Staub, far left; Giudice, second from right.
It’s starting to look like a curse: The fourth star from the Bravo reality TV series “Real Housewives” has filed for bankruptcy. For a show known for its characters’ conspicuous consumption habits, it’s a bit of a surprise—and a warning for us really real people.
Danielle Staub is not only the latest in a growing line of debtors from the series, following Tareq and Michaele Salahi, Sonja Tremont-Morgan, and Teresa Giudice; she is also the second from the New Jersey version of the show, following the 2009 Chapter 7 filing of her nemesis Giudice with one of her own on May 30.
Staub, who’s achieved a certain level of celebrity from the show based on her and Giudice’s on-screen cat fights, stands to lose assets valued between $500,000 and $1 million, according to her filing. While she lived in a mansion on the show, she’s now living in an apartment in North Bergen, NJ, just outside of New York City. She owes creditors including entities from banks and utilities to high-end companies like Nordstrom and Land Rover.
Money Burns the Same for the Stars
Maybe it’s a secret curse — it seems odd that people who are so obviously well-off can be hiding such dramatic financial difficulties. How does this happen?
The rich and famous have the same needs and desires as the rest of us, observes William Wolfson, a lawyer who runs his own bankruptcy practice in Flemington, NJ, an hour west of Staub’s new digs. “Often they get caught up in the excitement of having money without the skills to manage. This can lead to hiring incompetent or dishonest management or making poor investments.”
And, like the rest of us, “they also overspend and just do not think about the issues that may be lurking ten to 15 years down the road, including illness, divorce, and providing for retirement,” he adds. “And then there is just plain bad luck: They buy homes or stock and see its value erode, as many of us not-as-rich-and-famous have seen since 2008.”
And while no area of the country has been immune from the economic blues, New Jersey is an expensive place to live and work, allows Wolfson. “It’s also expensive to raise and educate your kids,” he adds, “since they often get expectations and a sense of entitlement that is not realistic.” All you have to do is flip over to MTV and catch an episode of “Jersey Shore” to view evidence of that.
How Far the “Fighty” Have Fallen
There are also certain drawbacks to sudden wealth that can lead its spenders more quickly down a path to bankruptcy. “Sometimes they go into businesses that they lend their names to and put cash in without limiting their exposure,” Wolfson says. “They also do not understand that the heavy pay days will end.” Or they might be too altruistic: “Sometimes they want to be good to their relatives or end up with a lot of hangers-on who become expensive new best friends.”
In fact, both Staub and Giudice are both still hawking all kinds of personalized products on their websites—from Bellini-type drinks and cookbooks to “mafia t-shirts” and fitness videos. Depending on the type of bankruptcy being filed for, sometimes a debtor can keep running his or her business, especially if it’s one that involves a personal services contract.
Wolfson points to the infamous example of Michael Vick, the professional football player convicted of running a dog-fighting ring who lost everything in the aftermath and filed for bankruptcy protection: His plan of reorganization includes the use of the cash stream from his contract with the Philadelphia Eagles to fund repayment of his creditors.
What You Can Do to Avoid This Reality
In the real real world, regular people file for bankruptcy every day. Without as much to lose, they are, in a sense, a little better off than the flaunters of fortune, who have further to fall.
“The once-wealthy have lots of assets that a Chapter 7 trustee is obliged to recover from them and sell, such as a nice home, cars, furs, jewelry, art work, office buildings, stocks, race horses, etc.,” says Wolfson. “The not-so-well-off are going to get to keep a modest home, much if not all of their belongings, pensions up to $1,000,000. This is because bankruptcy law lets you keep enough to get a fresh start but not a head start.”
If you do happen to come into sudden wealth—Jersey’s not the only state with a lottery!—here are some tips from Wolfson about how to avoid having and then losing it all (to your creditors):
Don’t get hung up on conspicuous consumption, competing with your friends and acquaintances.
Realize that the stuff you buy are just things and you could lose them all in a heartbeat.
Learn resiliency: Have a plan B.
Always pay your taxes on time.
Save, and invest in CDs and other low-risk items.
Indulge in the luxury of not listening to others tell you what they can do for you.
Live modestly, as if you did not win the lottery.
And if you ever have to file for bankruptcy, remember that trying to transfer or hide assets can get you in very serious trouble, Wolfson warns. “Be completely truthful and forthcoming, no matter how embarrassing it might be. Hiding or not disclosing assets from a bankruptcy trustee is a federal crime.”
Regardless of whether you’re a 1%-er or a 99%-er, also remember that this too shall pass. “This mess is just temporary,” he often tells clients. “There is always light at the end of the tunnel and it is not the train.”
If you find yourself in financial straits, be sure to call a bankruptcy or debt relief lawyer before your situation gets worse. Use the Attorney’s Fee Calculator to find out what a lawyer costs in your zip code.