Teresa Giudice bankruptcy means star owes $11 million

Reality bites: NJ 'Housewives' star owes $11 millionThis story was updated on June 8, 2010.

Reality stars tend to live larger than life when it comes to their houses, their indulgences and their dramas. As it turns out, some of their debts are larger than life, too. The New York Post recently reported that Teresa Giudice, better known to fans of the show "The Real Housewives of New Jersey" as one of its free-spending cast members, owes nearly $11 million to various creditors, despite having an annual family income of just $79,000.

And it would appear that she's willing to talk openly about it, as long as it results in more media exposure for herself. Paid of course.

Along with her husband, Joe, she's racked up more than $100,000 in credit cards bills and is facing foreclosure on three homes, one of which is a gaudy, $1.8 million mansion; the other two are also mortgaged to the hilt. Their flashy Cadillac Escalade isn't being paid for and is uninsured, according to the Post (let's hope she doesn't get distracted by something shiny while driving and get into a fender-bender with that thing!) Giudice owes around $12,000 to a fertility clinic while her husband owes various business partners several million, according to the tabloid (which dug through court filings to turn up their scoop).

As it turns out, the Giucides wound up doing what lots of average Americans overwhelmed by debt have done: They declared bankruptcy last fall, an event which Giudice is now talking about to any media outlet that will listen. People magazine took the bait, running a statement from her in which she calls bankruptcy "a fresh start."

WalletPop got in touch with Clarky Davis, aka the "Debt Diva," to ask her to give a little unsolicited advice to these serial spenders.

Davis didn't mince words, saying that bankruptcy was probably the couple's best option. She also added that some serious lifestyle changes would be necessary. "When you're looking at a debt load that is this large, or even if it was in the hundreds of thousands of dollars, those are usually secured debts you can liquidate. The first thing you should do is sell the house, the jewelry, the car you can't afford. You've got to unload it and get rid of it."

Clinging to a big house you can't make payments on is foolish, especially since you're also paying to heat, cool and maintain the place, she points out. "Housing has been what's killed a lot of people. If you're struggling to afford that, move into a smaller place and look at it as a lesson learned." As for Giudice's reported outstanding fertility-clinic bill, Davis points out that medical facilities will almost always work with patients directly to set up payment plans, often at lower interest rates than a credit card would offer.

Davis says the Giudices also exemplify another aspect of American life that's gotten a lot of people into trouble: living beyond their means. While the reality-show lifestyle probably isn't something all of us are rushing out to emulate, Davis says those of us with debts can still make better headway at paying them off by taking a hard look at our spending and cutting out discretionary purchases.

"For most people, adjusting your lifestyle is going to make a huge difference," Davis says. She also adds that we'll probably see the Guidices trying to dig themselves out of their debt by trying to get more work such as additional TV appearances. Hmm, maybe this is why Giudice is suddenly so forthcoming about her fiscal woes with the tabloid media. While the rest of us can't call up our agent and ask to guest-star on, say, Jersey Shore, Davis says it's not a bad idea to look into more down-to-earth ways to increase income, maybe by taking on a part-time job or asking for increased hours at your regular workplace.

Giudice told People, "When people fall, the way to success is to get up and learn from our mistakes." It will be interesting to see if she's able to give up the bling-tastic lifestyle to which she and her family had grown accustomed, or if this will be a colossal waste of a learning experience as well as money.

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