Can I Discharge Gambling Debts In Bankruptcy?

May 13th, 2010 by Reed Allmand

Some debtors considering bankruptcy have accrued a large amount of gambling debt.  While generally speaking some gambling debts may be dischargeable in Chapter 7 bankruptcy, the discharge of that debt may depend on a few factors.

1. Where you incurred the debt.  Nevada has a law that makes gambling debts fully enforceable and there have been bankruptcy cases where a debtor’s bankruptcy discharge has been successfully challenged by Nevada creditors who were owed gambling debts.  However, it should not be assumed that this will be the case in every bankruptcy and a debtor who has incurred gambling debts in Nevada should discuss the matter with their bankruptcy attorney.
2. Intention to repay the debt when it was incurred.  If a debtor went to a casino and charged up $10,000 worth of gambling debts to their credit card while being unemployed and filed bankruptcy a few months later it would probably be assumed that the debtor did not intend to repay the debt.  In that case the debtor’s gambling debts would be deemed nondischargeable in bankruptcy.
3. The willingness of the creditor to object to the debtor’s bankruptcy discharge.  The discharge of certain gambling debts in bankruptcy will often be determined by a creditor’s willingness to object to the debtor’s discharge.  If a gambling debt was incurred just before filing bankruptcy or was charged to a credit card the chance of the bankruptcy discharge being challenged by the creditor increases. Although a creditor challenging your discharge doesn’t guarantee that they will be successful in having your bankruptcy discharge denied.

Whether you believe your gambling debts will be discharged in bankruptcy or not, you are still obligated to disclose any gambling debts in your bankruptcy case. Failure to disclose gambling debts could result in the dismissal of your bankruptcy case.