0032 - Debt Related Queston: Bankruptcy Question # 0032
I have been working for my Dad for cash. Because I don’t ‘technically’ have any income I haven’t been paying my taxes. I have a student line of credit, but I only take a few classes. Over the last year I’ve been getting further and further into debt, and I don’t think I’ll be able to pay it off. If I filed for bankruptcy or tried to make a proposal, would my employment history be a problem? Would I have to pay taxes on money coming from my Dad?
When you file a bankruptcy, or a proposal to creditors, you are required to disclose all assets, all income, and all debts. Further, there is a requirement to bring all tax returns up to date. Your “cash” income would be up for exploration by the trustee, and maybe the tax office. Technically, income is income and you are required to pay tax (the tax office can provide more details on this requirement). There is more to this situation though; how are you paying living expenses? An analysis of true income and expenses needs to be done by a trustee or credit counselor. From there a workable budget, and options for settlement or bankruptcy can be done.