If my mom lets her house be foreclosed and leaves the country, can I get in trouble?

February 25, 2010 3:49 PM

If my mom puts her money in my bank account, lets her house be foreclosed and leaves the country, can I get in trouble?

My mom has decided she wants to leave the states and move to europe permanently (she has both US and UK citizenship). Her house has been up for sale for a while but there's no sign of any takers. Being somewhat impulsive, she decided to pick a date and leave, whether her house sold or not.

So now that the date is almost here, she wants me to open a checking account in my name. Then she will write me a check for a bunch of money, I'll give her my debit card and she'll use that in foreign ATMs until she can manage to open a foreign account, which apparently takes a while. Plus she's not sure where she'll be settling.

She doesn't want to consider other options and she's stressed out, so I don't feel like I have much of a choice if I want to keep up good relations. My question is: what kind of trouble can I get into for doing this, if any? Could my credit get hurt or something like that?

posted by anonymous to law & government (33 answers total)

This sounds like a disaster waiting to happen.

She could easily open an account in her OWN name and use the debit card from that, leaving you out of the picture entirely.

Your own credit could certainly be hurt if she runs up a massive overdraft and refuses to pay it back, which sounds like the sort of "impulsive" thing she could do.
posted by Solomon at 3:52 PM on February 25, 2010 [9 favorites]

Don't do it. Banks aren't stupid, they're figure this out. They'll get records from her bank showing the money coming out of checking and they'll trace where it went.
posted by Oktober at 3:52 PM on February 25, 2010

The words "fraud" and "aiding and abetting" spring to mind.

Talk to a real estate agent. Tell him/her that you'll up the commission for the sale. Hell, some real estate agents might even buy the house and attempt to flip it themselves.
posted by Cool Papa Bell at 3:55 PM on February 25, 2010

There are companies out there (HomeVestors, the We Buy Ugly Houses people spring to mind, although please don't take this as an endorsement) that will buy your house for less than market rate, in cash. Maybe that's a good alternative to wire fraud?
posted by Oktober at 3:57 PM on February 25, 2010

In addition to trouble, you might wan tot think about other ways this could affect you. Anything wealth-based that you want to interact with while you are doing this [applying for loans, getting a mortgage, applying for certain kinds of benefits] this money will count as yours even though it's not yours.

Your mom can get her own bank account. If they are going to go after her to the extent that she can't have a bank account, they will be motivated to figure this out. More specifically, she has a debit card in your name that she's using which makes you liable for fraud, overdrafts or hell she could just lose the damned thing and then you'd have to explain it and straighten it out. This could lead to problems for your credit score for years. Years.

This is, as I'm sure you know, a terrible idea.
posted by jessamyn at 4:02 PM on February 25, 2010 [4 favorites]

Then she will write me a check for a bunch of money

So she has money? Or she's going to write you a fradulent check? I'm not even clear on that part. Do YOU even know?
posted by peep at 4:03 PM on February 25, 2010 [3 favorites]

Got ahead of myself. Anyway, if she really does have a lot of cash / a checking account (the one where she'd be writing the check from?), it just seems like there are so many better options.

How would she feel about using a [her own!] credit card abroad and giving you power of attorney so you could write checks out of HER account to pay the bills? NOT that I'm suggesting that, but if you think she would have a problem with that, then she should understand you having a problem with her suggestion.
posted by peep at 4:06 PM on February 25, 2010

Your mom is trying to use you to hide her assets. Would you let, say, your best friend propose this scenario and carry it out with you? Your coworker? Anyone else?

Don't let her do it either.
posted by fairytale of los angeles at 4:08 PM on February 25, 2010 [3 favorites]

This is an absolutely terrible idea on so many levels that I'm having trouble coming up with what order to list them in, so I'll just say: Stop thinking about this, stop listing pros and cons, stop considering it, just stop. No good can come of this.
posted by Justinian at 4:18 PM on February 25, 2010 [2 favorites]

If she is extremely keen to transport money with her, there is always travellers checks. That way you are not involved in some sort of dodgy behavior, and she can survive in another country with her cash.
posted by a womble is an active kind of sloth at 4:28 PM on February 25, 2010 [4 favorites]

Extending womble's answer, for people who have AAA memberships, traveler's checks are free. Whether she ends up doing this or not, it might be the case that advocating this position ("your money is safer if you have it -- if I have it, they'll find it") could get you out of this very bad situation without making the conflict about what risks you are and are not willing to take for your mother.
posted by Valet at 4:38 PM on February 25, 2010

I believe this is what's known as a "fraudulent transfer". The exact legal ramifications depend on your jurisdiction, which you didn't mention--in some states you could go to jail. (Generally only for a few months, but still.) It many states the bank could simply seize the money from you. I suggest ask you to talk to a lawyer but any lawyer you talked to would say "don't do it!" so I won't bother to suggest it.
posted by phoenixy at 4:40 PM on February 25, 2010 [1 favorite]

What is her reasoning for wanting to do this? From whom is she hiding the money?

She'd have to look at the details of her mortgage, but there is probably a better option for giving up on the house than just disappearing. Like, for example, if she wants to obtain credit at any point in the future. I don't know how exactly it works, but I really don't think a European lender is just going to say "oh, just came back? no probs" and issue credit. They are probably going to make some calls. I'm almost sure the borrower's liability in a home mortgage is simply the property itself, unless there is some other bad faith going on. The bank may balk if it is worth less than the loan, but that's why there is a contract.

And yes, if she is trying to hide the money, using checks really isn't the way to go about it. If she owes someone money, they can easily go back and see where it went.

Finally, no, don't do this. It sounds fraught with peril- seek professional advice of course, but there is something out there about comingling of assets. Possibly urban legend, but basically, if you both jointly own a checking account, you could both be on the hook for the others' debts. But again, no clue how it works. Just investigate and see.
posted by gjc at 4:55 PM on February 25, 2010

Her argument about opening foreign accounts doesn't hold up. I've opened four accounts on foreign soil (while living abroad) and it's never taken more than 30 minutes. They will likely want a cash deposit, so she'll need to carry some of her money with her (check customs regulations to see how much she can carry duty-free).

Another question regards if she's filing bankruptcy in the US or not. If she is, some level of her cash is protected under bankruptcy law (I'm not a lawyer, but a lawyer can provide details).

She could also look at donating the house to a charity (since at the moment she's merely lazily donating it to the bank).
posted by Galen at 4:59 PM on February 25, 2010

Another issue: if it's a substantial amount of money it'll be considered a taxable gift. That gives you a choice - pay taxes on it, thus drawing attention to the transaction, or risk a substantial penalty if you're ever investigated for this or any other reason.

So yeah, you could get in trouble and it'll be a lot worse than just your credit score.

You feel like your mom is manipulating you into doing this (won't consider other options, health of your relationship hinges on it). It's difficult to draw the line with people like that, but it'll be a lot easier to do it now than it would be later if things go poorly with her living out of a checking account that's in your name.
posted by rhiannon at 5:00 PM on February 25, 2010

If she wants to leave with her money, she could just get cash. Amounts over $10,000 subject to disclosure to US Customs when you leave the US and enter the UK. Sadly, the damn terrorist mean that hauling a bag with a bunch of cash in it would be noticed at the security checkpoint.

What nacrotraficantes and other money launders do these days is put the cash in prepaid Visa/MC/Amex.. The criminals ruined that as well so now the issues are government look for amounts that come close to $10K and are flagged.

In other words, your mom is trying to have you help her with the same problems drug cartels and terrorists have getting their money out of the US. If mom's not caught, but your accounts are flagged for weird activity, the US government will presume you're a drug dealer or terrorist and you'll need to spend lots of money to clear it up. I'm sure they'd have a good laugh down at the FBI when you tell them you're not a bad person, it is just your mom's house wouldn't sell.

If my mother came to me with a similar request, I'd tell her I'd help her with a legal remedy to the situation.
posted by birdherder at 5:04 PM on February 25, 2010 [1 favorite]

what I always tell my young nieces and nephews is: if it sounds like a great plot for a movie or a book, you probably shouldn't do it. great fiction = great peril = nerve-wracking and unhappy life.
posted by toodleydoodley at 5:10 PM on February 25, 2010 [8 favorites]

I'd consider what gjc said about the ramifications of just walking away from the property. Talk to a real estate lawyer about whether her state allows for a so-called "strategic default" where she forfeits the property and is shielded from any further legal liability. (Downside is that the bank may be too overloaded with properties to bother foreclosing right away, and there's no way to force them.) That seems like a much saner option than trying to shield her assets for her.
posted by serathen at 5:17 PM on February 25, 2010

I don't see where you benefit in this situation - you incur a great deal of risk, and for what?

If your mother has decided to skip the country and take all of her liquid assets with her, there's honestly not a lot that her creditors can do to her. There are many ways for her to take her assets out of the country and very few ways (providing she's careful) for creditors to get their hands on them once they're gone.

The point here, however, is that the course of action she has decided upon is risky for both of you. If she wants to hide her assets, writing you a check is one of the worst ways to go about it. This kind of stuff happens all of the time - transfers to spouses and friends are quite common in civil cases - and I guarantee you that lawyers and accountants are going to know exactly where to look. It's incredibly simple to trace checks, and honestly, I would put your chances of getting caught above 90% if I had to assign an arbitrary number to them. Do you want your assets frozen? Do you want threatening letters from $500 an hour attorneys? Do you want to spend hours of your time and thousands of dollars in legal fees because of her actions? You may even go to prison for fraudulent transfers like this (IANAL, however, so take my advice with a grain of salt). You need to think about these things, and think about them seriously.

I'm sure you care about your mother, but from my perspective, this arrangement is just not worth it for you.
posted by Despondent_Monkey at 5:19 PM on February 25, 2010

if it's a substantial amount of money it'll be considered a taxable gift. That gives you a choice - pay taxes on it, thus drawing attention to the transaction, or risk a substantial penalty if you're ever investigated for this or any other reason.

Sort of. The tax liability for gifts is on the giver, not on the receiver, so the poster would not owe taxes on it. It's also unlikely that there would be tax liability unless the amount is truly huge (like over a million dollars). But it's possible that the gift would require the poster's mother to file certain tax forms, which does pose the problem that the poster's mother would have to draw attention to the transaction or risk getting in trouble for not filing the form.
posted by phoenixy at 5:23 PM on February 25, 2010

You mom moving back to Europe sounds like a good idea because health care is available in Europe. You committing wire fraud along the way sounds like one very bad idea.

Your mom is incorrect that bank accounts are difficult to open in Europe. Yes, you'll find opening a bank account in the U.K. can prove tricky, but France, Germany, etc. are all fairly easy. Yes, banks prefer that people have a job with direct deposit, but they'll surely open the account if they're seeing a fat wire transfer coming form the U.S.

Is her mortgage underwater? If so, she should find out about defaulting. If not, you might even want to take her house for yourself. Figure it out.
posted by jeffburdges at 5:27 PM on February 25, 2010 [1 favorite]

One more thing that I forgot to add to my previous post:

Some states have what's called a "homestead exemption" in place, which means that a certain amount of equity is protected from creditors in bankruptcy. This depends on your mother's state of residence, and once again, IANAL, so you'll need to contact an attorney to discuss this in detail.

It is very possible that your mother could declare bankruptcy and keep her house legally. You might want to consider this option and let your mother know about it before she acts rashly.
posted by Despondent_Monkey at 5:28 PM on February 25, 2010

My advice:
1. Do not do this.
2. Consult a lawyer to make sure you are protected in the event your mom tries to involve you in this in any way.
posted by sallybrown at 5:40 PM on February 25, 2010

I would agree to do this when I returned from Cleveland. When she asks when you are going to Cleveland, you say, "I ain't never going to Cleveland."

Is there anyone else, a sibling or trusted relative that can talk some sense into this woman?
posted by JohnnyGunn at 5:50 PM on February 25, 2010 [1 favorite]

Fraudulent Conveyance:

A fraudulent conveyance, or fraudulent transfer, is a civil cause of action. It arises in debtor/creditor relations, particularly with reference to insolvent debtors. The cause of action is typically brought by creditors or by bankruptcy trustees. The typical fact situation involves a debtor who as part of an asset protection scheme donates his assets, usually to an "insider", and leaves himself nothing to pay his creditors... In a successful suit, the plaintiff is entitled to recover the property transferred or its value from the transferee who has received a gift of the debtor's assets.
posted by 2bucksplus at 6:22 PM on February 25, 2010 [2 favorites]

This is a terrible idea.

Many travel agents offer assistance in obtaining a UK bank account from abroad. Particularly if she's already a citizen, there's no reason she can't get an account of her own set up before she travels.
posted by embrangled at 6:28 PM on February 25, 2010 [1 favorite]

This is not as clear cut as the chorus would suggest. Is your mom the only one on the loan? How much does she owe on the house? How much is it realistically worth? Is she willing to give you (or someone else) power of attorney to sell the house in her absence?

Read this and call a title company and ask to speak to an attorney. It may take a few calls, but you'll find somebody who will give you a few minutes of their time to explain your options.
posted by ajr at 7:00 PM on February 25, 2010

Could my credit get hurt or something like that?

Someone who makes impulsive, foolish, and legally dubious (or outright illegal) choices with regard to her life and money would be using your bank account which is in your name only. Yes, your credit could get hurt.

She is either woefully uninformed about her options or is actively lying to you. Whichever it is, you put yourself at significant risk if you go along with her scheme.
posted by Meg_Murry at 7:18 PM on February 25, 2010

What, exactly, is the upside of this scenario? I don't understand what your mom gains from this.
posted by bitdamaged at 7:50 PM on February 25, 2010 [1 favorite]

I don't feel like I have much of a choice if I want to keep up good relations.

You need to reexamine very carefully your relationship with your mother. When she tries to use her "stress" and "impulsiveness" to manipulate you or use you, you need to stand up for yourself.
posted by fritley at 8:01 PM on February 25, 2010 [4 favorites]

I was able to open bank accounts in London and Amsterdam, and I was only there on visas, being paid by American companies; it was just easier for me to get paid via wire transfer and have access to local currency. I had no trouble explaining it, and the accounts took just a few minutes to set up. (They were equally easy to close when it was time to go home.)

So, I don't know why she thinks it takes months to set up an account. If an American can do it, surely a citizen should have no trouble.

I know you've seen this, but just to reiterate, doing what she wants is bad juju, and I would avoid it.
posted by dejah420 at 9:33 PM on February 25, 2010 [1 favorite]

I also don't see what your mom gains from this. First of all, there is almost certainly a better way to forfeit the house than simply leaving the country. Depending on the state and the details of the mortgage, possibly even ways that leave her not owing money on the mortgage. Second, even if she wants to forget it and walk away, it's not like they can just take the money from her bank account. There are many steps between owing money and having assets seized, starting with foreclosure which itself could take months. If she is a UK citizen she will be able to bypass almost all the difficulties Americans usually have opening bank accounts there. Fly over, open an account, and transfer the money.
posted by Nothing at 9:42 PM on February 25, 2010 [2 favorites]

Former fraud lawyer here. Don't fucking do this. You may not get caught but if you do the consequences will be catastrophic.
posted by dmt at 3:21 AM on February 26, 2010 [1 favorite]