People seeking relief from their liabilities may include gambling debts. Particularly in New Jersey, there are many casinos in the region as well as online gambling, as well as the proposed sports betting which may be legalized here. The problem gambler may easily lose control and find himself in substantial debt.
The answer to whether gambling debts may be discharged is: it depends. And it is not necessarily so easy. The threshold question is whether it appears that you have incurred the debt without any intention of paying it back.
Any debt incurred under false pretenses is considered to be fraud according to the United States Bankruptcy Code, and is not allowed to be discharged. However, it can be very difficult to prove false pretenses or fraud in most cases. A casino operator will investigate whether you used deception when borrowing money from a casino. When you sign for a marker at a casino to borrow money to gamble, you are representing that you have sufficient funds to cover any money that you borrow. If a casino files an adversary proceeding to its debt excluded from the discharge and if you did not have adequate funds to cover the marker, the bankruptcy court may determine that you used deception to borrow the money. (See https://www.middlesexcountybankruptcyattorney.com/2015/10/)
Similarly, a credit card issuer may seek a determination of nondischargeability for cash advances taken inside a casino, if you fail to make any attempt to repay those advances.
A bankruptcy judge may consider whether you have sought help for your gambling addiction and if you made payments toward the debt. This kind of proof can evidence that you did not file bankruptcy to escape a debt you never intended to repay. It is essential that you demonstrate that you thought you would be able to repay the debt and that you attempted to do so.
It is important to consider that if a gambling debt is incurred a few months before you file for bankruptcy, the court may conclude that you never intended to repay it.
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