifts from you that totaled greater than $600 within the two years prior to your filing. In other words, if you’ve given somebody over $600 worth of items or cash, you are required to report this to bankruptcy agencies. This includes charity donations as well. If you fail to report your expensive gifting to an agency, this could be considered fraudulent.
There are many different types of bankruptcy fraud. If you have given many people expensive gifts over a total of $600 in the last two years before you file for bankruptcy, these must be reported. If you do not report them, it may be considered a punishable crime in court. This sort of fraud falls under the category of intentionally falsifying information on a bankruptcy form. Another type of bankruptcy fraud that someone can commit, often attempted to be concealed as gift giving, is the concealing of assets to avoid giving them up. This may be in the form of property or cash. By giving your savings to another person as a gift, it may look as if you are attempting to hide your money with them for the duration of your bankruptcy. Agencies may look at this as if you are expecting to receive the money back at a later time.
Another common form of bankruptcy fraud is purchasing gifts on credit if you already cannot afford your bill. People may consider doing this before filing for bankruptcy under the belief that these balances will be discharged regardless. However, this is considered fraud and may be punishable.
If you are wondering whether you are permitted to give a certain gift before filing for bankruptcy, consider talking to a bankruptcy attorney. Karen E. Evangelista is an attorney that has been specializing in bankruptcy for over 31 years. If you have any questions about bankruptcy, Karen E. Evangelista is here to help. Contact us today to schedule a consultation and discuss the details of your case.