I have $60,000 in debt, most of it from gambling. I can’t keep up with the payments and I’m starting to fall behind. I think I need to file for bankruptcy, but I was wondering – would a bankruptcy include my gambling debts?
This question came to me the other day and is a fairly common concern – if I’m in financial trouble because of gambling debts, will my bankruptcy cover them?
A gambling debt is no different than a credit card debt or a tax debt or a bank loan – it is an unsecured debt that can and will be discharged, or forgiven, by your bankruptcy. The only difference is if you file for bankruptcy with debts that were caused by gambling, you are not eligible for an automatic discharge as in other bankruptcies.
Essentially, a bankruptcy takes 9 months to complete. At the end of this time, a first-time bankrupt person will be released from their debts after 9 months automatically, unless there is a reason preventing this from happening. There are a few reasons for an automatic discharge not happening, like not paying your surplus income payments and not attending your required counselling sessions. Another reason is if your debts were caused by gambling.
Gambling debts are a two-sided problem – on the one hand they are financial burden that you can no longer afford to maintain and need to deal with, and on the other hand they were caused by a behavioural problem that needs to be solved.
When you file for bankruptcy for your gambling debts, the law looks at both sides of the situation. You are able to get rid of your debts by filing for bankruptcy if you also work to rehabilitate yourself from your gambling problem.
At the end of your 9-month bankruptcy, you will be required to appear in court in order to determine if you have made progress in fixing your gambling problem. They want to know if you’ve been enrolled in counselling programs to handle your gambling addiction and if you have done things voluntarily, like self-excluding yourself from casinos, where you ask to be banned from the casino and if you do appear they have permission to arrest you.
If you appear before the court and you haven’t taken any steps to help your gambling problem, you may not get an absolute discharge, where your debts are forgiven, but rather you might have to be bankrupt for longer. The court needs to know that you are serious about fixing both of the problems – the financial situation and your gambling addiction.
The real key to this situation is to try and find an alternative to filing for bankruptcy;Â a consumer proposal may allow the debts to be compromised while avoiding an attendance before the courts.
If you’re struggling with a gambling problem and overwhelming gambling debts, contact me for a free consultation. You can also email me any questions you might have. Don’t be embarrassed by your problem – let’s talk about it. I can help you figure out a plan to deal with your debts and even help you find an agency that can help you deal with your gambling problem. Contact me today.
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