Gambling debt in an IVA

Gambling debt in an IVA

With the increased access to on line gaming sites it is easier than ever before to build up gambling debts. If you are facing unaffordable debt, will creditors accept gambling debt in an IVA?

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Can gambling debt be included in an IVA

If you are struggling with personal debts one of the solutions you should consider is an Individual Voluntary Arrangement (IVA). However if you have gambling debts you may be worried that you will not be allowed to include these. The concern you may have is that such debts are illegal or not legitimate.

There is no need to be worried. You can include all legal unsecured debts in an IVA no matter how they have been generated. Gambling is not a crime and as such any unsecured debts generated through this activity can be included.

Although many people gamble for recreation you may have tried to pay off other debts by winning money. Generally speaking this never works. It is extremely rare to find an example of where someone has successfully gambled their way out of debt.

Most commercial banks will agree as long as your proposal is reasonable. Because most gambling debts are actually built up on credit cards there should be no issue at all.

Do you have to prove you are no longer gambling?

Gambling can become addictive. As such if you have generated gambling debts in the past there could be the possibility that you will be tempted to do so again in the future. If that were to happen while you are in an IVA you IVA could be at risk. You might no longer be able to afford to make your monthly payments and the arrangement could fail.

For this reason, if you have gambled in the past before you start an IVA you need to be sure that you will not gamble again. Demonstrating that you are committed to this, certainly during the IVA, is an important step.

This could include taking advice from organisations such as Gamcare. GamCare is an independent UK charity which provides information, advice and support for anyone affected by problem gambling across England, Scotland and Wales.

You will need to prove that you are no longer gambling. So no gambling activity on your bank statements for the last 3 months.

What if you have gambled recently

If you have gambled in the last 3 months then you can still take action to start the road to becoming debt free. Whilst you cannot start your IVA application straight away, you could take on a temporary DMP (Debt Management Plan). This means you could pay reduced monthly payments to your creditors for a few months whilst you have stopped gambling.

Then after 3 months you will have 3 months of bank statements showing no gambling. This means you could start the IVA application. There are a few benefits to this. Firstly the creditors will usually stop taking further action against you and may freeze further interest and charges. More importantly you will start to get used to your new budget. Paying only what you can afford and not taking out any more credit.

There are many companies that can provide a DMP for you. They will work out your monthly budget and what you can afford to pay to creditors. They will do the negotiation for you and you can pay them a single payment each month. If you want you can organise the reduced payments yourself with your creditors.

A DMP will not write off debt. It could be a useful temporary solution for people with recent gambling debts who would like to do an IVA in future.

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