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Can I buy Christmas gifts before I file bankruptcy?

| Nov 30, 2018 | Bankruptcy, Firm News

Tis the season for a timely question. There are two things to watch out for: The first concept, if you file after the gift is given, concerns what are called fraudulent transactions, which could potentially invoke a trustee’s “clawback” (or avoidance) powers. If a person receives something of value from you, the trustee could potentially try to recover that from the recipient. But first, there’s an undefined “de minimis” rule. While not defined by statute, the bankruptcy forms only require disclosure of gifts exceeding $600 to any particular recipient within the prior two years. Contrary to popular perception, most trustees aren’t grinches. I’ve never actually seen a trustee trying to recover a normal Christmas present, and in the case of the debtor’s own minor children, to whom a debtor owes a duty of support, I would think a trustee would be hard pressed to pursue a minor child’s gifts received, particularly if it’s a necessity like clothes. I used to hate getting clothes for Christmas, that never seemed like a gift because I expected that anyway. Bottom line, life goes on, and giving is usually  OK as long as long as it’s reasonable.

The second concept to watch out for is ownership. If the gift has been purchased but not given yet, it’s still your property, which needs to be disclosed as an asset, and as long as you can claim it as exempt, you can protect it.