Online Casinos, Gambling Debt and Bankruptcy
Maybe you like playing the ponies or placing a wager on your favorite sports team. With advances in technology and recent changes in the law, you don’t have to travel far to gamble your paycheck. In fact, you may not even need to get out of your pajamas. Just go sit in front of your computer and direct your browser to your favorite online casino. There you have it – a recipe for potential disaster. The discharge of gambling debt may or may not be feasible given the facts of your case.
You place your first couple of bets and lose a few dollars. Then you place a few more bets and win back your losses. Then comes more bets. You win some and you lose some. Next you find yourself looking for your wallet to add more “credit” to your account, because you know that it’s only a matter of time before you are really ahead of the game. Hours pass and you add more credit and before you know it you are several hundred or possible thousands of dollars in the hole.
The next morning when you balance the checkbook you realize you have really over done it. So what do you do? You use the bill money and try to win some of your losses back. This cycle may repeat itself until you can no longer pay your bills. The collectors are calling, threatening to foreclose on your home or repossess your car. What do you do?
Is Discharge of Gambling Debt in Bankruptcy the Answer?
Bankruptcy is a very powerful tool. It can stop your creditors from pursuing collection actions immediately and allow you and your attorney time to develop a strategy. However, more importantly, it can wipe out your debt. Debtors generally file one of two main types of bankruptcy: Chapter 7 or Chapter 13. Chapter 13 allows you to work with your creditors and the court to create a debt repayment plan. Generally you’ll pay all of your disposable income toward your creditors for a term of 3-5 years. At the end of 3-5 years, the court will discharge your remaining debt. Under Chapter 7 bankruptcy, the court’s bankruptcy trustee will take control of your non-exempt assets and sell them to repay your unsecured creditors. The court will then discharge whatever debt remains.
Gambling debt is dischargeable in bankruptcy, but it is not as clear-cut as other types of debt. There is no law which specifically prevents the discharge of debt related to gambling, but the courts look at it differently than other debts you may have incurred. A creditor or the trustee may object to a discharge on the grounds that you acquired such debt with no intention of repaying it and are now turning to bankruptcy as a final solution.
The bankruptcy code states, ” A debt incurred under false pretenses or through fraud is nondischargeable in bankruptcy.” 11 U.S.C. 523(a)(2)(A). The problem here is that it is very difficult to prove false pretenses and fraud in court. If you, the debtor, can prove that you genuinely intended to repay your debts you may be able to obtain a discharge.
Any gambling debt incurred right before filing for bankruptcy will seriously jeopardize receiving a discharge. The court assumes any debt immediately incurred (within 60-90 days) prior to filing was never meant to be repaid, Word of advice… If you are considering filing for bankruptcy, make sure you wait for a few months after acquiring new debt.
Contact Pikunis Law (856) 282-5505 to learn more.