Lessons From the “Real Housewives” Bankruptcy Fraud Charges

Posted on August 22, 2013 at 2:00pm by

A Kansas City Bankruptcy Attorney Offers Useful Tips

Two stars from the reality show “The Real Housewives of New Jersey” were recently charged with 39 different counts of fraud, including bankruptcy fraud. The federal government alleged that Joe and Teresa Giudice grossly exaggerated their income and assets while applying for home loans and credit cards, and the government alleged they lied to the bankruptcy court and the IRS.

Some acts of fraud are only possible when people willfully lie or misrepresent themselves to a creditor or the government. However, in the months leading up to a Chapter 7 or Chapter 13 bankruptcy filing, certain acts will be construed as potential fraud, even if they were made with innocent intentions. If you are considering filing for bankruptcy, it is essential to have a Kansas City bankruptcy lawyer on your side to protect yourself and your property.

Avoid Unintentional Fraud by Working with a Qualified Attorney

Bankruptcy is a legal process, and it must be handled with as much precision and caution as any other matter of the law. If the rules of bankruptcy are not respected, a filing can be dismissed, exposing a person to lawsuits, wage garnishment and foreclosure. If you are considering bankruptcy, it is essential that you avoid:

  • Paying back family members or friends that lent you money.  Those types of transactions raise the eyebrows of judges and creditors. The bankruptcy court prioritizes how creditors are paid back, and the law gives certain creditors preferential treatment. Payments to friends or family prior to filing may mean that other creditors were not treated fairly. The bankruptcy trustee can sue anyone who received money from you in the period prior to filing to get the money or assets back. This is known as a “clawback” lawsuit. If a debt to a friend or family member is discharged in bankruptcy but you still want to pay it back out of moral obligation, you can certainly do so. The correct time to pay such a debt back would be AFTER bankruptcy, not prior to filing.
  • Making big purchases. The bankruptcy court will look with suspicion upon any conspicuously large purchases in the days before your filing. Purchases made prior to bankruptcy are fair game for a trustee to seize for sale. For example, in the Joe and Teresa Giudice case, the Chapter 7 trustee seized household goods purchased before and after bankruptcy for approximately $60,000 to be auctioned off to pay creditors. Do not make any unnecessary large purchases or spend large amounts of money in the days or weeks prior to filing.
  • Transferring or giving away valuable assets. Whether it is artwork, musical instruments or jewelry, you should not give property away in an attempt to keep it out of the bankruptcy estate. The law offers exemptions to protect your property, which can be utilized to save such property in a legal manner approved by the bankruptcy court.

There are several other potential legal pitfalls when filing for bankruptcy. Only a qualified and experienced Kansas City bankruptcy lawyer will know how to help you avoid a dismissal of your bankruptcy case and potential criminal charges.

Protect Yourself and Your Family While Gaining Financial Freedom

Our job is to work with you to find the solution that works best for you and your family. We will ensure that your Chapter 7 or Chapter 13 bankruptcy is done correctly, and in a way that prepares you for a life free of debt. Contact our Kansas City bankruptcy attorneys today to take the first steps towards recovery.