There are thousands of people who are battling a gambling addiction. The numbers have grown thanks to the easy access to online gambling sites as well as casinos. What starts as a form of entertainment can spin out of control very easily.

Many of my clients ask if their gambling debts can be wiped out when filing for bankruptcy. Eliminating your gambling debt may be more complicated than other types of debt. Gambling debt is viewed differently by the bankruptcy judge. This is especially true if it seems as though the gambling debt has been incurred without any intention of paying it back.  

Any debt incurred under false pretenses is considered to be fraud according to Section 523 of the Bankruptcy Code, and is not allowed to be discharged. It can be very difficult to prove false pretenses or fraud in most cases. Casino creditors will investigate whether you used deception when borrowing money from a casino. When you sign for a marker for chips, you are stating that you have adequate funds to cover any money you borrow. If the casino files paper’s to have its debt excluded from the discharge and if you did not have adequate funds to cover the chips, the court may determine that you used deception to borrow the money.

Courts look at whether you have sought help for your gambling addiction and if you made payments toward the debt. This can show that you did not file bankruptcy to escape a debt you never intended to repay. It is imperative that you demonstrate that you thought you would be able to repay the debt and that you attempted to do so.

Gambling debt falls into two categories, secured and unsecured loans. When you pledge property as collateral for your gambling debt, that is considered a secured debt. A personal loan is considered unsecured debt. If your gambling debt is secured by an asset, the lender may be able to claim the collateral as payment for the loan.

Timing is everything when it comes to gambling debt and filing for bankruptcy. If you incurred the debt a few months before you filed bankruptcy, the court may assume that you never intended to repay it.

Be sure to consult with an experienced bankruptcy attorney before filing for bankruptcy. Contact the offices of Tom Orr to schedule your consultation today.