What Happens to Gambling Debts When You File Bankruptcy?
One of the main advantages of filing for bankruptcy is that the filer will often be forgiven a number of his debts. When a person files for bankruptcy, a judge must decide which of his debts he is responsible to pay and which are "dischargeable." When a debt is discharged, the debtor no longer has to pay it. While gambling debts are technically dischargeable, judges will often choose to not discharge the debt.
Other People Are Reading
-
Gambling Debts
-
Gambling debts can be incurred a number of different ways. In some cases, a gambler will have a line of credit with a casino or other party that provides for legal betting. In others, the gambler will have charged his bets to a credit card or used loans from finance companies or other lenders to support his habit. In all cases, a judge will consider not just to whom the debt is owed, but what the money was used for.
Dischargeability
-
In order for a debt to be discharged, the debt must meet specific criteria for dischargeability. According to Craig Robbins, a New York bankruptcy attorney, gambling debts are technically eligible for discharge, as there is no specific statute preventing a judge from forgiving the filer of them. However, according to the U.S. Courts, judges are allowed to protect gambling debts from discharge under certain circumstances and have, in the past, generally refrained from discharging them.
-
Fraud
-
According to Robbins, under federal law, a gambling debt will not be discharged if the creditor contests the debt's discharge. The exact party contesting a discharge will vary depending on how the debt was incurred -- for example, a credit card company may contest it or, if the gambler took out loans from a casino, the casino itself -- but, in all cases, the creditor will contest the discharge on the basis that the debtor acted fraudulently in taking out the debt.
Considerations
-
Whether a gambling debt will be discharged will depend on the disposition of the judge hearing the case. According to both Robbins and the U.S. Courts, judges legally have grounds to rule either way. If the debt is not discharged, it will be because the judge decided that the debtor took out the debt knowing that he would be unable to pay it back. The burden of proving this is on the creditor, which can often make his case a tough one.
-
