Can Gambling Debt be addressed by Bankruptcy in California?

  • Bankruptcy

Can Gambling Debt be addressed by Bankruptcy in California?

If you like gambling, Los Angeles offers you a large number of casinos to choose from. However, gambling can lead to the accumulation of a huge amount of debts. People often choose to get rid of their debts via bankruptcy. During bankruptcy, debts are discharged which effectively makes creditors go away as they cannot harass you to get the payment back. While bankruptcy is an excellent way to get rid of debts, it is important to know that it gets reflected on your credit report. Your bankruptcy appears for up to 10 years on your credit report which may make things a bit difficult if you wish to get new credit.

The duration of bankruptcy and its discharge depends on the type of bankruptcy filed. While in the case of Chapter 7, debtors surrender all your non-exempt property which is sold off to pay creditors and you get an automatic discharge of any remaining unsecured debts. Under California’s set of exception for bankruptcy, almost all property can be exempted and debtors do not have to give up anything. In the case of Chapter 13, a 3-5 year repayment plan is devised keeping in mind the assets, income, and debts of the filer. After the end of the repayment plan, any unsecured debt (medical bills, personal loan, credit card bills, utility bills, etc.) which remains is discharged. Debts like taxes, student loan debt, and fines owed to the government, child support and alimony are not discharged in bankruptcy.

Getting gambling debt discharged

According to Los Angeles based law firm, gambling debts are tricky to get rid of when filing for bankruptcy. Though gambling debts meet the criteria of dischargeable debts, the inclusion of them in your bankruptcy raises some valid questions. Both trustee and creditor question the intention of the debtor to pay off gambling debts. It is quite possible that players who incur heavy gambling debt often had plans to file for bankruptcy in order to avoid making repayment.

To ensure that gambling debts are discharged, you need to make sure that the debt was not made under the false pretense of payment. You need to prove that you intended to repay all debts including gambling debts and that bankruptcy is not your way of conning the system. People often file for bankruptcy in order to avoid paying creditors. This is known as filing “in bad faith”. If you are found to be guilty of this practice, your discharge is denied. Since it is extremely difficult to prove the intentions of bankruptcy filer, other factors are used to assess the intentions of the debtor vis-à-vis the gambling debt.

Prove good faith to get gambling debts discharged in bankruptcy

Amongst the various factors considered to test the good faith of a debtor is the use of a marker. A marker is the credit line from casino used by people to fund their gambling. The amount of marker given to a gambler depends on certain factors like their track record at the casino, money in their bank accounts, how the marker is being used, etc. Signing the marker is equivalent to any legally enforceable debt. In case you sign the marker claiming you have funds to repay the debt but later declare bankruptcy, then the said debt is considered to be borrowed in bad faith. If the court sees that the debt is made in bad faith then it is not discharged. However, if there were funds in your account to repay the marker but due to other problems like unexpected heavy medical bills, you were left with no option except bankruptcy, then it is a case of good faith.

Nothing shows your intent as repent. If you seek professional counseling, have stopped gambling and had even made a few payments to pay off the debt, then such actions show that you were making efforts to pay off the debt. This represents that the debt was made in good faith.

Another factor which the court examines is the timing of the debt. If the duration between incurring the debt and filing of bankruptcy is long, there are fewer chances of the debt being made in bad faith. A debt incurred a couple of weeks before filing for bankruptcy is much more suspicious than that taken 6 months or prior. If you had made some payments in the allotted timeframe between acquiring the debt and filing for bankruptcy, it shows your intent. The time frame for paying back markers depends on the amount owed. Marker of less than $1,000 needs to be paid within 7 days; those between $1,001 and $5,000 in 14 days. If the marker is above $5,000, you get 45 days to repay the money. If you fail to make a payment on the debt, then your intentions seem dubious.

Despite the fact that creditors view gambling debt suspiciously, judges are more lenient towards them, probably because gambling is a legal activity and therefore debts so acquired should be treated in a similar fashion. If the debt was made in good faith then you can easily get them discharged when you file for bankruptcy in California. However, you need the help of a bankruptcy attorney to prove your case. In case you haven’t hired one, call 888-297-6203 to consult with some of the best legal minds.