Debts built up from gambling can be included in an IVA. However you will need to show evidence that you have stopped gambling before you can apply.
Included in this article:
- Are you allowed to start an IVA if you have gambling debt?
- How can you show you have stopped gambling?
- What can you do if you have gambled in the last 3 months?
Are you allowed to start an IVA if you have gambling debt?
You can include debt built up due to gambling in an IVA. Normally, you will have used credit cards or personal loans to borrow the money you have spent. These are unsecured debts and as such, there is no issue with adding them into an Arrangement.
The fact that the debts are the result of gambling is not a problem. The banks will not reject an IVA proposal because you have gambled the money you have borrowed.
Ultimately, the reason they will agree your IVA remains the same as why they would agree one with debt borrowed for any other purpose. That is, the return they will get is far better than if you were to go bankrupt. If were to chose that option, they would likely receive nothing at all.
That said, before you can apply for an IVA, you must be able to show that you have stopped gambling. If you haven’t, the concern is that you won’t be able to stick to your agreed monthly payment because of your habit.
Your IVA company must be able to confirm to your creditors that you have stopped gambling when you apply for the Arrangement.
How can you show you have stopped gambling?
The best way to show that you are no longer gambling is to have no evidence of this type of expenditure on either your bank or credit card statements for at least the last 3 months.
You will be asked to provide these documents during the application process. Given there is no evidence of gambling expenditure, it can be reasonably assumed that you have stopped. This can then be highlighted to your creditors.
It is also useful to be able to show that you have engaged with a support group such as GamCare or Gamblers Anonymous.
This is not a requirement. However it adds weight to the argument that you have stopped for good and are serious about staying gambling free.
What can you do if you have gambled in the last 3 months?
Check your bank and credit card statements carefully. If there is evidence of you gambling in the past 3 months, you will have to delay your IVA application. You can’t proceed until you have 3 months of clear statements.
Ideally, you should continue to make the minimum payments towards your debts during this time. But what if you can’t afford to do this? What can you do?
In these circumstances you stop paying them. When they contact you about your accounts, be honest. Explain that you have got into financial difficulty and are planning to start an IVA. Ask them to put your account on hold.
Generally speaking most creditors will be helpful in this regard.
You could consider setting up a temporary debt management plan to manage your debts while you wait. However, given it’s only going to be in place for three months, it may not be worth it doing this.
Even if you start a reduced payments plan like this, most creditors will continue to contact you about your debt for 2-3 months anyway. As such, a better idea may be to use your spare income during this time to bring any household bills such as Council Tax or utilities up to date.
Want to start an IVA but have gambling debt? We can help. Give us a call (0800 011 4712) or complete the form below. The advice is free and confidential.