Can Gambling Debts be Discharged in Bankruptcy?

Debts come in all shapes and sizes. Because of our close proximity to Atlantic City, some of our clients have acquired a significant amount of gambling debts. Often, people with a lot of gambling debt feel ashamed and embarrassed, which prevents them from asking for help until their debts have mounted to unbelievable heights.

Like any addiction, gambling has the power to destroy lives and families. The typical indebted gambler is already in a financial bind before their gambling even begins. Hoping to catch up on late utility bills or a missed mortgage payment, gamblers put all of their hope into winning big at the casinos.

Unfortunately, statistics are not in any gambler’s favor. This means that there is a very low chance of winning big enough to pay down all of the money they already owe. However, even unsuccessful gamblers may find it difficult to quit because they believe that ‘next time will be their big win.’ They’ll take out loans with eye-popping interest rates (like pay day loans and credit card advances) just to get one more shot at winning.

As you can imagine, gambling is not a reliable way to make money! However, it is also not illegal in New Jersey, so it can be quite difficult to convince a gambling addict to change his/her behavior before they are up to their eyeballs in gambling debt.

Although it’s legal in New Jersey, gambling isn’t generally considered a smart way to earn a living. Granted, there are a small number of people who have the discipline to make money as professional gamblers, but there are far more people who are simply addicted to gambling, and these people end up losing a ton of money quickly.

Turning Your Life Around: Cleaning Up Your Gambling Debts

For those who truly are addicted, there are recovery centers that specifically treat gambling addictions. Getting help for the addiction is the most crucial step for any gambling addict. Just like a drug or alcohol addiction, the behavior isn’t likely to stop on its own, and therapy can help stop or at least lessen the urge to bet more money.

Getting treatment won’t erase the debts incurred because of the addiction, however. Many gambling addicts feel so much shame at the financial ruin they’ve caused that they don’t know where to go or how to manage the financial side of their actions.

It’s a falsely held belief that gambling debts cannot be discharged via chapter 7 bankruptcy. Why should debts incurred while gambling be treated any differently than debts acquired via extravagant shopping sprees charged to a credit card?

The only hurdle that may be experienced when attempting to discharge gambling debts in a bankruptcy is if a creditor can prove that the gambler obtained loans under false pretenses. This is extremely difficult to prove, and most likely will not hinder the gambler’s right to a bankruptcy discharge of both gambling and other debts.

It is important to note that the bankruptcy court will look suspiciously at a case that is filed immediately after acquiring a ton of gambling debt because it will appear that the debtor never had any intention of paying back the money borrowed. It is best to put several months between your last gambling binge and the filing date of your bankruptcy case.

 

Image credit: Alan Cleaver