Bankruptcy fraud is a serious issue for both the attorney and of course the Debtor who files the bankruptcy petition. My wonderful wife likes to watch the show "The Housewives of New Jersey" and I have become enthralled in watching the reality show with her. One of the cast members and her husband (Teresa & Joseph Giudice) filed a Chapter 7 Chapter 7 bankruptcy last year. A Chapter 7 bankruptcy is a liquidation bankruptcy. Once a person files a Chapter 7 bankruptcy an estate is created of all the persons property they hold or have held in the last four years (or longer). The trustee or appointed court officer who is appointed to the person's case must liquidate any non-exempt assets for the benefit of the Debtor's creditors.

It seems from news reports and public records that the Guidice's lavish homes contents are scheduled for auction by the court appointed trustee. See the Article To make matters worse the trustee is filing an objection to the Giudice's discharge based upon a false oath (perjury) and their failure to explain their loss of assets and financial demise with proof through their books and records. The trustee is seeking to make all of their debts listed in the bankruptcy non-dischargeable under 11 USC 727, which is a very serious matter. If the trustee settles with the Giudices then any creditor may be able to step into the shoes of the trustee to object to the discharge according to current precedent. One creditor already has filed an objection to their discharge according to reports based upon allegations of fraud relating to Mr. Giudice.

The trustee has also alleged that the Giudice's failed to list interests in businesses, revenue from and interests in a book that Teresa Giudice wrote which is a New York Times bestseller, and other items as well as undervaluing property. Ms. Giudice in previous episodes can be seen spending lavishly on expensive clothes, going on shopping sprees, and throwing lavish parties for herself and her children. In the most recent episode, Teresa and her husband can be seen taking a rather lavish anniversary dinner at a nice hotel where they were staying, taking a limo there, and he gives her a purported enormous "yellow diamond ring" for her anniversary gift despite his financial problems and later filing of the bankruptcy (Maybe it was a Fugazi (fake) which was discussed earlier in the same episode), but nevertheless the trustee is likely to inspect that ring to make sure it is fake and if it is not then the trustee will likely liquidate it for the benefit of their creditors. I am sure there will be more news to come with regards to their bankruptcy.

Nevertheless, when filing a bankruptcy it is necessary to list all your assets and liabilities. Failure to do this can and may lead to prosecution by the Department of Justice for bankruptcy fraud (with stiff penalties of up to 5 years in jail and/or a $250,000 fine). Further, the trustee can and likely will object to the discharge of a person who undervalues assets or fails to list them in their petition and schedules. For a person to file a Chapter 7 or any bankruptcy they must fully disclose an accurate picture of their financial situation and explain the loss of income or property etc. In some cases the trustee may ask for proof of bank records, cancelled checks, or credit card statements. The failure to provide those documents can lead to an objection to the persons discharge. Further, if a person undervalues assets then the trustee has the right to get an accurate appraisal or value for the listed properties or even inspect them.

When a client comes into my office and asks what do I need to list? I say everything "ALL ASSETS and LIABILITIES" and I tell them that they cannot pick and choose what they list and do not list. Everyone will sign a disclosure required under federal law 527 (a) (2) which is to be given prior to retaining our office which states the above in no uncertain terms. When filing a bankruptcy with an Chicago Bankruptcy Attorney we would never put a client in a position to perjure themselves. Further, as an attorney I have a duty under the bankruptcy code to make all reasonable attempts to do due diligence with regards to the Debtor's assets and liabilities. As court opinions will often say, "bankruptcy is for the unfortunate debtor who cannot afford to pay their creditors back, but want too" almost all of the clients we see seek the protection of bankruptcy because they have no other alternatives other than a bankruptcy. Please call my office today for a free consulatation at 312-489-8182.

Marc Wagman