Eliminating gambling debt may appear to be the priority, but the first step any problem gambler should take is getting help to come to terms with his or her addiction. Gambling losses regularly occur very quickly, but paying off debt takes far longer. Unless that person is in control of his addiction, even the best debt-free plan is destined to fail. The correct approach is to seek advice from Gamblers Anonymous before finding a way to clear debt from gambling.
Growth in Numbers Eliminating Gambling Debt by Filing Bankruptcy
Only a small percentage of the population is pathological gamblers. However, the growth in casinos, online gambling sites, race tracks, slot machines, lotteries, and online roulette has meant that more people are now exposed to it, btw you check all types of online roulette strategies at top-roulette-methodes.com. If more people gamble, more people will come to realize that they’ve got a problem.
Tom Coates, the founder of Consumer Credit of Des Moines, has estimated that about 15% of his clients are insolvent due to problem gambling. This is validated by SMR Research that revealed that the number of people who filed was 11.2% higher in counties that had legalized gambling.
Filing Bankruptcy to Eliminate Gambling Debts in the US
There was a time when debt from gambling couldn’t be discharged by filing chapter 7 bankruptcy, but this is no longer the hard-and-fast rule. There are still no guarantees so it is important to seek professional advice before proceeding. Should the creditor object to the discharge of gambling debt, the judge is legally obligated to examine the spending behavior that led to the filer’s debts.
The court will seek to ascertain whether a debt was incurred with the intention of ever repaying it. In doing so, they will look closely at the filer’s credit activity. Although it is possible to file bankruptcy to clear gambling debts, if all debt is directly attributable to speculation, this could present a problem. It’s advisable to hire a bankruptcy attorney as they will be able to provide their professional opinion.
Paying Off Gambling Debt with a Debt Management Plan
If an unsecured debt is spread across several credit cards and loans, a debt management plan could provide the answer. Rather than making lots of different payments, the client will make one payment to an intermediary to clear gambling debt at an affordable rate. It is a purely voluntary agreement between a debtor and his creditors and can be canceled by either party at any time.
Although the principal won’t be reduced under a debt management plan, most creditors will put a freeze on further interest and charges. Repayments continue until the full amount owed is repaid so it’s only suitable for smaller liabilities. Despite the fact that it provides peace of mind, it can take quite a while to pay off debt from gambling as the debtor is paying a reduced monthly payment.
Pay Off Gambling Debt with a Debt Settlement Program
The debt settlement program is the leading bankruptcy alternative for dealing with serious debt problems. Following a series of negotiations, up to 50% of debt from gambling could be eliminated. The actual debt write-off won’t take place until 12 to 36 payments have been received by the intermediary. As a debt management plan, it is also a voluntary agreement.
A debt-free plan can help in terms of eliminating gambling debt. However, it is important to appreciate that any debt that is written off will be treated as taxable income by the Internal Revenue Service (IRS). Ken Clark, a Certified Financial Planner, stated that: “If you’re going to owe the IRS big money, you’ll want to think about it much more carefully.” Before proceeding, seek advice from a tax professional.
Is Bankruptcy the Right Option
If you asked a group of people to come up with a solution to a serious debt problem most would think of personal bankruptcy. Why is this the case? It is simply because most people aren’t aware that there is any other way to deal with financial difficulties.
The Advantages of Declaring Bankruptcy
- Declaring yourself bankrupt allows you to write off almost all debts, with the exception of taxation and student loans.
- The overwhelming majority of people will be released from their obligations after a period of 12 months, perhaps less.
The Disadvantages of Declaring Bankruptcy
- If you own a property you will almost certainly lose it.
- Your insolvency will be advertised in a local paper so it will become public knowledge.
- If you have accrued gambling debts or have a gambling problem you could have a Bankruptcy Restriction Order (BRO) imposed upon you. This may mean you are not discharged for up to and including 15 years.
- You will not be able to work in certain professions, including the police force and government offices.
- You will not be permitted to be or remain as director of a company.
- Your personal finances will be heavily scrutinized.
The Main Alternatives to Bankruptcy
There are numerous alternatives to bankruptcy available. It is vital that you put together a complete breakdown of your incomes, expenditures, and all your debts. This will help when you later consult a debt counselor.
1. Discharge Serious Debt with an Individual Voluntary Arrangement (IVA)
Recent legislative changes mean that it may be more appropriate for a person to commence an Individual Voluntary Arrangement. This has a number of advantages over bankruptcy, the main ones being you can keep your professional status and your home.
2. Manage Debt Problems with a Debt Management Plan
Your debt problem may not be anywhere close to as serious as you think it is and it is not unknown for people to declare themselves bankrupt because they owe a few thousand pounds. In instances such as these a debt management plan would be far more appropriate. You will be able to reach an agreement to pay your creditors as little as £100 per month.
3. Achieve Affordability with a Debt Consolidation Loan
If you have equity in your property you may be able to get a debt consolidation loan. This will help bring all of your debts under one roof and potentially reduce monthly outgoings.
4. Full and Final Settlement with Creditors to Pay Off Debt
If you have spare cash or can borrow some from family, you may be able to reach a final settlement figure with your creditor. The reality is that all finance companies sell on debt for a fraction of the loan’s value. Loans are regularly settled for as little as a third of the original amount.
5. Get Free Debt Counseling to Balance Income and Expenditure
Before you decide which debt solution you wish to proceed with, it is imperative that you consult a debt counselor for independent advice. They may be aware of a potential pitfall that you haven’t yet thought of – prevention is always better than the cure!
