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Christmas and Bankruptcy

Christmas And Bankruptcy

A Trustee’s Point of View.

By James B. Angell

Christmas Spending. As we make our way through the holidays, we tend to spend money to get the right gift for the right person.  In 2015, the average spending per person during the holiday season was over $800.00, only the second year in history of spending at this level. Total Holiday Sales increased 4.1% in 2014 and 3.2% in 2015. The National Retail Foundation predicts that 2016 holiday sales will rise another 3.6%. According to its survey, taken in October, American Consumers planned to spend an average of $935.58 during the holiday shopping season in 2016.

Holiday HangoveR. While this is good news for retailers, total credit card debt tends to follow a predictable cycle, increasing each year during the fourth quarter, to be partially repaid in the first quarter of the succeeding year. The average household with credit card debt carries a balance of $6,885 as of June 2016 and pays $1,292 per year in interest, based on calculations from nerdwallet.com. Nerdwallet.com reports that households that bring in more than $157,479 per year pay almost four times more in credit card interest than households that make less than $21,432, although the lower income household pays a greater percentage of its income to credit card interest.

Increased Bankruptcy Filings. We bankruptcy trustees see the aftermath on an annual basis. According to Epiq Systems, bankruptcy filing typically peak in February, March, and April of each calendar year as credit card payments come due and households find it hard to make payments, often up 15 percentage points over January filings. The general trend is that, after settling down in May and June, they never again reach the number of filings per month as in the early months of the year.

Of course, winter fuel costs, taxes and other factors may contribute to this increased rate of bankruptcy filings, but the aftermath of holiday spending is at least a component of financial stress felt by consumers after the holidays.

Keep it Simple. So, as you toast to neighbors and friends, think kindly of those who are less fortunate than you and the financial pressures they may be under. If you are able, give food, toys and other gifts to charitable organizations that redistribute them to the less fortunate in your community. And keep things simple with your friends and neighbors – the generous gift giver you see on Christmas just may be the debtor in bankruptcy next spring.

James B. Angell is a panel chapter 7 Trustee in the Eastern District of North Carolina, and will be a panel Trustee in the Middle District of North Carolina, commencing January 1, 2017. If you have questions regarding bankruptcy matters, please contact James B. Angell  at (919) 821-7700 or at jangell@hsfh.com.

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