Your Trustee Can Sue You!

The interwebs have had quite a time with Teresa Guidice of the Real Housewives of New Jersey. Our hearts go out to her for her current financial dilemma. She and her husband might have brought some troubles upon themselves, however, which bankruptcy cannot fix. United Press has reported that the Guidices have been sued by their Chapter 7 trustee for failing to report assets in their bankruptcy petition, and the trustee also alleges that the tax returns submitted by Teresa and Joe Guidice are fraudulent.

Ok, this is serious, and something from which we all can take note. The Guidices are facing a complaint under Section 727(a)(4) of the Bankruptcy Code which

bars a Chapter 7 discharge to a debtor who knowingly and fraudulently, in or in connection with the case—

(A) made a false oath or account;
(B) presented or used a false claim;
(C) gave, offered, received, or attempted to obtain money, property, or advantage, or a promise of money, property, or advantage, for acting or forbearing to act; or
(D) withheld from an officer of the estate entitled to possession under this title, any recorded information, including books, documents, records, and papers, relating to the debtor’s property or financial affairs;

The outcome of the trustee's allegations could be that Teresa and Joe's Chapter 7 bankruptcy will be dismissed. This would mean that all their creditors would be able to begin collection actions against them. It might also mean they are guilty of perjury which carries a penalty of up to 5 years in jail.

The lesson here should be clear: Don't lie in your bankruptcy! When you submit documentation and declare information related to filing a bankruptcy, you can be certain that the trustee has independent confirmation of all the information you provide, so catching you in a lie is easy as pie. And no one wants to go 5 years without pie.