Bankruptcy Lawyer Bryan W. Stone answers the question: “Will I lose my property if I file for bankruptcy?”
When Teresa Giudice’s name has appeared in the press for the last half-decade, it has usually not been uplifting press for the former “Real Housewives of New Jersey” star. Bankruptcy fraud convictions, millions owed in debt and a stint in the federal penitentiary have dampened the celebrity she once enjoyed as a reality star, and the hits just keep on coming.
The former trustee in the reality star’s bankruptcy case is getting involved with her $5 million malpractice suit against her former bankruptcy attorney James Kridel. The trustee filed a motion to take any money that Giudice wins against Kridel to be distributed amongst her creditors, claiming that any potential winnings the “Real Housewives” star receives from the lawsuit should be considered an asset that predates her bankruptcy. In other words, Giudice can’t sue her bankruptcy attorney and then keep the money herself when she still owes millions to others.
Teresa Giudice infamously filed for Chapter 7 bankruptcy relief back in 2009 with her husband Joe, claiming $11 million in debt to creditors. The couple withdrew their bankruptcy petition in 2011, but here’s the thing about filing for bankruptcy: the filings become public record. Their original filing caught the attention of the feds, who launched an investigation into the Giudices’ financial affairs. This culminated in a 39-count indictment alleging bankruptcy fraud as well as a long-running conspiracy from their pre-celebrity days to illegally obtain millions in lines of credit, mortgages and construction loans using falsified tax returns and W-2 forms. In the fraud allegations the couple was accused of not disclosing information about their rental properties, businesses and Teresa’s salary from “Real Housewives.”
The Giudices eventually pled guilty to one count of wire and mail fraud and three counts of bankruptcy fraud. Joe additionally pled guilty to one count of failing to file a tax return.
Teresa was eventually sentenced to 15 months in federal prison. After she was released earlier this year, her husband was ordered to begin his 41-month sentence. The judge had them serve their sentences at different times for the sake of their children but expressed a desire during their sentencing to send a message that celebrity does not excuse blatant disregard for the law. Teresa’s sentence also included two years of probation and over $400,000 in restitution payments.
After Teresa’s sentencing hearing, Kridel, her bankruptcy attorney, noted that his client had just not been that knowledgeable about her family’s finances until she ultimately became the breadwinner, something he said was a common situation in many households but not something that constituted intentional fraud.
These words of vague support were insufficient for the convicted Giudices. Before leaving to serve her sentence, Teresa filed a malpractice lawsuit against Kridel, claiming that he mishandled her bankruptcy filing, made faulty amendments to the filing, and did not properly prepare her for her meeting with creditors and the federal Bankruptcy Court trustee.
As the case stands now, the Giudices’ bankruptcy trustee has asked the court to reopen the couple’s bankruptcy case and take over the malpractice suit against Kridel to ensure that the money goes towards paying off the Giudices’ creditors. According to the trustee, none of their unsecured creditors have been paid.
Unsecured creditors are creditors with no specific assets as collateral or security in the event that the debtor defaults. An example of an unsecured creditor would be a credit card company. In a bankruptcy case, unsecured creditors are not payed until after the secured creditors (usually banks and other asset-based lenders).
If you are contemplating bankruptcy in the Charlotte area, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with legally sound advice for your particular situation.
About the Author
Kyle Frost joined Arnold & Smith, PLLC in 2013 where he focuses his practice on all aspects of civil litigation and bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.
Born and raised in upstate New York, Mr. Frost attended the University at Albany on a Presidential Scholarship, graduating magna cum laude with a double major in Political Science and Sociology. He went on to attended Wake Forest University School of Law in Winston Salem, North Carolina.
Following college, Mr. Frost spent over a year teaching English in South Korea. He worked in a private school in Seoul developing curriculum, English programs, and educating both children and adults that were interested in learning a new language.
In his spare time, Mr. Frost enjoys homebrewing, fishing, and travelling.
See Our Related Video from our YouTube channel:
See Our Related Blog Posts: