As the gambling options in Maryland have continued to grow, I have seen more and more people in Charles, St. Mary’s and Prince George’s County who need to file for bankruptcy because of their gambling debts.
The problem is that the number of people dealing with gambling addiction continues to grow. With the legalization of sports gambling this problem is almost guaranteed to get worse.
Like any addiction, a gambling addiction can affect just about everyone the addict knows.
And it seems to me that the problem of debt only makes this worse. When faced with the problem of their debt, the gambler thinks the solution is to gamble more.
Will the bankruptcy court help you out if you are in this situation? Maybe! But first, if you or a family member are stuck in this situation, don’t make the situation worse!
Don’t Make it Worse!
When the addict falls behind on their mortgage or car payment the friends and family think they are helping them out by lending them some money. But, inevitably, the person with the gambling addiction just turns back to gambling to try to pay back the debt.
Since the addict no longer has to go to Las Vegas or Atlantic City to gamble, it is even easier to hide their problem from family and friends.
If someone comes to you for financial help, make sure to consider the possibility that they may be dealing with a gambling addiction. You don’t want to be the person who tried to help, but only made things worse or enabled a problem.
Is Bankruptcy The Answer?
If you have a gambling problem, or know someone who does, bankruptcy may be an option they should consider.
When someone meets with me about bankruptcy because of their gambling debt, I try to make sure they have sought help and encourage them to seek addiction counseling. Gambling addiction, like any addiction is a difficult issue to deal with. Don’t face this problem alone. Seek professional help for the addiction. The Maryland Gaming Commissions Resource Page is a good place to start.
The most common bankruptcy options for someone with a gambling problem are Chapter 7 and Chapter 13. Chapter 7 bankrupcy can be thought of as a straight wipe out your debts option. Chapter 13 bankruptcy is a payment plan option.
Each has his its plus and minuses. The debt you don’t have to pay back in a bankruptcy is considered to be discharged.
What is Chapter 7?
Chapter 7 can be a good option for someone who has dealt with their gambling problem, but just can’t make the debt they built up go away.
If they are eligible to file a Chapter 7 they can get out of most of their debt, focus on their recovery and move on with their life. The case may be over in as little as 4 or 5 months.
Before someone files a Chapter 7 I want them to be as sure they are doing everything they can to make sure they can avoid a relapse.
First, you can’t file another Chapter 7 for 8 years. This is your chance to get a fresh start. Don’t blow this chance only to end up back in gambling debt. As soon as your Chapter 7 is over you may receive new credit card offers so this can be easier to do than you would think.
What is Chapter 13?
If someone can afford to pay back some of their debts a Chapter 13 payment plan is good option.
In a Chapter 13 a payment plan is established to pay back some or all of your debt. The typical payment plan is 5 years.
This payment plan puts you on a tight budget. But having one payment to make to a Trustee will be less stressful then dealing with a credit card bill coming in every other day.
In a Chapter 13:
You make payments to a Trustee who then pays your creditors.
The Trustee payment will eventually come right out of your paycheck.
During the plan you have to live without credit.
You need to seek Court approval to borrow money.
Chapter 13 can be a good way for someone to take responsibility for their debts without having to deal with them forever. You have to live on a budget without credit. And you have the structure of the Bankruptcy Court preventing you from taking on any new debt.
It can also be an option for someone who can’t file a Chapter 7 because they have prior Chapter 7 discharge that is less then 8 years old.
This can be an option if someone has relapsed after a Chapter 7. They can then file a Chapter 13 payment plan to deal with this new debt.
If the prior Chapter 7 is less than 4 years old they will have to come up with a payment plan that pays their creditors in full. If the plan pays the creditors less than what they are owed this debt will not be discharged. The debtor would still have to deal with the balances after the case is over. If the Chapter 7 if more than 4 years old the Chapter 13 can discharge some of the debt.
A gambling addiction is a serious problem. Filing a bankruptcy is not going to change that.
In fact, if you file a Chapter 7 before you have addressed the problem you might be able to find yourself quickly back into debt. But to have a chance at recovery you need to come up with a plan to deal with the debt your face.
It seems to me that if you are trying to deal with a gambling problem and you don’t come up with plan to deal with the debt, you may be setting yourself up for failure.
Don’t let the debt from your gambling problem ruin your financial future. Recovery is hard enough without having financial stress hanging over your head.
When you are coming up with a plan to deal with your gambling debt, come in for a free bankruptcy consult.
We will look at your plan and make sure it has a chance to work. You don’t want to pursue a plan that sets you up for failure – or worse, take steps that can make things make an even bigger mess. (See our post Trying to Avoid Bankruptcy? 5 Mistakes Not to Make?)
We will look at your bankruptcy options. Then you can decide what plan will help your bounce back quicker from the debt you face and help you move on with your recovery.