My gambling problem has gotten me in
debt. Can I file for bankruptcy?

Gambling is an activity that involves one person wagering something of value on an outcome that is not clear. The appeal of gambling is the chance to win something of greater value than the original bet. Some gambling enterprises are big, such as the driving industry of Las Vegas, or small, such as a friendly game of poker at a party. No matter what the stakes, gambling is attributed to the debts of over 15 million people in America.


For those whose compulsive gambling has gotten them deep in debt, there are not many options available other than actually paying off the debt. Under the law, debts obtained by fraudulent means may not be discharged.

In order for gambling debt to be exempted in bankruptcy, it must be shown that:

  • Loaned money was obtained through a misrepresentation that was false or untrue;
  • There was intent to deceive a creditor;
  • The creditor loaned money based on this misrepresentation; and
  • This reliance was the cause of the loss of money.

Many gambling debts are acquired by someone borrowing money with the intent of winning back money. When the gambler does not win the money back, they do not pay back their debts, but borrow more money to try and win it back, creating a vicious cycle of reliance. Since the lender is providing money under the belief that it will be repaid, it can be argued that, in essence, the gambler cannot confirm that they will repay the loan. The bankruptcy court can look at someone who files for bankruptcy in order to discharge bankruptcy debt as trying to cheat the system. It may appear that the gambler never attempted to pay back their debts and instead used bankruptcy as a way to continue gambling without being responsible for the debt, especially if the debts occurred in the immediate months preceding a bankruptcy filing. Luckily, there are options available for those with gambling debt. Chapter 7 and Chapter 13 bankruptcy allows someone with gambling debt the opportunity to discharge or repay those debts. Depending on the types of debts acquired, choosing the best form of bankruptcy to file for will be best discussed with an attorney.


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    Laura M. Nesbitt

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