Gambling Debts and an IVA
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Online gambling has grown rapidly. We’re betting more and losing more than ever before. Some regular gamblers rely upon credit, either to fund their stakes or to cover their expenses after losses.
There’s a perception that gambling-related debt is somehow different. People worry they’ll be unable to use the standard types of debt solution, such as an IVA. This perception is thankfully incorrect. Debt built up as a result of gambling can be resolved in the same ways as any other type of debt issues. Gambling isn’t a crime, but additional important factors may apply (as we explain later in this article).
We’ve helped many people to resolve gambling-related debt problems. For expert help and advice, you can get in touch with our qualified advisory team.
Your debt solution options depend upon where you live. This page is written for residents of England, Wales, and Northern Ireland. Residents of Scotland have different options. Further down this page you’ll find specific gambling-related factors that apply to an IVA, bankruptcy, or debt relief order. Click the link within each solution description for extra information about each debt solution.
An IVA (individual voluntary arrangement) is a popular type of debt solution. You commit to pay what you can afford for an agreed period of time. Provided you complete the arrangement, any remaining debt gets legally written off. An IVA is an alternative to bankruptcy which is especially popular with homeowners. Assets are dealt with more flexibly than with bankruptcy. Please see the section below regarding evidence that you have stopped gambling.
A debt management plan (DMP) is a less formal way to deal with debts. You offer a reduced monthly payment that you can afford. Your DMP provider negotiates reduced payments with your creditors and asks them to suspend interest and charges. The provider distributes your monthly payment to your creditors and liaises with them as necessary. Please see the section below about the importance of stopping gambling activity.
A debt relief order (DRO) can be the cheapest and fastest way to get out of debt. This debt solution is available if you own few assets, have little surplus cash, and owe no more than £20,000. The application fee is just £90 then no further payment towards the debt is made. Discharge from a DRO (and your debts) occurs after one year. Please see the section below regarding gambling losses.
Applying for bankruptcy is often seen as a last resort. However, for serious debt problems this could be the best route to take. Bankruptcy applications are submitted online and a £680 application fee is payable. You’ll usually get discharged from your debts after one year, though payment may be required for three years if you can afford it. Be cautious about bankruptcy if you own your home or operate a business. Please see the section below regarding gambling losses.
An IVA provider may ask for evidence that you’ve stopped gambling. Because gambling can become habitual or addictive, they want to see that you’ve got it under control. You’ll have a limited spending budget during your IVA, so continued gambling will probably make that budget unsustainable. The IVA firm doesn’t want to set up a debt solution that later fails due to non-payment. Recent bank statements that are clear of gambling transactions could be used as suitable evidence.
If you’ve experienced serious gambling addiction, additional steps might be necessary. The IVA provider might ask for evidence that you have referred yourself for specialist support or treatment. The NHS signposts valuable sources of help and treatment options. Reputable support organisations include Gamcare and Gamblers Anonymous. Providing evidence that you have self-excluded from online gambling may also be helpful.
These requirements may appear intrusive or judgmental. In reality, they’re used to provide a duty of care to you. By stopping gambling you’ll have the best chance of completing your IVA and becoming debt free in the future.
After you become bankrupt, the bankruptcy trustee will review your prior conduct. If they consider that your conduct has been dishonest or blameworthy, they could seek to impose a Bankruptcy Restrictions Order (BRO). These orders extend the restrictions associated with bankruptcy. They can last for between 2 and 15 years.
The same is true with Debt Relief Orders. Dishonest or blameworthy conduct could result in a Debt Relief Restriction Order (DRRO).
Large gambling losses, or borrowing money you knew you could not repay, are potential reasons for imposing a BRO or DRRO. You can find examples of gambling-related orders on The Insolvency Service’s bankruptcy and debt relief restrictions outcomes register. The risk of extended gambling-related restrictions might lead some people to choose alternative solutions, such as an IVA or debt management plan.
Debt management is a less formal way to deal with your debts. Unlike an IVA, bankruptcy, or DRO, it’s not a formal insolvency process. You may be able to enter a debt management plan even if you have recent gambling transactions on your bank statement. There are no restriction orders that can be applied (unlike bankruptcy or a DRO).
Despite this lack of formality, a DMP is unlikely to be effective if you continue to gamble. Your spending budget will be restricted to enable you to repay your debts at a reasonable pace. There will be little allowance made to fund continued gambling. Significant losses can only result in failing to pay important bills, failing to pay into your DMP, or using further credit. These would all be terrible outcomes for you.
If you have recently stopped gambling, debt management could be a useful short-term measure. It could help to manage your creditors until you have more bank statement evidence that you have stopped gambling. You could then switch to an IVA instead.
Thousands of people find themselves in debt as a result (or as a partial result) of gambling. We’ve helped many people to enter effective debt solutions that enable them to clear their debts.
Please contact our qualified advisers for confidential sympathetic help. Our approach is entirely non-judgmental. We’ll explain your options, and identify the benefits and drawbacks of each. For expert debt help, please get in touch.
Author: Andrew Graveson
Qualified Debt Adviser & IVA-Guide.co.uk Founder
Page Last Updated: 24/04/2020