If you have incurred a substantial amount of gambling debt, you may be wondering if filing for bankruptcy protection is a good solution to your problem. With casinos and online gambling websites, there are thousands of people facing a gambling addiction. They continue to go further into debt because they hold out the hope that they will eventually hit it big. Most gamblers fail to seek help until they are completely overwhelmed by their debt.
There is no law that prohibits a debtor from discharging gambling debt in a bankruptcy filing. However, when it comes to eliminating debt incurred by gambling, it is more complicated than other types of debt. The trustee and the bankruptcy judge will view gambling-related debt differently than other forms of debt, especially if it appears that you incurred the debt with no intention of ever repaying it.
Pursuant to Section 532 of the Bankruptcy Code, any debt that is incurred by false pretenses or through fraud is not allowed to be discharged. Proving false pretenses or fraud is difficult in most cases. However, if you signed a marker in exchange for chips from the casino and represented that you had adequate funds to cover the chips when you did not actually have the money, the court may determine that you used deception to borrower the money. Additionally, if your gambling was illegal, your discharge of the debt may be denied on the basis of fraud.
If, however, you sought help with your gambling addiction and you made some payments toward the debt, the court may determine that you did not file bankruptcy to escape a debt you never intended to repay. It is imperative that you demonstrate that you subjectively thought you would be able to repay the debt and that you attempted to do so.
It should also be noted that the timing of when you incurred the gambling debt is important. If you incurred the gambling debt in the few months before you filed bankruptcy, the court will likely assume that you never intended to repay it.
Finally, gambling debt can be secured (you pledged your car as collateral for the loan) or unsecured (personal loan). If your gambling debt is secured by an asset, the lender may be able to claim the collateral as payment for the loan.
Although discharging gambling debt can be complicated, a seasoned bankruptcy attorney can help. The lender has the burden of proving that the debt is non-dischargeable and it can be a difficult burden to overcome. Let us review your individual circumstances and help you understand how a Chapter 7 or Chapter 13 bankruptcy filing could benefit you.
If you are interested in learning more about filing a personal bankruptcy case, contact Levitt & Slafkes, P.C. We are experienced in handling a variety of bankruptcy issues. Our offices are conveniently located in Maplewood, New Jersey. Please call us at 973-323-2953 or online to schedule your free initial consultation today.