What starts as an innocent leisure activity can quickly spiral into a crisis when mounting gambling losses force the use of credit cards, personal loans, or casino credit to keep playing. If this reflects your circumstances, it is in your best interest to contact an experienced Rockland County Bankruptcy Attorney to understand your options during these challenging times.

Are Gambling Debts Dischargeable in Bankruptcy?

Gambling debt is generally classified as unsecured consumer debt, like credit card bills or personal loans. It doesn’t matter if you owe money to a regular casino, an online betting site, or if you used a credit card to gamble. The law considers these types of debts to be non-priority in a bankruptcy case.

Essentially, this means you can get rid of gambling debts through a Chapter 7 liquidation or pay them back more easily in a Chapter 13 bankruptcy. However, it should be noted that courts and trustees will scrutinize how and when you took on these debts, especially if you ran them up just before filing.

The selection of a bankruptcy chapter significantly influences the discharge procedure:

  • Chapter 7: The majority of unsecured debts are discharged quickly; creditors are entitled to contest the dischargeability of a debt, frequently asserting claims of fraud or bad faith. Gambling debts that are recent or were accrued under dubious circumstances are particularly at risk of such objections.
  • Chapter 13: This type of bankruptcy requires you to pay back some of your debts over three to five years, based on what you earn and what you need to live on. If you successfully complete the payment plan, any remaining eligible unsecured debts are wiped out. While creditors can still argue against certain debts being wiped out, they usually don’t challenge it as much as they do in Chapter 7 because they receive some payments during the repayment plan.

What Steps Should I Take Before Filing?

If bankruptcy is under consideration, the most immediate and critical step you should take is to cease all gambling activities. Continuing to gamble after seeking legal counsel or while demonstrably insolvent significantly jeopardizes your defense against potential allegations of fraud.

It is also highly recommended to document concrete measures showing a behavioral change, as these actions can help re-establish credibility with the court by indicating acknowledgement of the issue and an acceptance of responsibility:

  • Deactivating all online betting accounts
  • Registering for casino self-exclusion programs where applicable
  • Pursuing professional counseling or support services for problem gambling

Your legal representation requires a comprehensive overview of your past gambling history. This necessitates the collection of:

  • Credit card statements itemizing cash advances and direct charges related to gambling
  • Bank statements indicating ATM withdrawals executed at casinos or betting websites
  • Casino player statements or online betting account histories, should these records be accessible

While the process of compiling these records may present challenges, they are essential for preparing to address creditor objections and ensuring that you can respond to the trustee’s inquiries with veracity and precision.

Furthermore, as bankruptcy becomes a certainty, you must strictly refrain from:

  • Incurring new debts under the pretext of a “final opportunity” to recoup losses
  • Utilizing remaining lines of credit for routine living expenses when repayment is known to be unattainable
  • Making substantial purchases or cash advances could be construed as a misuse of funds

The fewer questionable financial transactions appear in your recent history, the less basis creditors will have to object to the discharge of their debts.

When overwhelmed by gambling debts, the critical first steps are immediately stopping all gambling activity, embracing total honesty about your financial situation, and securing qualified legal counsel. With strategic planning, it is often possible to discharge or restructure gambling-related obligations and begin the process of financial recovery. Contact a dedicated attorney at The Lauterbach Law Firm today to schedule a consultation.