Small Business Law

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Bankruptcy Attorney

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Gambling Debts: Is Bankruptcy the Best Option?

With the proliferation of “slots parlors” in Pennsylvania, not to mention lotteries, Off Track Betting parlors, horse racing, internet casinos and the nearness of Atlantic City casinos, it is highly likely that the number of bankruptcies in Pennsylvania caused by gambling debts will continue to rise. Many people end up maxing out their credit cards and taking out loans or cash advances they cannot afford to repay. Though recent statistics are hard to come by, it is safe to say that gambling debts account for between 10% and 20% of all bankruptcies filed in the country. Certainly, this percentage is higher where casinos are more prevalent.

But if you think that filing for bankruptcy will get rid of your gambling debts and let you start fresh with a clean slate, you might want to think again. While bankruptcy courts tend to be sympathetic to the plight of individuals who fall on hard times, creditors are not so forgiving. And when it comes to gambling debts, bankruptcy laws allow creditors to challenge the discharge of these debts. While each state is different, and often it depends on the prevalence of gambling establishments within the state, it is becoming more difficult than it once was to discharge gambling debts through bankruptcy.

Though Pennsylvania has no hard and fast rule, individuals normally need to demonstrate that they did not run afoul of the Bankruptcy Code, if challenged by the bankruptcy trustee or a creditor. Problems usually arise in the form of credit card cash advances. A trustee or creditor might challenge the debt as dischargeable when it feels that the debtor took a cash advance knowing that he or she could not afford to pay it back. The closer the cash advance is to the bankruptcy filing date, the more it might look like the debtor intended to take the money without planning to pay it back.

Although it is becoming more difficult to discharge gambling debts, it is by no means impossible. For instance, proving a bona fide gambling addiction helps to show that such debts should be discharged. Each situation must be reviewed on a case-by-case basis to determine the viability of bankruptcy.

To discuss your options in more detail, with respect to gambling debt or any other types of debt, call me for a free consultation.

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