Can Bankruptcy Wipe Out a Defamation Judgment? The Rudy Giuliani Case

Rudy Giuliani’s made headlines regarding his bankruptcy case and his bank accounts were frozen. Giuliani’s case, including having his assets seized, provide a masterclass in the limitations of the U.S. Bankruptcy Code.

After a $148 million judgment was leveled against him for the defamation of Georgia poll workers Ruby Freeman and Shaye Moss, Giuliani turned to Chapter 11 for protection.

However, in 2026, whether from a dismissed bankruptcy to a confidential settlement, here is why the “Automatic Stay” failed him and what happens when a debtor is accused of “willful and malicious” injury.

Updated on March 18, 2026.

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

Listen: The Professor’s Audio Briefing.

Key Takeaways for Your Financial Strategy

• Transparency is Mandatory: If you use bankruptcy to “hide” assets, the court can dismiss your case, leaving you vulnerable to immediate collection.
• Settlement is often the “End Game”: When a debt is likely non-dischargeable, a negotiated settlement is often the only way to retain personal property.
• Automatic Stay is Temporary: It only lasts as long as your case is active and in good standing with the court.

The Automatic Stay: A Shield, Not a Permanent Escape

In most filings, the Automatic Stay acts as an immediate injunction, halting all collection efforts, including lawsuits and bank garnishments.

Professor’s Note: Giuliani’s Chapter 11 case was dismissed by the court in 2024 due to a lack of financial transparency. Once a case is dismissed, the Automatic Stay evaporates. Creditors are then legally free to “freeze” accounts and seize property as if the bankruptcy never happened.

Why Defamation Judgments Often Survive Bankruptcy

Many debtors believe that filing for bankruptcy will discharge (erase) all their legal debts. Under 11 U.S.C. § 523(a)(6), however, debt is non-dischargeable if it stems from a “willful and malicious injury” by the debtor.

Because Giuliani’s actions were found to be intentional and malicious, a judge would likely have ruled the $148 million judgment “non-dischargeable,” meaning he would still owe the debt even if he had successfully completed his bankruptcy.

Seizing Assets vs. The Right to Work

Giuliani claimed on social media that the seizure of his checking account prevented him from earning a living. From a legal standpoint, this is a common misconception.

A creditor’s goal is to collect, not to stop the debtor’s productivity. In fact, creditors want a debtor to continue earning so there are future wages to garnish. Freezing a bank account is a standard legal remedy to satisfy a judgment; it does not legally bar a person from recording a podcast or pursuing new business ventures.

Dismissal Versus Settlement

The turning point in Giuliani’s case occurred when the Bankruptcy Court dismissed his case, citing his “recalcitrant” behavior and failure to disclose assets. This dismissal stripped him of court protection and led to a high-stakes standoff over his New York and Florida properties.

To resolve the ongoing litigation and prevent the immediate forced sale of his most prized possessions, including his Florida condominium and World Series rings, Giuliani finally reached a settlement agreement with Freeman and Moss in early 2025.

While the specific financial terms remain confidential, the agreement reportedly includes a permanent injunction preventing Giuliani from ever defaming the two women again.

The Professor’s Conclusion: Lessons for Every Debtor

The saga of Rudy Giuliani serves as a high-profile reminder that bankruptcy is a powerful tool, but only for the honest debtor. Whether you are facing a $148 million defamation judgment or a $15,000 credit card debt, the court demands absolute financial transparency.

Giuliani’s eventual settlement proves that even when a debt is likely “non-dischargeable” due to willful misconduct, the legal process eventually forces a resolution.

If you are navigating your own financial crisis, remember: the goal of bankruptcy is a “fresh start,” but that start is only possible when you approach the court with clean hands and a clear disclosure of your assets. As I’ve stated in my articles and YouTube videos, all assets must be disclosed on the bankruptcy petition, even if the assets are exempt.

When filing for bankruptcy, keep in mind the following:

• Bankruptcy Transparency: Failure to provide full financial disclosures can lead to a court-ordered dismissal, leaving your assets vulnerable to immediate seizure.
• Non-Dischargeable Debt: Under 11 U.S.C. § 523(a)(6), debts arising from “willful and malicious injury” typically cannot be wiped out in bankruptcy.
• The Automatic Stay is Temporary: Court protection only lasts as long as your case is active. Once dismissed, creditors can resume garnishments and bank freezes immediately.
• Settlement as a Solution: When a debt cannot be discharged, a negotiated settlement is often the only way to protect personal property from forced liquidation.

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. Paralegals and students who are buying single copies can do so via Amazon Books. To access my YouTube channel, click this link.

You can learn more about filing for bankruptcy and the bankruptcy petition via this link. Information on the bankruptcy court system, contact information for trustees, and your state’s exemptions can be found here. The federal bankruptcy exemptions are listed here. The latest version of the 341 Meeting of the Creditors can be found here.

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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.

Updated initially on May 7, 2025.