Will gambling affect my bankruptcy case? 

Will gambling affect my bankruptcy case? 

The short answer is yes, it can. You are obligated to disclose the last twelve months of profits and losses from gambling on your bankruptcy petition.  If you do receive winnings and it’s listed on your tax return as income, that also needs to be shown on the bankruptcy petition for the last two years.  Gambling can affect your ability to file for bankruptcy.

The first issue is whether you have taken out credit lines or personal loans for the purpose of gambling.  This is a good faith issue in terms of whether you intended to repay your creditors or if you were purposely going to default.  The objective of borrowing money hoping you would make more gambling will not be a valid excuse.  Similarly, having a gambling addiction would not be a valid excuse either.

The trustee’s perspective is that if you have $12,000 a year spent on gambling that is $1,000 per month that you should have used to pay your unsecured creditors.  The case law also supports this as well.  A Chapter 13 might be an option if you have gambled since you are trying to pay creditors back to some extent.  Otherwise, depending on the amount you gambled you might have to wait a year of no gambling to file your Chapter 7 bankruptcy case.

If it’s minimal like a few hundred dollars that is less of a concern.  However, if you plan to file for bankruptcy, abstain from any type of gambling so you do not compromise your case.

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