Know the Deal on Gambling Losses and Dischargeability

Published Sunday, July 19, 2009 @ 4:08 pm

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Gambling, not at all unlike compulsive spending in department stores, can often lead to serious financial pitfalls. Despite the prevalence of gambling addictions in America, debts incurred by too much betting were at one time non-dischargeable in bankruptcy. While the specifics of dischargeability with any type of debt should be explored with a bankruptcy attorney, it is important for you to know that if you count gambling losses as one of your reasons for bankruptcy, the odds are in your favor that it can be discharged.

Bankruptcy research suggests that close to 10 percent of all filings are connected to gambling. If you are already considered a “compulsive” gambler, then you may be one of the 20 percent who eventually file bankruptcy. If that is the case, know that the bankruptcy court is going to view your gambling debts much like it does other debts. That is, was the debt incurred with the intent to repay? For a compulsive gambler, that question is up in the air and where the answer lands depends heavily on how the money to gamble was obtained.

Not surprisingly, credit cards play a role in gambling debt. For those who walk in to a casino with a wallet full of positive cash and leave with it empty, no real debts have been incurred. The problem arises when a person uses a credit card for a cash advance. As you might imagine, the majority of bankruptcy lawsuits relative to gambling involve credit card companies.

Again, like most debt, a judge is going to use other facets of your financial history to determine your intention to repay the credit card company for the cash advance. Prior to filing, your attorney will want to know everything about your gambling habits, including how much of your debt was gambling related, how recent your gambling-related debt was incurred, and whether you reasonably believed you would be able to pay back your creditors. If there is an objection to your bankruptcy discharge, the court will thoroughly examine your gambling history to determine whether you acted with an intent to defraud your creditors.

Las Vegas may still be the world’s gambling mecca but one does not need to go far to find a casino. Whether on a riverboat, Indian reservation or just across our northern border, the opportunities to double down are plentiful. Thus, gambling losses are a common cause of bankruptcy.

Again, it’s important to understand that like the eligibility for discharge of other kinds of debt, a bankruptcy judge is going to weigh a number of factors in your financial history. First and foremost, if gambling is the primary driver of your reason for bankruptcy, it’s possible you have a problem. Your first stop then, should be getting help to put the brakes on your gambling.

Next, contact a good bankruptcy attorney. In North Carolina, call the Law Offices of John T. Orcutt at 1-800-899-1414. We can help you put into perspective your gambling debts and get you on the road to a more healthy financial future. You can bet on it.

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