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How Do Gambling Debts Impact Filing For Bankruptcy Protection?

GeorgetteMillerLaw.com > Bankruptcy  > How Do Gambling Debts Impact Filing For Bankruptcy Protection?

How Do Gambling Debts Impact Filing For Bankruptcy Protection?

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Gambling debts are a serious problem facing many people. As individuals find themselves further in gambling debt, they often experience additional financial hardships which prevent them from meeting their financial obligations. As debts mount, you may seek out an experienced debt relief attorney to discuss the options available to you to resolve your debts. If you are facing financial hardship and are unable to pay your debts, you may consider filing for bankruptcy. Georgette & Miller & Associates handles bankruptcy solutions for New Jersey clients seeking to understand your financial goals so we can pursue the best bankruptcy solution to meet your needs. If you are considering filing for bankruptcy protection and also have gambling debts, contact Georgette Miller & Associates today.

Compulsive Gambling and Financial Problems

Gambling is a form of entertainment, with some participants winning large sums of money. Some people get a thrill from gambling, experiencing the excitement of the unknown or the excitement of a large win. The prospect of winning, especially if dreaming of a life-changing win, prompts gambling and keeps the industry in business. Unfortunately, there is a negative side to gambling – not everyone can win, otherwise, casinos, lotteries, and betting books would cease to exist due to too many losses. Despite knowing the odds are not in the gambler’s favor, many people still gamble both recreationally or in a more serious manner. Gambling can even become an addictive or compulsive behavior. Compulsive gambling can lead to financial problems, increase existing financial problems, and create or add to individuals’ debts.

There is much stigma associated with addictions of any kind. As more is learned about mental health, addiction is treated less as a stigmatized choice and more as a compulsive disorder recognized by medical professionals. Some people have an addiction to gambling and they continue to gamble despite experiencing significant financial losses. There are social programs that can help compulsive gamblers avoid this behavior, but these do not erase current debts, gambling or otherwise. 

To get a handle on your debt concerns, you should talk with a bankruptcy attorney to discuss your bankruptcy options, your financial goals, and any other concerns you may have. While there is never an ideal time to file for bankruptcy, you can rest assured that Georgette Miller & Associates will handle your bankruptcy process with a focus on achieving your debt relief goals.

Can Gambling Debts Be Discharged in Bankruptcy? 

As with most legal questions, the answer to whether gambling debt can be discharged in bankruptcy is “it depends.” If you took our personal loans to finance your gambling activities, these loans could be discharged in bankruptcy. However, there are laws that would prohibit discharge if credit or loans were obtained for gambling without the intent to repay. These are complex issues in bankruptcy law, and you really need an experienced bankruptcy attorney to guide you through the process and analyze the governing case law, bankruptcy code, and the types of debts for which you are seeking relief.

Gambling Income and Bankruptcy

If you are filing for bankruptcy, your income will be evaluated to put you into the correct bankruptcy chapter. Most consumers will file under Chapter 7 or Chapter 13 of the bankruptcy code. Your bankruptcy attorney will analyze your financial position and advise you on proper filing.

Your gambling winnings may be considered income according to the IRS. Not only can this income evaluation impact your bankruptcy eligibility, but you may need to pay estimated taxes based on your gambling winnings being deemed income. This could strain your budget further and prevent you from making your payments under the bankruptcy plan, resulting in a dismissed bankruptcy.

The Risk of Additional Credit and Gambling

There are many sources of credit someone can draw from for funding their ventures, whether for business or personal use. People can obtain loans from financial institutions, open credit cards, or get a loan from a private source. Some lenders may be concerned about not being able to recover their investment if a borrower does not pay back the loan as agreed and may want more assurance to will protect their own financial position against the borrower. A lender may require a borrower to agree to secure the loan with an asset the borrower owns, including a home, vehicle, or something else of value that would allow the borrower to recoup the funds they lend. This is how a debt becomes a secured debt, and it would not be discharged the way an unsecured debt can be discharged in bankruptcy.

Another risk of gambling funded by loans or credit is the way that some gamblers will continue to seek more funding for their activities. This can quickly lead to the over-extension of credit and an imbalanced debt-to-equity ratio which can hinder a borrower’s future creditworthiness. As the borrower continues to use their assets as collateral to secure additional funding for gambling, they run the risk of not only increasing the amount of debt they carry but of losing the assets used as collateral. Working with a debt relief attorney can help you resolve your debts. Especially if finishing for bankruptcy, your attorney can help you through the credit counseling process to avoid finding yourself in this situation in the future.

Protecting Your Assets from Gambling Debts

Your debt relief attorney will try to create a debt relief plan that will repay your creditors, resolve your debts, and protect your assets, but the extent to which each and every goal is achieved will depend on the specific situation you find yourself in. If you have put up some of your assets as collateral against a loan that may fund your gambling debt, it is possible the asset will be repossessed or liquidated if required to complete your bankruptcy plan. Negotiating settlements with creditors may be a possibility to resolve your debt and protect your assets from repossession.

Schedule Your Free Consultation

You can receive answers to your gambling debt and bankruptcy questions by contacting Georgette Miller & Associates online or by calling 866-964-6529. We can help you work through your gambling debt and find your way to financial freedom.