Discharging gambling Debts

[lrprn]

Although this DOJ legal summary predates the current bankruptcy law, it explains this issue in more detail and lists cases at that time which set precedent for discharging or not discharging gambling debt through bankruptcy - http://www.usdoj.gov/ust/eo/public_a...s/gambling.htm

Which state the gambling debt was incurred in also impacts whether the gambling debt can be discharged or not as well. Each state and bankruptcy district has precedent set by case law about the dischargeability of gambling debt from markers and cc advances and that will come into play too.

This is an evolving area of bankruptcy case law, especially given the rapid increase of legalized gambling in many states and the exponential increase of gambling addiction seen in the last ten years across the US.

[inhocknow]

Thank you all again. You guys are fantastic.
Has anyone here ever had online gambling debt discharged? This is debt that was racked up by using credit card funds to fund your online gambling account.
Thank you for your help.

[HHM]

Thank you all again. You guys are fantastic.
Has anyone here ever had online gambling debt discharged? This is debt that was racked up by using credit card funds to fund your online gambling account.
Thank you for your help.

The use of credit cards to pay for gambling is not as problematic as gambling markers. It's a simple issue of time and amount. Like I said in my previous post, you "should" wait at least 6 months from the last time you used a credit card for gambling before filing BK. Waiting doesn't necessarily put you in the clear, but the longer you can wait, the better argument you have that you did not commit fraud (i.e. used the credit cards knowing that you could not pay them back).

[JRScott]

I agree. If it was jut online gambling with using credit cards then that's not the same as a gambling marker. Just distance yourself as much as possible from the last gambling charge.

Good Luck

[inhocknow]

Hello folks, I have to see if this is normal.

My lawyer called me this morning (he already got my paperwork going and I just need to review and sign the copies before he submits the paperwork for filing) and he asked me if I had gambling debt prior to the past 12 months. His questionnaire only asked me about the previous 12 months, but now he is asking me if I had previous gambling losses even prior to that.

Why would this be?

Also, he had a lot of questions for me. We were on the phone for about 30 minutes. Is this normal for a lawyer to ask these questions?

Thanks for your help.

[HHM]

Yes, and remember, he is YOUR lawyer, he is your advocate, so you should answer them truthfully. He is probably just trying to get a better understanding of the case and so he can make sure that he and you are prepared to meet any challenges.

[inhocknow]

Thank you for your help.
I answered them 100% truthful. Thank you again for your support. I felt like I was getting grilled but I guess its normal for the lawyer to want to know everything no matter how little it is.
That gambling debt still scares me for some reason. Are there ever times that they do not discharge the gambling debt?
Thank you all for your terrific help and support.

[HHM]

I think we have already answered your question. There is certainly a risk that your creditors who you used to make gambling charges could object. But again, if enough time has passed, and you made some payments to those creditors, the risk is probably fairly low.

[inhocknow]

Thanks for your time and help. You are correct, you already did answer my question. I am sorry.

If the creditors object, and they do not allow these debts to be discharged, can they force me into the Chapter 13 status?
If I can't pay my bills now, I need some kind of relief. I feel that a Chapter 13 is much better then no chapter 7.
Can they keep me without getting either one?
Thanks for your time and help.

[HHM]

You can only be pushed into a chapter 13 if you have disposable income. That determination is not dependant on whether these gambling charges are discharged or not.

If there (and this is a big IF) is a successful objection from a creditor, all that happens is that debt is declared non-dischargeable in your BK. What typically happens next is that the creditor will seek a judgment in state court and then pursue normal avenues of collection efforts (i.e. wage garnishment, etc).

[inhocknow]

Thanks for the help. The weird thing is that I see is that if there is no disposable income, why would a judge issue or approve a judgement? I don't think a judgement would cause me to all of a sudden have disponsable income.
Am I missing something? Thank you for your time and support.

[HHM]

Thanks for the help. The weird thing is that I see is that if there is no disposable income, why would a judge issue or approve a judgement? I don't think a judgement would cause me to all of a sudden have disponsable income.
Am I missing something? Thank you for your time and support.

LOL, judgments have nothing to do with your ability to pay. It is merely a question of whether you are liable for the debt.

Judgments essentially last indefinitely, so you may not have any money or assets now, but that may not always be the case.

[PaKettle]

I have a similar question about gambling...

I took out a $22,000 personal loan based on an offer I got in the mail about 3 years ago. I took the loan with the intent to buy real estate,but I never did due to various reasons (mostly the too-high prices).

So the money sat in the bank and dwindled away, some in large chunks, some just dwindling a bit at a time. I paid back more than half of it, plus the interest, so now it is down to around $10k balance.

Part of the dwindling of the money was just traveling to Vegas and other cities and part of the money was gambling. Some of the money I gave to my relatives for needed repairs on their home, but it would be hard to prove that, I gave them cash.

None of this is documented. I can prove I went to Vegas etc. (hotel bills) but I cannot prove I gambled it, I took the money out of the bank as cash withdrawals of slightly under $10k in one case, and lesser amounts in others...

Now, it just turns out, this particular loan was just bought out by a finance corporation, you know like "household finance corporation"... and I have heard these types of financial institutions are often very likely to fight a debtor, and I made NO payments to them in particular because it changed hands just as I decided to file bankruptcy.

So, my questions are:
1) how likely is this debtor to fight this personal loan (unsecured) debt?
2) IF I am asked what I did with the money, should I say that I gambled a lot of it?
3) IF asked, should I say that I gave the money to relatives, or just say that "I spent it" and leave it at that?
(ie. what is an "acceptable" reason, and what might not be?) I would think that since it was a personal loan, it really would not matter, it was my money to do with as I please and I did pay it back for 2 and 1/2 years, so... no problem.. BUT, what will THEY and the TRUSTEE think???

I have heard that it depends on your district as to whether advances used for gambling are seen as a dischargeable debt. Is that true? So I could lie and say I just spent the money on luxuries - clothes, restaurants, traveling, tours, etc.... Or I could say the truth, that a good amount of it went for gambling. Neither would be a complete lie, so which is better? Unfortunately I did not do online gambling (I think those places have questionable payoff practices!), so I have no proof of gambling at all... I may as well have burned the money with a match... And, no, no wins to report, either...

Again, the loan was taken 3 years or so ago, but the money sat in my bank for about a year... Then I began to spend it on the above, so I'd say it was definitely spent between 1-2 years ago... and I made payments on it for 2 and 1/2 years...

Advice? Info?

[inhocknow]

Hello.Thank you for your great responses.
Is it true that the dischargeablity of gambling debts depends on your district?
Thank you guys, you are truly the best. I appreciate all of your help.

[keepmine]

I have a similar question about gambling...

I took out a $22,000 personal loan based on an offer I got in the mail about 3 years ago. I took the loan with the intent to buy real estate,but I never did due to various reasons (mostly the too-high prices).

So the money sat in the bank and dwindled away, some in large chunks, some just dwindling a bit at a time. I paid back more than half of it, plus the interest, so now it is down to around $10k balance.

Part of the dwindling of the money was just traveling to Vegas and other cities and part of the money was gambling. Some of the money I gave to my relatives for needed repairs on their home, but it would be hard to prove that, I gave them cash.

None of this is documented. I can prove I went to Vegas etc. (hotel bills) but I cannot prove I gambled it, I took the money out of the bank as cash withdrawals of slightly under $10k in one case, and lesser amounts in others...

Now, it just turns out, this particular loan was just bought out by a finance corporation, you know like "household finance corporation"... and I have heard these types of financial institutions are often very likely to fight a debtor, and I made NO payments to them in particular because it changed hands just as I decided to file bankruptcy.

So, my questions are:
1) how likely is this debtor to fight this personal loan (unsecured) debt?
2) IF I am asked what I did with the money, should I say that I gambled a lot of it?
3) IF asked, should I say that I gave the money to relatives, or just say that "I spent it" and leave it at that?
(ie. what is an "acceptable" reason, and what might not be?) I would think that since it was a personal loan, it really would not matter, it was my money to do with as I please and I did pay it back for 2 and 1/2 years, so... no problem.. BUT, what will THEY and the TRUSTEE think???

I have heard that it depends on your district as to whether advances used for gambling are seen as a dischargeable debt. Is that true? So I could lie and say I just spent the money on luxuries - clothes, restaurants, traveling, tours, etc.... Or I could say the truth, that a good amount of it went for gambling. Neither would be a complete lie, so which is better? Unfortunately I did not do online gambling (I think those places have questionable payoff practices!), so I have no proof of gambling at all... I may as well have burned the money with a match... And, no, no wins to report, either...

Again, the loan was taken 3 years or so ago, but the money sat in my bank for about a year... Then I began to spend it on the above, so I'd say it was definitely spent between 1-2 years ago... and I made payments on it for 2 and 1/2 years...

Advice? Info?

I think you're creating issues where none appear.
A loan from 3 years ago won't be challenged. You've done nothing more than many of us have done. Taken cash advances and used them for everything under the sun.
If anyone cared to ask, what's wrong with the complete and simple truth-I spent it over the years.
One piece of advice. You tend to be wordy-not trying to censure you here but, when you file bk and are asked a question by the trustee-answer just yes or no if that's possible. Let the trustee ask followup questions if they want some detail. Volunter nothing.