Legal Question in Bankruptcy in California

You are definitely in a difficult position with respect to your representations to MediCal. When filing bankruptcy, you have to, under penalty of perjury, show your income for the past six months, and have to indicate on your schedules what your bank balances are at the time that you file. Thanks to Congress and the credit card industry, you now have to list all income you received over the past six months with a pretty good degree of detail. As such, you will either have to list the babysitting income, or face the possibility of all of the nasty consequences that are attendant with committing perjury in a US Bankruptcy Court proceeding (case dismissal, denial of discharge, criminal prosecution, up to $500,000 in fines, etc...). I would frankly err on the side of not intentionally committing perjury in the Bankruptcy proceeding, and roll the dice on the MediCal issue. You are in a "damned-if-you-do, damned-if-you-don't" situation, in that if you lie in the Bankruptcy Court about your income, there is a very good likelihood of experiencing some very nasty consequences. You may have already committed perjury with respect to the representations made to MediCal about your income, so if you must file, you need to be 100% accurate about the information you file therein.

Will you get caught by MediCal? It is definitely a possibility. Does the Bankruptcy Court report to Medical? I can't answer that question, as I do not know, but I do suspect that a smart Trustee will question the fact that you are receiving disability and earning money under the table, and might report that. You should definitely meet with one or more very experienced attorneys in your area to see what the local practice is, what the local trustees and US Trustee may or may not do. Finally, if you are receiving virtually no income except MediCal/disability, then you may be what is often referred to as "judgment proof" which means even if your creditors sue you and get a judgment, you have so little that they can take, they may not bother. Don't rely upon that - in theory its a great idea, but in practice, creditors will beat a dead horse trying to get money.

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