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Teresa Giudice one of the stars of “Real Housewives of New Jersey” is facing accusations that she and her husband have been concealing assets in their Chapter 7 bankruptcy filing.  Bankruptcy trustee John Sywilok says that the Giudices have allegedly concealed key documents about their finances and business transactions when they filed Chapter 7 bankruptcy this past fall.

The assets the Giudices are alleged to have concealed include interests in a pizza parlor, laundromat, Teresa’s TG Fabulicious clothing and accessories company (where you can buy the “Jersey Girl” shirt she wore on the first season for $24.95) and the “Skinny Italian” cookbook she authored (which promises to teach readers how to eat spaghetti and still fit into their skinny jeans). Sywilok also accuses the couple of making false statements under oath about their assets, income and expenses.

If found guilty of concealing assets in Chapter 7 bankruptcy the Giudices could face charges of bankruptcy fraud, fines and the dismissal of their bankruptcy case.  Also, if the bankruptcy judge deems it necessary, the couple could face prison time if convicted of bankruptcy fraud.  But this isn’t the first “upset” the Giudices have faced in their bankruptcy case.  Bankruptcy trustee Sywilok has already scheduled the public auction of the contents of the Giudices’ newly built family mansion in Towaco, N.J.  The mansion has been the center of controversy since the Bravo reality show depicted the home’s construction and no-expense spared decorating spree. It has twice been rumored that the mansion was facing foreclosure since the Giudices filed Chapter 7 bankruptcy.  Once the contents of the home are sold at the bankruptcy action, the proceeds will be distributed to pay creditors.  It is important to note that only the contents that are above and beyond the bankruptcy exemptions available to the Giudices will be auctioned off.

Related posts:

1. ‘Real Housewives of New Jersey’ Bankruptcy Drama
2. Bankrupt NBA Star To Face Felony Bad Check Charges
3. Bankrupt Auto Dealer Accused of Fraudulent Transfer of Assets

The first item that caught my eye this week was a little blog our student Priya Barnes is writing as she visits Germany, attending the Summer Session in Giessen, Germany, that Professor Fallone blogged about on Monday.  So far, she’s only offered one entry, about her travels, but I intend to watch for more…. Mark Tushnet [...]

One of the most common conversions that occurs in bankruptcy is the conversion of Chapter 13 bankruptcy cases to Chapter 7 bankruptcy.  But what happens to assets when the conversion takes place?  Let’s take a look at what the bankruptcy code says:

(1) Except as provided in paragraph (2), when a case under chapter 13 of this title is converted to a case under another chapter under this title– (A) property of the estate in the converted case shall consist of property of the estate, as of the date of filing of the petition, that remains in the possession of or is under the control of the debtor on the date of conversion;

What does this mean?  Generally speaking, only the property that was part of the original Chapter 13 bankruptcy filing will become part of the new Chapter 7 bankruptcy case.  But this does not include property that has paid for via Chapter 13 bankruptcy or property that simply does not exist because it was sold, was destroyed or donated.  Also, the new Chapter 7 bankruptcy case will not include property that was acquired after the Chapter 13 bankruptcy case was filed.  For example, if you were in Chapter 13 bankruptcy for 2 years and purchased a new car in that time, the new car would not become part of the new Chapter 7 bankruptcy case.  However, there are some exceptions….

(2) If the debtor converts a case under chapter 13 of this title to a case under another chapter under this title in bad faith, the property of the estate in the converted case shall consist of the property of the estate as of the date of conversion.

An example of bad faith would be if the debtor received an inheritance that was large enough to repay his/her creditors in full but instead the debtor decided to file Chapter 7 bankruptcy.  In this case the inheritance money would become part of the Chapter 7 bankruptcy case and would be used to repay creditors.

Related posts:

1. Converting Chapter 7 Bankruptcy Into Chapter 13 Bankruptcy
2. Divorced Debtor’s Interest In Marital Property Becomes Part Of Bankruptcy Estate
3. Four Reasons Why Chapter 13 Bankruptcy May Be Better Than Debt Consolidation

State Representative Joe Farias has been fighting to get legislation passed that will regulate the 2,800 payday lenders in Texas and provide caps on loan interest rates which can increase up to 400% for a payday loan.

“They can operate without being regulated at the city, state,  or federal level…The intent we are caring forward is to have measures,  like the banks and credit unions,  that regulate them on their lending practices” said Farias. Unregulated lenders have “targeted military personnel and now they’re extending that to universities and colleges…They’re offering you a free T-shirt with a $300 loan, but the problem with that is the average person who gets a $300 loan ends up paying $840,” he said.

Currently federal law limits the interest rate that banks and credit cards can charge to 36 percent; but payday lenders have been able to avoid the interest rate caps effectively charging as much as 400% for loans to borrowers who are often low-income and unaware of how payday loans really work.  Already, some states have come down hard on payday lenders, most recently an outright ban on the predatory loans in Arizona.  And because the harsh economy is driving many more individuals to take out payday loans, car title loans and other types of predatory loans due to desperation, the effects of these loans are beginning to spread.   Limiting interest rates on payday loans could be a first for Texas to combat and eventually eliminate predatory lending practices in this state. But if Texas is serious about combating the predatory lending policies of payday lenders and others, we need to include harsh penalties for companies who violate any new restrictions that are created.

Related posts:

1. Texas Legislators Poised To Rein In Payday Lenders
2. Payday Loans Are Banned In Arizona – Should Texas Follow Their Lead?
3. Predatory Payday Lenders Leech Off Unemployed Americans

When a Chapter 13 bankruptcy plan is created there is an even number of payments required over a certain number of years.  For example, a debtor may be required to make payments of $536 per month for five years via Chapter 13 bankruptcy.   But just because there is an even number of payments does not mean that all creditors are paid the same amount at the same time.  Chapter 13 bankruptcy repayment plans prioritize debts with those having the highest priority receiving repayment first.  Secured debts such as taxes and mortgages are priority debts and will get paid off before unsecured debts such as credit card debts and payday loans.   And even if a debtor pays off one of their secured creditors first, such as delinquent taxes, that will not change how much the debtor is required to pay into the Chapter 13 bankruptcy case every month, it will only mean that the other creditors will be paid a higher amount.  For example, if a debtor pays off their taxes, then their delinquent mortgage debt may receive more money every month and eventually after it is paid off the next debt in line may receive more money every month and so on until the plan is completed.  There are some instances when a debt is split—meaning that it consists of both secured and unsecured portions.  This often happens when the property secured by the loan is worth less than the debt.  For example, if a Chapter 13 bankruptcy case consists of a vehicle with a $10,000 debt and the car is only worth $6,000, then the $4,000 portion of the loan is not secured.  Once the Chapter 13 Bankruptcy is completed, the unsecured portion of the car loan will be discharge. But if the debtor does not complete the Chapter 13 bankruptcy or misses even one payment even after the secured portion of the loan is paid they could lose that car to repossession.  This is why it is so important to complete your Chapter 13 bankruptcy or convert it to Chapter 7 bankruptcy if you cannot make payments due to a change in finances.

Related posts:

1. How Does The Chapter 13 Bankruptcy Trustee Get Paid?
2. Special Class of Creditors Disallowed in Chapter 13 Bankruptcy Case
3. Four Reasons For A Chapter 13 Bankruptcy Payment Increase

Denny Hecker, former auto tycoon, lost his claim to a $1 million consulting fee in bankruptcy court and now faces new criminal charges in a fresh federal indictment.  Bankruptcy Judge Robert Kressel dissolved Hecker’s interest in a consulting deal with Midwest Motors after the company sought to end  the relationship with Hecker  because of the bad publicity surrounded the embroiled former auto tycoon.  The bankruptcy judge said that Midwest Motors had good cause to terminate the consulting agreement because of bad publicity.

Bankruptcy trustee Randy Seaver has objected to the fee for nearly a year, saying the money should go to Hecker’s creditors. Seaver recently reached a settlement in which Midwest Motors agreed to pay $65,000 to the trustee and about $425,000 to creditors Chrysler Financial and Toyota Financial Savings Bank. Hecker had objected.

But the loss of the consulting fee in bankruptcy is only the beginning of Hecker’s financial and legal woes.  The former auto tycoon is now facing additional criminal charges including 26 conspiracy, bankruptcy and wire fraud charges stemming from accusations that he orchestrated various schemes to defraud Chrysler Financial and other lenders out of hundreds of millions of dollar in auto loans.  The new indictment accuses Hecker of illegally concealing and transferring money prior to filing bankruptcy. According to the indictment, Hecker failed to disclose the purchase of $10,425 in gift cards.

The new criminal charge is just one more thing added to the long list of legal accusations added to Hecker’s criminal case.  If convicted of the bankruptcy fraud charges, Hecker could face up to ten years in prison.

Related posts:

1. Auto Tycoon Faces Bankruptcy Fraud Charges And Fails To Pay Attorneys
2. Auto Dealership Mogul Denny Hecker Faces Bankruptcy Fraud Charges
3. Rare Decision In Fallen Auto Tycoon’s Bankruptcy