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teresa bankruptcy and divorce

Joe and Teresa Guidice: The Real Deal on Bankruptcy Fraud and Divorce

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Whoever said that all publicity is good publicity probably hasn’t spoken to Joe and Teresa Guidice recently. The Real Housewives of New Jersey stars were charged in a 41 count indictment with a conspiracy to commit mail and wire fraud, bank fraud, and making false statements on loan applications and bankruptcy fraud. Had they been found guilty of all charges, each could have received sentences of 50 years in prison. Although they might be used to video cameras taping their every move, it was probably different having those cameras follow them from court with dozens of reporters yelling at them to make a comment.

Joe and Teresa Guidice Fraud Charges

Ultimately the Guidice’s pleaded guilty to fraud charges and both will face time in prison. Joe, who is still an Italian citizen, could face deportation when his sentence has been completed, and Judge Esther Salas, the federal judge in charge of the case suggested that deportation was indeed in Joe’s future once he is released from prison. When faced with the charges of this case, Joe admitted that he avoided paying income taxes on $1 million of income between 2004 and 2008. For Teresa’s part, when she faced the music, Teresa agreed to pay $200,000 in penalties to government with more penalties expected to follow later which will possibly double the penalties.

Failure to Disclose During Bankruptcy Is Fraud

In addition to not filing taxes, Joe and Teresa each pleaded guilty to conspiracy to commit mail and wire fraud and they pleaded guilty to three types of bankruptcy fraud. In 2009, the Guidice’s filed for Chapter 7 bankruptcy and were charged for failing to disclose accurate information about their businesses, Teresa’s salary for the reality television program, and rental properties the couple owned. Additionally, the couple failed to report a 2006 Ford F-250 pickup truck, a cement mixer, a bobcat trailer, a 1993 Ford Ranger, and 1997 corvette.

hidden money in bookHad the lies about income been discovered during the bankruptcy hearing, the case could have been dismissed immediately. If the case had been dismissed at that time, the financial situation of the Guidice’s would have returned to where it was prior to bankruptcy proceedings. That means creditors would have still been hounding the family and assets would have been in danger of being taken and the family could have lost everything they had if bankruptcy had been off the table for them. Although the 15 month sentence Teresa received and the 41 month sentence Joe received probably feel harsh to them, they may feel different had they lost everything they had, which may have happened had they been caught lying during the original bankruptcy hearing.

There are actually several legal reasons a Chapter 7 bankruptcy case can be dismissed in addition to fraudulent activities: failure to complete credit counseling (if court mandated), lying on the official forms (Teresa did this), hiding property so it can’t be sold or liquidated (Teresa did this too), failure to file the correct forms or pay the filing fee, failure to appear at the meeting with creditors. In some situations, the case can be dismissed, and the people seeking bankruptcy relief can refile immediately or relatively soon, but fraud is not one of those situations.

Fines and Prison Time for Bankruptcy Fraud

Bankruptcy fraud, lying on forms and or hiding property so it doesn’t have to be forfeited to pay creditors constitutes bankruptcy fraud which Teresa is guilty of. Bankruptcy fraud is federal crime that can cause the guilty party to pay fines and do prison time. Theresa has been hit with a $10,000 fine and has thus far has been ordered to pay $200,000 in restitution with another restitution order possibly coming later. Judge Salas, who had this case said that Teresa failed to list at $75,000 in assets during her 2009 bankruptcy. The judge also seemed to question the lifestyle depicted on television. Teresa’s attorney stated that the furniture and wardrobe depicted on the television show were purchased by RHONJ and that what is seen on television is basically an orchestrated fiction.

Judge Esther Salas Sentenced The Guidice’s

The judge responsible for the Guidice’s case is Esther Salas, a woman who was not raised in the Real Housewives standard of living. Judge Esther Salas is the federal district judge for the United States District Court for the District of New Jersey and sits in Newark, New Jersey. Salas was confirmed as a federal district judge in June, 2011 by the United States Senate, making her a member of the Court for life. Prior to the federal judgeship, Salas had been a magistrate judge since 2006.

Judge Esther Salas sentenced guidice
Photo credit PROUDMAN, JOE/SL

Salas, whose parents are Mexican and Cuban immigrants, was raised in New Jersey after her mother fled her abusive husband in California. When fire destroyed the family’s possessions when the judge was 11, she represented her mother at meetings with government officials to receive assistance and shelter for her mother and four siblings. This background, in contrast to the lifestyle seen on RHONJ has stuck with Salas and undoubtedly colors the lens she sees life with. She said to Teresa Guidice, “What you did in the financial disclosure really sticks in my craw. It’s what the court has a problem with. It shows blatant disrespect for the court. It’s as if you thumb your nose at this court. I honestly don’t believe you understand and respect the law.” She concluded, “Getting this financial information that I need to judge this case was like pulling teeth, it was the most difficult in my years as a judge and as a lawyer.”

This lecture to the defendant came as Teresa Guidice received a 15 month sentence rather than the maximum 21 month sentence. Her attorney had asked for probation with no prison time, but the judge believed that Teresa needed to learn a lesson about lying to the court and the consequences of spending beyond her means. Judge Salas said that she had considered probation until she read the government report about how difficult it was to receive an accurate financial report, and suggesting that during the process there may have been attempts to confuse the court with the documentation the defense team and the Guidice’s returned to the prosecution and the court. In any case, the process of understanding what assets the Guidice family has was far from straightforward and the judge was not pleased.

The judge also hoped that by passing down a sentence that included jail time for both Teresa and Joe, that the four children of the Guidice’s would be able to learn from the punishment their parents received. In an act showing compassion for the family, Joe will begin to serve his sentence of 41 months after his wife is released so that one parent will remain with the children, all girls ranging in age from five to 13 years.

Divorce: Now? Later? Never?

possible divorce teresa guidice

There have been rumors speculating that Teresa is furious with Joe after being handed down their prison sentences, and is considering a divorce. Even if the divorce is all speculation now, there is a good chance that the rumors could turn into a reality. Reports show that the divorce rate among couples where one spouse is incarcerated for one or more year(s) is about 80%, and for women is almost 100%. Many of the spouses, and secondary victims of the committed crimes (like the Guidice’s 4 daughters) often feel outcast, shame loneliness, and financial hardship. Teresa, who will serve her 15 month prison sentence first, is uncertain if Joe can handle raising their children by himself while she is locked up. Additionally, finances, and the fact it will be difficult to improve their finances while in prison have also been causing the couple stress, especially since a certain amount of the success that Teresa has had financially, selling books an hair care products is based on her public persona. That persona took a hit, and there certainly won’t be a public portion of it during the 15 months she’s in prison.

Although it seems that the divorce rumors about the Guidice family are false, it will be possible for a divorce to occur while one or the other of them is incarcerated. The Utah Divorce process to dissolve your marriage with someone in prison is almost exactly like it is under normal circumstances.

Whether Joe and Teresa have learned anything from this episode of real life, only time will tell. What those who have followed the case have learned is that when tax time comes, pay the taxes. If it is necessary to file for bankruptcy, don’t play fast and loose when listing assets. As stressful as taxes and bankruptcy can be, most would agree, they are not as stressful as doing time in prison.

 

Jennings & Medura, LLC offers full service family law and bankruptcy representation to the residents of Salt Lake City, UT. We are dedicated to providing efficient and quality legal services to help individuals protect their rights when facing issues of family law or bankruptcy matters.

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In Trying Times…

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Wealth is a byproduct of higher ideals, and not a higher ideal in and of itself. In these difficult times, it is hard to see that truth. Remember these words:

We will find neither national purpose nor personal satisfaction in a mere continuation of economic progress, in an endless amassing of worldly goods. We cannot measure national spirit by the Dow Jones Average, nor national achievement by the Gross National Product. For the Gross National Product includes air pollution, and ambulances to clear our highways from carnage. It counts special locks for our doors and jails for the people who break them. The Gross National Product includes the destruction of the redwood and the death of Lake Superior. It grows with the production of napalm and missiles and nuclear warheads… it includes.. the broadcasting of television programs which glorify violence to sell goods to our children. And if the Gross National Product includes all this, there is much that it does not comprehend. It does not allow for the health of our families, the quality of their education, or the joy of their play. It is indifferent to the decency of our factories and the safety of our streets alike. It does not include the beauty of our poetry, or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials… The Gross national Product measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measure everything, in short except that which makes life worthwhile, and it can tell us everything about America- except whether we are proud to be Americans.”

-Sen. Robert F. Kennedy,
March, 1968

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What do I do When Creditors Call?

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1. Avoid getting panicked.

Collectors want a reaction from you. It’s in their personality for some reason. More importantly they want money from you. When you tell them no, they get mad. They want you to get mad in return so be calm at all times and be polite. Nothing infuriates debt collector more than person who is calm and polite while they are getting upset and aggressive. If you can’t pay, you can’t pay. it is that simple. There is nothing wrong in saying this. It won’t be what they want to hear, but that isn’t your problem. It’s simply the truth. The sooner you realize this fact, the sooner you can take steps to find a real solution.

2. Get information!

Find out who they are collecting for and what company they represent. Find out the address for where to send mail. If they won’t give this information to you, hang up, they aren’t a legitimate collection agency. A licensed and bonded collection agency will be happy to give your their contact address, and are also happy to know the name of your attorney and will contact that attorney rather than harass you.

3. Know your rights!

If you advise them not to contact you further, they have to respect that. This is why you get their address, so you can send a letter advising them to have no further contact with you. You should send it certified, return receipt requested. If they contact you after that, it is an FDCPA violation.

If you are our client - remember the Mantra! If you are one of our clients who has signed and paid a retainer, then you may state the following:

“My attorney’s name is Jarrod H. Jennings. His phone number is 801-883-8332. I do not wish to have any further contact with you. Have a nice day.”

After you have finished that, HANG UP! You hired us to handle your creditors, let us do our job! If they call you back again, repeat the mantra until you are blue in the face and let us know they are still calling.

 

Bankruptcy Myths

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There are many misconceptions about bankruptcy, here are some of the most common.

Myth #1. Everyone will know I have filed for bankruptcy:

Unless you’re a prominent person or a major corporation and the filing is picked up by the media, the chances are very good that the only people who will know about a filing are your creditors and the people who you tell. While it’s true that your bankruptcy is a matter of public record, the number of filings is so massive, that unless someone is specifically trying to track down information on you, there is almost no likelihood that anyone will even know you filed. However, telling someone that someone else filed bankruptcy is good gossip. Just like telling a someone you heard so-and-so is getting a divorce. So, if you don’t want everyone you know to know you filed bankruptcy you need to keep the information to yourself. As for newspapers our experience is that most papers don’t include information about who filed bankruptcy and even if they did, think about it who would be interested enough to read that stuff?

Myth #2. You will lose everything you have:

Nothing could be further from the truth. The fact is most people who file bankruptcy don’t lose anything. First, while laws vary from State to State, every State has exemptions that protect certain kinds of property. Using Washington as an example: There are exemptions to protect such things as your house, your car, your truck, household goods and furnishings, IRAs, retirement plans, the cash value in life insurance, wages, and personal injury claims. There is even a “wildcard” exemption that can be applied wherever you want it. In those rare situations where you have more property than can be protected by available exemptions there is Chapter 13. In Chapter 13 you can even keep non exempt property through what is known as a ‘liquidation analysis.’

Second, as mentioned above, filing bankruptcy does not generally wipe out liens. Therefore, if you want to keep a car, truck, home or business equipment that serves as collateral for a loan you need to keep paying on the debt. If you make these payments and have exemptions to cover any value above what is owed, you can rest assured
you will be able to keep these items.

Myth #3. You will never be able to own anything again:

A surprising number of people believe this but this is completely false. In the future you can buy, own and possess whatever you can afford. In fact, most of our client’s are back to having good credit within a couple of years after the bankruptcy. How you handle your
credit repair after bankruptcy is up to you, but if you follow our program, chances are you will have good credit sooner rather than later.

Myth #4. You will never get credit again:

Quite the contrary. Filing bankruptcy gets rid of debt and getting rid of debt puts you in a position to handle more credit and this makes you look more attractive to would-be lenders. It won’t be long before you’re getting credit card offers again. At first the would-be lenders will want more money down and will want to charge you higher interest rates. However over time, if you are careful, and keep your job, and start saving money, and pay your bills, and do things that will put good marks on your credit report the quality of your credit will get better and better. Generally, in my experience, if a client has not
re-established good credit in 1 to 2 years it’s not because they filed bankruptcy. It generally means that something else has happened after the bankruptcy to hurt their credit.

Myth #5. Filing bankruptcy will hurt your credit for 10 years:

Not true. Two completely different concepts are getting confused with each other. The fact that bankruptcy is reported on your credit report for 10 years is not the same thing as adversely affecting your credit. Just because something is reported on your credit report does NOT necessarily mean it will have a negative effect on your credit standing.

Let’s get one thing out in the open. By the time you need to make an appointment to see a bankruptcy attorney your credit is already messed up or maxed out, or both. This being the case you have no credit for bankruptcy to hurt.

Furthermore, as I mentioned above, in my experience, if you have not re-established good credit in 1 to 2 years after you file bankruptcy most likely it has nothing to do with the fact that you filed bankruptcy and it certainly has absolutely nothing to do with the fact
that your credit history still shows an old bankruptcy.

Myth #6. If you are married, both you and your spouse have to file bankruptcy:

Not true. In many cases where both husband and wife have a lot of debt it makes sense and saves money for them to both file but it is never a requirement under the law. We have many cases where only one spouse has filed. The good news is that generally if it makes sense for both spouses to file together.

Myth #7. It’s really hard to file for bankruptcy.

NO. IT. IS. NOT! When you hire an experience attorney who can tell you what to do to prepare for your filing, it gets much easier. The decision to file may be a tough one, but once the decision is made, you need only do what the attorney tells you to do. It’s not difficult and is very straightforward. Having a coach and counselor on your side
to guide you through the process makes it a simple process.

Myth #8. Only deadbeats file for bankruptcy:

Not true. The people who file bankruptcy are good, honest, hard-working people, just like you and me, who file as a last resort after months or years struggling to pay the bills that left over from some life-changing experience. Such as a divorce, the loss of a job, a
failed business venture, a serious illness, or some family emergency. Or because they honestly and mistakenly fell into debt at a young age before they knew better, before they knew anything about budgeting or how to manage money.

If that isn’t enought to convince you, consider this, Donald Trump and his casino’s are presently in Chapter 11. United Airlines is in Chapter 11, US Air and MCI have been in Chapter 11. Do you think less of these companies because they filed for bankruptcy? I didn’t think so.

Wrap your head around this factoid. 72% of American’s qualify for bankruptcy relief. That was before our current economic crash. Imagine what that percentage is today? We all live one paycheck away from bankruptcy.

Myth #9. Filing bankruptcy means you are a bad person:

There’s a reason over 1,000,000 Americans file bankruptcy each year and it’s not because they’re bad people. Lots of good, honest, hard-working people fall on hard times. Let’s face it, life can be brutal and sometimes the money’s just not there. The bankruptcy law
were created to make sure you have a way to get free from the burden of debt so that you and your family can have a second chance at a “fresh start”.

Myth #10. Filing bankruptcy will hurt your credit:

Sorry, wrong again. Think about it. By the time you come to a bankruptcy attorney your credit is already either messed up or maxed out. And if it’s already messed up or maxed out how can bankruptcy hurt it?

The big surprise for my clients is when I tell them that filing bankruptcy can actually help them re-build their credit. Bankruptcy gets rid of debt and getting rid of debt puts you in a better position to handle new credit if only someone will give it to you. Therefore
bankruptcy is the first step in the process of re-building your credit.

The truth of the matter is that bankruptcy has very little to do with the algorythms that affect your credit score. In some cases, depending on the circumstances you are in, filing bankruptcy actually raises your credit score right away.