Former gamblers can avoid bankruptcy with an IVA
Phillip Allen, Licensed Insolvency Practitioner at Debt Lifeboat
If you have run up substantial gambling debts on your credit card, you may think bankruptcy is your only option. In fact, creditors are willing to consider alternatives, including IVAs, but only if you can convince them that your gambling days are over.
With media attention focused on the politics surrounding the location of a new super-casino, it’s easy to forget that by far the biggest source of gambling debt is online gaming. More than 1,700 gambling websites currently target the UK consumer and the average online gambling debt now tops £30,000.
The online gaming fire has, in turn, been stoked by the availability of instant credit. These days, it is easier to secure credit for internet betting than virtually anything else. And, having registered your credit card, you can continue playing up to the limit. Not surprisingly, credit problems caused by gambling have skyrocketed.
Creditors, meanwhile, treat debts incurred by gambling more harshly than other types of debts. This is because gamblers are notorious for "chasing their debt" – trying to recoup losses by further betting.
As a result, gamblers are more likely to become bankrupt than to come to an arrangement with their creditors. In fact, if you become bankrupt as a result of gambling debts, your creditors can apply to the court for a Bankruptcy Restriction Order. This means that the full range of bankruptcy restrictions (such as having to disclose your status to borrow money or being prohibited from acting as a director of a company) can be imposed for between two and 15 years.
But, with the right support, it is possible to sort out your debts without resorting to bankruptcy. At Debt Lifeboat we often meet with people who have got into debt problems through gambling and can help you find a solution if you are prepared to do three things:
1. Stop gambling completely. Allowing yourself so much as a lottery ticket is like allowing an alcoholic a double scotch for breakfast.
2. Seek help from www.GamblersAnonymous.org.uk, GamCare (0845 6000 133, www.gamcare.co.uk) or www.gamblingtherapy.org
3. Destroy all your credit cards.
Creditors will not allow you to convert gambling debts straight into an IVA. They will insist that no new credit has been obtained for up to six months and want proof that you have stopped gambling and have no intention of doing so in the future. This includes registering with one of the organisations listed above and attending counselling sessions.
But during this period we can help you establish a debt management plan. This will demonstrate to your creditors that you are serious about addressing your debts. Once this period is over there’s a good chance your creditors will agree to an IVA.
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