Gambling Debts Can Be Discharged in Bankruptcy

A debtor who borrows money on credit cards in order to gamble the money may still discharge these credit card debts in bankruptcy according to the court decision in In re Rembert, 141 F. 3d 277. The fact that a debtor takes available cash, or borrows money, and then proceeds to lose the money at the gambling table is not by itself indicative of fraudulent intent. The court decisions stated, "The fact that Rembert later admitted that it probably was not reasonable to believe that she would win enough money to repay the Appellants does not indicate a subjective intent not to repay her debts in this case. Accordingly, under the totality of the circumstances, we conclude that the bankruptcy court clearly erred in determining that Rembert possessed the necessary fraudulent intent for purposes of § 523(a)(2)(A). We thus agree with the district court's findings that at the time Rembert incurred the debts at issue she intended to repay them and believed that she would have the means to do so from her gambling winnings. Accordingly, the district court properly reversed the judgment of the bankruptcy court.

According to this decision, debtors subject to a judgement may attempt to pay the judgement by gambling their available liquid assets or even borrowing more money to wager.