The Legality Of Teresa Giudice's $60K Post-Bankruptcy Spending Spree

It was discovered last week in court—where the Giudices tried to stop the auction of the contents of their McMansion—that Teresa spent $60,000 on furniture just days after filing for bankruptcy. Is that even legal?

In October 2009 the Giudices filed for bankruptcy. First, let's review how they got to be $11 million in the hole:

  • $104,000 on at least eight credit cards
  • $85,000 for home repairs
  • $91,000 for materials used to build their new home
  • $12,000 in fertility treatments
  • $2.6 million for eight mortgages on three homes (two of which have been handed back to lenders)
  • $5.8 million for various "business investments"
  • $1,280 for defaulting on a car payment
  • $2,300 phone bill

In court last week, the Giudices attempted to stop a planned August 22 auction of the contents of their home. In the process, their lawyer had to submit receipts of their post-bankruptcy spending, and it turns out that Teresa decided to celebrate being broke by blowing "$8,800 for curtains and nearly $45,000 on wall hangings, mirrors, frames, tables, urns and chairs." That girl loves her urns. (The auction is still on, but was postponed until October 3.)

So is this legal? Apparently, yes. The federal bankruptcy judge appointed to the case said, "It's not for this court to tell people how to spend their money" earned after bankruptcy. In fact, the Giudices lawyer, Jim Kridel, condoned Teresa's spree telling People, "That was the money she earned as an advance for her book Skinny Italian. Since she earned it after the filing, she was absolutely free to spend it." And he believes it was prudent of her to do so. "If she put it in the bank, they'd say, ‘Why don't you pay your creditors,' and the trustee might freeze the assets while he investigates whether she can spend it or not."

Fame Brief: Is the Giudices' $60K Post-Bankruptcy Spree Legal?
[ATL]