2017 Update: Know the law and protect yourself from predatory lenders. Learn how to avoid scams.

Gambling addiction has been linked to poor mental health, crime, alcohol problems and weaker educational attainment. One ex-student, who wishes to remain anonymous, gambled large amounts of his. If I owe student loans can I collect lottery winnings? I won $1,500 on a scratch off ticket. If I claim the ticket, will the lottery withhold the money from me since I have federal student loan debts. Federal student loans are due soon: What to know With interest rates near historic lows, now could be a good time to consider a student loan refinance. Taxes 18 hours ago. It’s obvious advice but still important. Quitting will remove any chance of gambling affecting your application, it will also ensure that you can save more money to pay off your loan.

This applicant who lives in Stockton, Ca, wants a personal loan to pay off her gambling debts. She has used up all their family credit, which is their Visa Card ($8000 dollar limit) and their Line Of Credit ($35,000). When you read this plea for a 45-50 thousand dollar loan, it can be heart wrenching to see how badly a gambling addiction can rip a household apart, and rip apart the fabric of a family.

We have kept our applicant’s name secure to protect her privacy, but we have left the actual City of Stockton. We have also changed the names of her husband, her kids, the genders of the children. Stockton has a population of over 300,000 now, and it’s certainly a City, but at Clf, we don’t take chances with our applicants’ private information.

Just so you know, all of the loan applications we discuss here at California Loan Find are volunteered for the purpose of reviewing our list of Reputable Lenders. It’s a simple trade off. You can read more about that here.

So after reading our applicant’s request for a loan to pay off her gambling debt, which describes very well how bad it can get for the family of an addicted gambler, and for the gambler suffering with their addiction, we will work out her possible loan options. The loss of financial security and the loss of a family’s sense of security is devastating. You can see how desperate this applicant is to get approved by some kind of lender. She wants to make it all better for herself and her family, and she is willing to work off her debt ANY way she can. All of our editors and writers here at Clf wince when we read these kind of requests for a gambling debt loan.

The thing to remember is that this applicant is not alone by any means. There are millions of Americans who have really bad gambling debts who are in just as much personal debt as this woman is – some for much much more. Out of control gambling causes families to lose their homes, their credit rating, their social status, and self respect – which is the single greatest loss you could ever experience. Anyway, enough of the introduction – here is this borrower’s loan application.

Type of Loan :: Personal Loan To Pay off Gambling Debt

Why do you need a loan? – Explain in detail :: I have got myself into deep debt from an addiction to gambling. I started gambling innocently enough on video poker machines down at our bowling alley. I used to break even many times but in the end I always lost money. One time I won over $3000 dollars on a video jackpot machine in Vegas. We were staying that Venetian Casino right on the strip and I won the three thousand dollar jackpot the first day we were there. That REALLY got me hooked, and then started playing Blackjack, Roulette, Craps, and Texas Holdem tournaments.

I ended up leaving Vegas with over $15,000 dollars in winnings. My husband and I were so excited! We told friends and family about our good luck, and when I got home I started to down to the little local bars that video gambling machines. I not only kept losing, but I was spending allot on the food and drinks in the bar too.

I got way behind in our household bills because of the mounting gambling debts, and realized I was spending too much money in the bars. I decided to do all my gambling online at home. That is when it really got out of hand. When you gamble online, there isn’t anybody to really witness your losses, and you can sort of hide your addiction.

My husband Frank finally noticed when he decided to check our Visa Card statement. He saw in the black and white on the statement that our card was completely MAXED OUT! He was furious! He want and checked out home equity line of credit for $30,000 dollars and found out that I had maxed out to.

We had a huge fight and our marriage almost didn’t survive it. I promised to go to counseling for gambling addiction, and now I go to a special group just for people who have gambling addictions.

The problem is that we are so deeply in debt now. I feel so guilty, depressed, and filled with anxiety. I can tell that my husband has not forgiven me, and might never forgive me for what I have done to our family.

My two daughters and one son (Mary, Maggie, and Kevin) have lost respect for me, and sometimes I feel like ending it all by killing myself. I am now on medication for depression and anxiety and most days I don’t want to even get out of bed. Please, please, please help us!

I fear that everything we know is at risk, and I really need this loan to pay off all our debt. If you could lend us the money then I could pay it back over time, and I promise you that I will never gamble again.

How Much Do You Want To Borrow? :: Between $40K – $50K

Length of Employment :: Over 5 Years

Time at Address :: Over 5 Years

Age :: Over 30

Extra Info Here – anything else that would help us get your loan approved :: My husband Frank has a small business where he sells auto parts, and I am stay home Mom. I have been applying for jobs in our area, and it looks like I might have to settle for a job at Dairy Queen. It’s not glamorous, and does not pay very well, but it would be enough money every month to make a loan payment to you.

My husband’s business makes enough income to cover all of our bills, so ALL of my paycheck from the Dairy Queen could be handed over to you to pay off the loan as quickly as possible.

Sex :: Female

Marital Status :: Married

Ever Claimed Bankrupcty? :: No – never

What City/Town and State is your primary address in? :: Stockton, California

Have you checked your credit report in the last year? :: No

Would you consider your credit rating to be? :: Poor

Collateral? :: No

Down Payment? :: No

Do you a have co-signer or co-borrower? :: No

Employment Industry, Title, Experience, Background :: None. I’m a home-maker and the only experience I have in the work force is from when I was a teenager. I worked at IN-N-OUT burger from when I was 16 years old to 18 years old. I am employable though, and I am going to take the job at the Dairy Queen down the road – it’s walking distance.

One more thing before we consider this applicant’s request for a loan. Pay special attention to the fact that she has never had employment outside of her fast food job when she was a kid. This lack of experience in the work force makes lenders very leary because there is no real credit history for them to use when reviewing your credit report (or lack there of). This lack of a consumer credit history can send desperate borrowers, like the woman appling here, in to the arms of predatory lenders or “legal loan sharks”. (don’t get me started on the subject of loan sharks because this piece could get very long in a hurry). Needless to say, that she may end up paying exorbanant interest rates to pay off all her family credit cards and line of credit.

So for these lending agreements we are going to assume that our borrower is using a high interest, short-term lender, that is charging an extremely high APR (annual percentage rate). These are not Payday Lenders (of course) because the principal of the loan is $50,000 dollars. Could you imagine how much interest that would cost? Don’t get me started on that subject either!

This applicant resides in California so a conventional lender can only lend money at the highest legal “usury limit” allowed by current law. I italized current law because there is always new legislation coming down the bar from the Federal Government and the local State Government(s). That said, there are unconventional lenders such as pawnbrokers and “legal loan sharks” that are licensed to ignore State Laws considering usury limits. Our debtor’s interest rates could sky rocket, so our first job at Clf is to make sure doesn’t enter into a loan agreement with one these predatory lenders. To show her (and you) why you need to avoid legal loan sharks who ignore usury limits, we will show a loan payment schedule from a loan agreement with a conventional National Bank, and then another loan agreement with a high-risk, private lender who charges and extreme amount of interest.

$50,000 Loan to Pay Off Gambling Debt – 10% APR Conventional Lender

Principal Loan = $50,000
Interest Rate = 10%
Length of Term = 5 years
Payment sched. = monthly

Gambling Debt Loan at 10% Interest – Fixed Rate

Total amount to be paid back = $62,705.95
Total amount of interest = $12,705.95
Payments = $1,030.78

This is the best that our applicant could hope for in the way of a fixed rate loan at ten percent interest. This is the kind of loan we hope she could get, but odds are she won’t be approved for financing with a conventional bank. Now we will look the higher interest option with an “unconventional lender”.

$50,000 Fixed Rate Loan to Pay Off Gambling Debt – 25% APR – Loan Shark

Principal Loan = $50,000
Interest Rate = 25%
Length of Term = 5 years
Payment sched. = weekly (lender will likely NOT approve any other kind of payment schedule)

Gambling Debt Loan at 25% Interest – Fixed Rate

Total to be paid back = $81,369.96
Total interest = $31,369.96
Payments = $312.10

Gambling With Student Loan Money Lenders

Notice how the loan shark is charging over $30,000 dollars in interest over a 5 year term. Criminal you would think – think again. The debtor’s payments every month total over $1200 dollars. In 5 years all of her gambling debts would be paid off and she may have regained the trust of her husband and children again – we can only hope, assuming she never starts gambling again.

See how the second loan option is costing her almost $20,000 dollars more in interest! This is the price we can pay as borrowers when we have no credit at all to speak of – no credit history, and no employment history – not to mention if the lender knows that it was a gambling addiction that brought the applicant to their knees – financially.

With full time job at Dairy Queen, for a starting wage, is close to $8.50 as a national average. So her total income from her job at 40 hours a week is $350 dollars, and after paycheck deductions (taxes, etc.) she gets a little over $260 dollars. Multiple that by 4 and we get $1040 a month income. She would not be able to make the payments demanded by the loan shark crook, so she would have to find a private lender whose interest rate would fall somewhere in between our two lenders displayed here today.

Conclusion

Luckily our applicant did find a private lender near Stockton (in Sacramento which is directly North of Stockton, up the I5). She was completely honest with the private loan company and told them why she needed the money, and was truthful about all areas of her financial and personal life.

She was granted the loan for $50,000 at a fixed interest rate of 17%. This is still a very steep APR and certainly predatory, but it’s a fixed rate, and the loan agreement had NO provisions or clauses that would balloon her payments crank up fees on her. So would you like to see how her final loan approval was laid out? – Sure you do. Like this.

Final Loan Approval to Pay off Gambling Debts (Credit Cards and Line of Credit Debt)

Principal Loan = $50,000
Interest Rate = 17%
Length of Term = 5 years
Payment sched. = biweekly (this lender was OK payments every two weeks)

Last Chance Gambling Debt Loan at 17% Interest – Fixed Rate

Total to be paid: $71,413.30
Total interest $21,413.30
Payments: $547.83

You can see that the debtor is still paying more per month on the loan than what her starting wage is at the fast food restaurant (Dairy Queen). It turned out that her manager hired her as an adult employee and gave her wage of $10.75 per hour. That makes her total income from the job is $1290 after taxes and paystub deductions.

Her monthly payments to the lender total $1,095.66 per month, and her total income is $1,290, so she has almost $200 dollars to pay for other expenses she would have because of her work. Sounds like a drag, but considering she is basically “doing time” for her insane addiction to gambling, it’s not a bad trade.

Slightly more than one in five US college students, 21.2%, admitted to financing cryptocurrency purchases with student-loan funds, a study by The Student Loan Report found.

The funds were supposed to cover students living expenses at college. Instead, they were being used to buy virtual currencies, such as Ethereum (ETH) and Bitcoin (BTC).

The study carried out a survey of 1,000 current college students with loan debt with a single question: “Have you ever used student loan money to invest in cryptocurrencies like Bitcoin?”

The survey did not ask how much students were investing, and many could be simply testing the waters by buying only smaller amounts.

Depending on their financial needs, undergraduate students can receive up to $5,500 in federal loans in the 2017-2018 academic year, according to Federal Student Aid, a part of the US Department of Education.

Last year, cryptocurrency growth was phenomenal and clearly this could be one the reasons for students to venture into the digital asset.

However, cryptocurrency speculation is dangerous because it exposes both borrowers and lenders to an extremely volatile market. The most popular cryptocurrency; Bitcoin rose to an all-time high price of around $19,205.11 (£13,502.92) on 17 December 2017 then dropped to a low of $6,701.40 (£4,711.69) a little over four months later on 5 April 2018, Coinbase data indicates.

The second most popular cryptocurrency, Ethereum, lost more than two-thirds of its value during the first quarter of 2018. Ethereum was trading at $1,338.67 (£941.21) on 13 January 2018 and $503.01 (£353.66) on 17 April 2018. Coinbase estimated that Ethereum’s price increased by 940.14% in the 12 months that ended on 17 April 2018.

Gambling With Student Loan Money Transfer

The risk to lenders is tremendous because around 44 million Americans owed around $1.48 trillion (£1.04 trillion) in January 2018, Student Loan Heroreported. The average American college student owed $37,127 (£26,103.62) in student loans upon graduation. That amount increased by 6% between 2016 and 2017. The amount of student loan debt owed in the United States exceeds credit card debts which were estimated at $1.03 trillion (£720 billion) in January 2018.

No oversights of student loans

The students are able to speculate in cryptocurrencies because there is no oversight on how the loan money is used, StudentLoans.net revealed.

In the United States, lenders send colleges a lump sum of money to cover tuition. If the funds paid out exceed the amount of tuition, the leftover cash is given directly to the students.

The students can use the funds for whatever they want including holiday trips, beer, gambling, speculation, video games, or new cars.

Disturbingly, buying cryptocurrency might be the most responsible use students are making of that money. There is at least a possibility the students might make a profit from the digital currency. Funds spent for beer or holiday trips will be completely lost.

Risks to the greater economy

The student loan situation will remind many observers of the US subprime mortgage crisis of the mid-2000s.

That crisis developed because of irresponsible lending to low-income individuals many of whom used the mortgage money borrowed for other purposes. Some borrowers used second mortgages to cover living expenses or finance holidays, and calls. Many people used the subprime mortgages to speculate in real estate – the infamous flipping.

The subprime crisis was one of the underlying causes of the financial crisis of 2007 to 2008. That crisis developed because investment banks, hedge funds, and other financial institutions were heavily-invested in mortgage-backed securities.

The student loan market is already in crisis, around 11.5% of student loans were in default in October 2017, US Department of Education data indicates. The number of student loans in default was estimated 8.5 million and the number of loans in default increased by 12% between June 2016 and June 2017, Forbesreported.

Technology fuelling speculation

The exposure of the economy and individuals to volatile speculative markets is greater than ever because of new financial technologies such as cryptocurrencies. The student loan situation reveals that individuals at all levels of the economy are exposed to the cryptocurrency risks.

Gambling With Student Loan Money Bad

The amount invested in cryptocurrencies is now large enough to create risks for the wider economy. The total market capitalization of all cryptocurrencies reached $741.620 billion (£521.43 billion) on 8 January 2018, CoinMarketCapcalculated. That figure fell to $257.704 billion (£181.19 billion) by 4 April 2018. That means cryptocurrency lost nearly $500 billion (£351.55 billion) in value in four months.

Use Of Student Loan Money

Exposure to new speculative investments like cryptocurrencies is a risk that all insurers and lenders will have to take into account. New technologies are greatly increasing volatility and spreading the exposure to that volatility far and wide.