Having parents purchase "rental home" then moving in.

[tobee43]

well that's scary enough for even ME!! when put in those words! i'm waddling away!

[goon]

If he is signing a lease to pay a similar amount of money ($1500) for a similar dwelling (this wasn't confirmed that I saw) then it wouldn't truly be an artificially inflated payment. If he stayed in his current residence that he is paying $1500 for it wouldn't be an artificially inflated payment (or I am assuming the trustee wouldn't have allowed it).

That being said if his land lord wants to put a portion of the "within normal bounds" rent payment into a savings account and at a later date feels like giving that money to him as a gift, what is wrong with that.

Now if the price was truly inflated, for example if he tried to modify his plan to make his rent payment $2000 for a similar dwelling, then I would agree that he would be defrauding the creditors. I understand that there is an intent element, but if he is paying a reasonable allowed amount I don't see the problem, he just switched to a new rental with the same monthly rent cost.

Let's look at it another way, if I were to work out a deal where I could work at home a couple days a week and save money compared to my budgeted gas costs, would I be "defrauding the creditors" if I did not send that saved money to the trustee?

[chp13]

Haha, you guys. Well I was only asking for advise, I hadn't gone forward with it. Well she got the loan and based on the advise here I'm going to pay exactly what the mortage will be. Based on the house were looking at the mortage will be around $1450.

Thnaks for all the advise!

[Pandora]

If he is signing a lease to pay a similar amount of money ($1500) for a similar dwelling (this wasn't confirmed that I saw) then it wouldn't truly be an artificially inflated payment. ..

Now if the price was truly inflated, for example if he tried to modify his plan to make his rent payment $2000 for a similar dwelling, then I would agree that he would be defrauding the creditors.

Did you miss this part of the post?

I will be saving $500 a month. I'll still make a rental payment of 1500 as stated on my ch 13 paper work but my mother will hold the difference in savings and return it to me. Like a savings account, It's a win win situation right?


It would be fraud because he is overinflating the actual cost of rent in order to take that money away from creditors and having it returned to him afterwards by his mother.

That is fraud, plain and simple.

And no, its not like gas cost / telecommuting - apples and oranges.

[tobee43]

The pad is going great. Bought me a new top-hat, cane, and tux, ready for the rainy season at the lily pad.

LOL!! ah i missed that LOVE the top hat, can you dance now?

[justbroke]

Yes, it was mentioned earlier by HHM and myself that the rental terms and lease agreement will need to be above water and not contain any questionable terms... such as a kick-back.

[Pandora]

Yes, it was mentioned earlier by HHM and myself that the rental terms and lease agreement will need to be above water and not contain any questionable terms... such as a kick-back.

Hiya JB

Question: how does the OP pull this entire thing off w/out the trustee considering it being an "insider" type of issue? There is no rental payment history established to his mother, and who's to say that, while the OP may state he's paying the full mortgage amount as rent - that it's merely an "on paper" type of scenario?? (no disrespect to OP, of course...but....it does raise eyebrows)

At arms length should come into play..... or does this not count in that area?

[tobee43]

i know of a case an open asset 7, not a 13, where the client's mother obtained the mortgage and the house is in her name not his. the trustee's office has an extemely close eye on this particular case as it has assigned special council to collect a rather large receivabe the client was owned and there are numerous IRS issues...back to the point.

interesting fact here is that she, the mother cannot claim even the taxes and interest on the loan as she cannot back up the payments with any documents. in fact the client takes the tax deduction which i found remarkable because of the fact that the 1098 is issued under the mother's ss number. this situation was run past numerous atty's, included tax attys, estate atty, bk attys and this particular trustee's office.

my next question was ok then is the mother claiming rental income. no, and she does not have to, if this is her home and her family member is living there and paying and doing all the upkeep and there is proof that the checks are going directly to the mortgage lender and NOT the mother then there is no rental income as such. confusing, absolutely, but this case i know well (i'm doing some side work on it for the past 5-6 years). talk about complex issues well this was is full of them.

now, another interesting point on this situation. the IRS comes to the client claiming this is YOUR house and you have sell it and pay us any proceeds, well that didn't work out well, since the mortgage, deed and title are in the mother's name. very interesting situation and there are years for this client to straighten out their life if ever.