There is an old saying in the bankruptcy world, “Pigs get fat, hogs get slaughtered.” It means the honest, but unfortunate bankruptcy debtor will keep enough property to live comfortably and then some. On the other hand, when the debtor conceals assets, hides income, or attempts to keep more than legally entitled, the bankruptcy process may serve up the hoggish debtor on a silver platter.
We may be witnessing a good old fashioned hog roast in the media. Teresa Giudice, star of the Bravo television show The Real Housewives of New Jersey, is embroiled in a fight with a New Jersey bankruptcy trustee. Teresa and her husband Joe filed for Chapter 7 protection in late October, 2009, but have yet to receive a discharge from the bankruptcy court.
On June 30, trustee John W. Sywilok filed an adversary complaint seeking to deny the Giudice’s bankruptcy discharge. The trustee alleges that the Guidices “concealed documents, records and papers from which the Defendant’s financial condition or business transactions could be ascertained.” The trustee also complains that the Guidices failed to disclose financial or ownership interests in several businesses, including a pizza parlor and a Laundromat, as well as a book written prior to the bankruptcy.
Recently the trustee produced documents showing that the Giudices when on a $60,000 shopping spree before and after filing bankruptcy. During court testimony reported by the New York Post, Sywilok claimed that over $45,000 worth of furniture was purchased, and $11,000 of that just two days before filing bankruptcy.
The trouble the Giudices face with the bankruptcy court is very real and very serious. If the court determines that assets or income were intentionally concealed, the debtors may be denied a discharge. An auction of assets has been ordered by the bankruptcy court, so a denial of discharge will mean that the Giudices lose their property, creditors will receive the proceeds of the auction (including a substantial payment to the trustee as compensation), and any remaining debt will survive the Chapter 7 case. Consequently, the Giudices may face additional state court litigation on their debts and garnishment of future earnings. If the case is egregious enough, the bankruptcy court may refer the case to the Department of Justice to investigate possible bankruptcy fraud, a federal criminal act.
Regardless of the outcome, the Giudice case is an excellent example of how not to act before and during your bankruptcy case. If you need relief from your debts and are willing to deal honestly and fairly with the trustee and your creditors, bankruptcy can discharge your debts and give you a fresh financial start. Consult with an experienced bankruptcy attorney today and discover how the federal bankruptcy laws can help you and your family.