Rudolph W. Giuliani’s decision to file for bankruptcy could buy the former New York mayor some time to pay off his debts — including the $148 million in damages he owes to two former Georgia election officials for spreading lies , they tried to steal the debt of the 2020 election from former President Donald J. Trump.
However, the jury prize will not necessarily be lost as a result.
What does a personal bankruptcy filing do?
In the case of personal insolvency, just like in the case of corporate insolvency, all pending legal disputes or attempts at collection by creditors are usually stopped. With that in mind, it’s not all that surprising that Mr. Giuliani filed for bankruptcy a day after a federal judge ordered him to begin paying damages awarded to former election workers. An application can affect a person’s credit rating and make it harder for them to get a loan or buy a property later.
What are the advantages of filing for bankruptcy?
Individuals file for bankruptcy when their debts exceed their assets, and they see little hope of reversing this situation any time soon. A bankruptcy filing is intended to give individuals the opportunity to get their affairs in order and typically develop a plan to pay off creditors.
The goal of bankruptcy is to give a debtor a “fresh start” so that they are not burdened with these liabilities forever. In Mr. Giuliani’s case, his assets were broadly estimated at $1 million to $10 million and his debts at nearly $153 million, according to court filings.
Who are creditors in a personal bankruptcy?
Creditors are people, institutions or companies to whom a person owes money. When filing for bankruptcy, creditors’ claims are usually ranked according to who gets paid first. So-called secured creditors, potentially at the top of this list, are companies or individuals who have a claim against a debtor that relates to real estate. In a personal bankruptcy, the most common secured creditor is a bank that holds a mortgage on a property.
All other claims in bankruptcy are considered unsecured, but some have “priority” status when it comes to settlement. Typically, any taxes owed by an individual are classified as priority creditor claims. Mr. Giuliani said in his filing that he owes nearly $1 million in income taxes to the Internal Revenue Service and New York state.
Most of an individual’s debts are listed as unsecured debts with no priority status.
Mr. Giuliani did not list any secured claims. His filing listed a number of unsecured, non-priority debts, including the $148 million jury award. He also listed about $3 million in debts to attorneys as non-priority unsecured claims.
What happens to a person’s debts in the event of bankruptcy?
Some personal bankruptcies create a payment plan in which a person makes payments to certain creditors at a reduced rate. Typically, creditors included in a payment plan only receive a portion of their debts.
Some bankruptcy debts can be discharged – meaning the person is not required to make payments on them. This often includes credit card debt, medical debt, and loans that are not secured by real estate.
In some bankruptcies, a mortgage can be discharged, but debtors usually lose title to their home. The same applies to a car loan. Child support payments, student loan payments, criminal penalties, and income taxes generally cannot be discharged in bankruptcy.
Some civil judgments can be partially overturned. However, a verdict that involves a malicious act cannot be overturned, and in Mr. Giuliani’s case, the jury’s verdict in favor of the former poll workers could fall into that category.
Lindsey Simon, a professor at Emory University School of Law who specializes in bankruptcy, said Mr. Giuliani would likely not be able to accept the jury’s award. However, she said the bankruptcy filing could give him time to “come to terms with a settlement.”
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2023-12-22 14:30:25
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