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How to write off gambling debt

Sharon McDougall - 25th October 2021 - 3 minutes to read

If you have built up debt from gambling, you may be able to write off part or all of the debt via a formal Scottish insolvency route. Not all insolvency solutions allow debts to be written off, but you may be eligible for a trust deed if you meet certain criteria, with sequestration also being a possibility in serious cases of debt.

Trust deeds generally last for a period of four years, and will appear on your credit file for six years from the starting date. Trust deeds have numerous advantages for those struggling with unmanageable debt, including learning better money management which will hopefully allow you to live a life free from debt following the conclusion of the trust deed agreement.

How can a trust deed help me with gambling debt?

A trust deed is an arrangement made with your creditors to repay an agreed proportion of the total sum owed. This might include other monies in addition to the gambling debt, but if some or all of the arrears are related to gambling, it is likely that you will need to address the gambling habit or addiction before a trust deed is granted.

Sometimes proof is needed that you have not gambled for a period of time before a trust deed is able to be arranged. Although this is difficult to prove with any degree of certainty, your Trustee may issue a request to see your bank statements for several months previously to check for any gambling related transactions.

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What is a protected trust deed?

A trust deed becomes ‘protected’ once a majority of your creditors have agreed (or at least not objected) to the terms and proposed monthly payments. Up until that time the trust deed remains unprotected in the sense that your creditors can still legally pursue you through the courts for payment, and could even petition for your sequestration (bankruptcy).

Once the trust deed becomes protected, all action against you ceases and creditors are no longer able to contact you directly. In essence you are protected from creditors so long as the terms of the deed continue to be met.

Which extra measures should I take for gambling debt?

  • You will probably be required to source external help for gambling addiction to address the problems you have. If you refuse to do this, it is unlikely that your creditor will agree to a protected trust deed, or have faith in your ability to keep up repayments in the long-term.
  • As mentioned above, your Trustee may require ‘proof’ that your gambling has stopped – this could be in the form of bank statements or other records.

Is sequestration (bankruptcy) an option?

An alternative to a trust deed is a process known as sequestration. Sequestration is the Scottish term for bankruptcy and is the most serious personal insolvency procedure there is. Sequestration will see all of your unsecured debts written off, although you will then be faced by a number of restrictions regarding your future finances. Your access to credit will be severely limited for many years following the sequestration order meaning you may find it hard, if not impossible, to obtain even small amount of credit; being sequestrated may affect your employment, particularly if you work in the legal or financial industries; and your home may be at risk.

In the case of gambling debt, if you choose to enter bankruptcy voluntarily with a view to starting afresh, your circumstances will be scrutinised to see if you have spent or gambled recklessly in the time leading up to the bankruptcy application. If this is found to be the case, an order that restricts you from entering bankruptcy may be issued.

In some instances you might be forced into bankruptcy by your creditor(s) and in these cases so such restrictions will apply.

Scotland Debt Solutions can advise on all types of debt, including those caused by gambling. Contact one of our expert team to arrange a free initial consultation.

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Sharon McDougall


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