There is a new twist in the Teresa Giudice bankruptcy case, as the reality television star has reportedly agreed to use any funds obtained in a malpractice lawsuit to pay back her creditors.
Teresa Giudice Convicted of Bankruptcy Fraud
All of these legal issues began with a fairly standard bankruptcy filing, one that drew scrutiny from federal officials because it omitted a large chunk of income and assets.
Teresa Giudice, who stars on the hit Bravo series “Real Housewives of New Jersey,” was ultimately convicted of committing bankruptcy fraud and conspiring to commit wire and mail fraud and actually spent time in federal prison. She was released from prison in December 2015.
Giudice’s husband, Joe, was also convicted in the bankruptcy fraud case and is currently serving his own prison sentence in connection with the criminal charges.
Giudice’s conviction stemmed from her failure to report a large amount of income from her “Real Housewives” television show when she declared bankruptcy. This was a major issue because lying to the Internal Revenue Service (IRS) about assets and income in a bankruptcy filing is considered bankruptcy fraud and can result in stiff penalties. In this case, those penalties included a 15-month prison sentence for Teresa Giudice and a 41-month prison sentence for Joe Giudice. (Teresa Giudice ultimately served 11 months behind bars, while Joe Giudice is still serving his prison term.)
Teresa Giudice Files Malpractice Lawsuit against Bankruptcy Lawyer
Although Teresa Giudice officially accepted responsibility for not meeting her tax obligations in the bankruptcy filing, she is still suing her former bankruptcy lawyer, James Kridel, for allegedly misleading her and failing to properly advise her about her tax liabilities and obligations when filing for bankruptcy.
Depending on the outcome of the civil lawsuit, Giudice could receive a significant amount of compensatory damages and punitive damages.
There has been some dispute between Giudice and her creditors as to whether any compensation she receives in the malpractice lawsuit would go toward paying off her creditors. When Giudice’s creditors learned about her potential financial windfall in the bankruptcy malpractice lawsuit, they immediately filed a petition with the US bankruptcy court in Newark NJ and asked for the original bankruptcy proceedings to be reopened. The creditors expect that any new money received by Giudice will be used to cover the debts she previously incurred.
Now it appears that Giudice has reached an agreement to share with her creditors at least a percentage of the money she might get in the malpractice lawsuit. Giudice’s current lawyers reportedly indicated that they had a “handshake deal” with the lawyers for the creditors. However, John Sywilok, the trustee who represents Giudice’s creditors, has cautioned that nothing is official yet.
For additional information about this developing bankruptcy case, check out the NJ.com article, “Teresa Giudice Agrees to Settle with Creditors but Other Camp Says Not So Fast.”
If you are struggling with debt and are thinking about filing for bankruptcy, you need to talk to a qualified bankruptcy and debt management lawyer. Joel R. Spivack is an experienced bankruptcy attorney who can help you explore your legal options. Contact Mr. Spivack now to schedule a free consultation.