Teresa and Joe Giudice, cast members of The Real Housewives of New Jersey, clearly did not read Nolo’s bankruptcy articles before they filed for Chapter 7 bankruptcy in 2009. Last week in federal court, the Giudices admitted to committing bankruptcy fraud by failing to list income and assets. (They also admitted to conspiracy to defraud banks through mortgage and loan fraud — but that’s another blog.)
Never, Ever, Hide Income and Assets in Bankruptcy
When you file for bankruptcy, you complete a packet of papers where you list your income, assets, and debts. You must sign your bankruptcy petition and schedules under penalty of perjury, so if you lie, you are committing perjury (a crime). For this reason, you should never deliberately fail to list assets or income on your bankruptcy schedules. (See Nolo’s article Filing Bankruptcy? Disclose Everything, Hide Nothing.)
How Did Real Housewives Stars Teresa and Joe Commit Bankruptcy Fraud?
According to news reports, Teresa and Joe failed to list an array of income sources and assets, including:
- Teresa’s true income from “Real Housewives”
- income and speaking fees from personal and magazine appearances
- businesses they owned, and
- rental income.
You Will Get Caught
Teresa and Joe Giudice may be dippy, but they must have known that lying on their bankruptcy schedules was a no-no. But they did it anyway, probably thinking they wouldn’t get caught. Bad idea. Listen to what bankruptcy lawyers say — you will get caught. Bankruptcy trustees have the power to do a bunch of asking and digging. And bankruptcy trustees are good at spotting red flags that might inspire them to do some digging.
And even if you’ve already gotten your discharge, you are still not home free. The bankruptcy trustee might find fraud after your bankruptcy is over – which is what happened with Teresa and Joe. They filed for bankruptcy in 2009 and for a while probably thought that they had gotten away with their fraud. Ha.
Bankruptcy Fraud = Big Trouble
So what can happen if the bankruptcy court finds out that you’ve hidden assets and income or otherwise lied on your petition and schedules? A lot.
- The court can deny your discharge. The court can deny your discharge. Which means all of those debts you wanted to get rid of in bankruptcy will now be yours again.
- The court can revoke your discharge. If your bankruptcy case is closed, the trustee can ask the court to revoke (take away) your discharge up to one year after closure.
- No discharge in later bankruptcies. Don’t think you can just refile and discharge the debts the second time around. If the court denied the discharge of your debts because you hid assets, you won’t be able to discharge them in bankruptcy again, ever.
- You could face criminal charges. Here’s the worst case scenario – criminal charges. You sign your bankruptcy schedules listing your assets under penalty of perjury, representing that they are true and accurate. The penalty for making a false statement or concealing property is a fine of up to $500,000 or imprisonment for up to five years, or both. (Learn more about the consequences of hiding income and assets in bankruptcy.)
Jail Time for the Real Housewives’ Stars?
Teresa Giudice could face up to two years and three months in prison, and Joe could face three to four years of prison time for the bankruptcy and mortgage fraud.