Whether or not an individual in Tennessee can discharge their gambling debts in bankruptcy will depend on when the gambling debt happened. If the debt happened 90 days prior to filing the bankruptcy, it would be considered non-dischargeable.
This means that the debtor will still be responsible for paying that gambling debt even after they have filed for bankruptcy. It is important for potential bankruptcy petitioners to be aware that, under bankruptcy discharge laws, hiding assets in bankruptcy is bankruptcy fraud.
Bankruptcy fraud is a federal crime and a perpetrator can face severe civil and criminal penalties. Tennessee lawyers can help their clients understand more about gambling debts and bankruptcy.
Can I Gamble During Bankruptcy in Tennessee?
In Tennessee, it would be considered fraudulent for a debtor to use their money for gambling instead of providing those funds to their creditors. If a debtor gambles during the bankruptcy process, all of their debts become non-dischargeable.
This means that the debtor would have to pay all of their debts after their bankruptcy, not just their gambling debts. To find out more about how gambling can affect a bankruptcy proceeding, an individual should schedule a Tennessee lawyer consultation.
Discharging Gambling Debts in Bankruptcy
In many gambling-related bankruptcy cases, gambling is often just one of many issues for the debtor. If someone has a gambling issue, they often use their savings for gambling and may even fail to pay their bills or not provide for their families.
In some situations, a gambler may even put up their vehicle as collateral to get quick cash. In addition to in-person casinos, there are various types of horse racing establishments, lotteries, and online casinos that individuals can play that are generally legal.
Gambling has become one of the leading causes of debt in the United States.
Can I Discharge My Gambling Debts in Tennessee?
Bankruptcy laws seek to ensure that debtors who can pay some of their debts do so. These laws also seek to prevent certain debts from being discharged because they are considered too important to be discharged.
These types of debts include child support obligations, student loans, and debts related to wrongful acts. Typically, most gambling debts are eligible to be discharged.
Because most gambling debts are not secured using collateral, a debtor can often completely discharge these debts using Chapter 7 bankruptcy if they meet the standard means test. This test examines their ability to pay off some of their debts after they deduct what they will need to pay their necessary expenses for themselves and their family.
Debts Incurred Through Fraud and Gambling in Tennessee
When analyzing how to handle a gambling debt in Tennessee, it is important to review how the debt happened. It is common for a debtor to borrow money by taking out a credit card or cash advance.
If a gambler wins, they can pay off that advance or debt. If they lose, however, the company they borrowed from must be compensated. In most situations, if the gambler does not repay the credit card company, it will result in collections actions against them.
Another way a gambler can incur debt is by casino markers. This is where the casino allows the gambler to borrow using a line of credit.
In these situations, the laws may be on the side of the creditor, depending on the time frame. If the debtor files bankruptcy within 90 days of their gambling debt and the debt is for more than $500, there is a possibility that the debt will not be dischargeable.
Similarly, a cash advance of over $750 that is actually a credit extension, which is made within 70 days of filing for bankruptcy, is presumed to be a fraudulent debt and, therefore, is not dischargeable. As a general rule, debts lower than these amounts and outside these time limits will be dischargeable.
However, if a creditor can show a debt was fraudulent, it cannot be discharged. In addition, if a debt was incurred because the debtor misrepresented their financial situation, the debt may also not be dischargeable. For example, if a debtor tells a casino they have the funds to pay back a marker when, in fact, they do not.
Chapter 13 Bankruptcy in Tennessee
Chapter 13 bankruptcy in Tennessee allows a debtor to propose a plan to pay off their secured debts and non-dischargeable debts. Their dischargeable debts can often be paid off for a few cents on the dollar.
Even when an unsecured gambling debt cannot be discharged due to the presumption of fraud or actual fraud, a debtor can still pay back their debt over time. Typically, with a Chapter 13 filing, a debtor will have three to five years to pay off their debt.
What if the Gambling Was Criminalized?
Fraud in the context of bankruptcy discharge is different from actual fraud. A debtor can be charged with a criminal offense if they do not pay their casino marker obligation.
Filing for bankruptcy does not protect the debtor from criminal charges or the consequences of criminal conduct. If someone is facing criminal charges in addition to their bankruptcy issues, they should consult with a criminal defense attorney.
Gambling Can Destroy You Financially and Fast
It does not take long to dig a large financial hole when someone has an impulsive gambling habit. They can lose thousands of dollars quickly when gambling, leading to overdue bills, borrowing money, maxed-out credit cards, and many other financial issues. When debt accumulates, it can take years to pay off.
Any extra funds a gambler brings into a household are often quickly rerouted to the gambling habit. This often leads to borrowing money to pay regular expenses, such as keeping the power on. Often, even the borrowed funds are used to keep the gambling habit going.
This can lead to repossession of the family home, vehicles, and any other possessions. Spouses and children can suffer hardships and go without the things they need. Sometimes, the only way out of the debt and to get a new start is to file for bankruptcy.
The “Big Win” Addiction
The gambling that leads to bankruptcy may be caused by an addiction. Many gamblers believe that their problems can all go away with just one big win.
A consumer bankruptcy attorney will understand the ins and outs of how gambling debts relate to fraud and how addiction can factor into the issue. They can provide information about resources that are available to get help for the underlying addiction or gambling issue.
Do I Need a Lawyer for Filing Bankruptcy in Tennessee?
If you are facing filing bankruptcy in Tennessee because of your gambling debts, you may think you do not have the funds to hire a Tennessee bankruptcy lawyer. It is free to use the attorney-client matching services that are provided by LegalMatch.
Many bankruptcy lawyers will also give potential clients free initial consultations. This means that you can potentially speak with several bankruptcy lawyers in your area of Tennessee at no cost and find one who works best for your needs and budget. It will only take you around 15 minutes and will cost nothing to submit so get started today finding your Tennessee bankruptcy attorney with LegalMatch.
