Relative who is terrible with money

freeasabird

I discovered by accident that my mother took out a loan for £2000 with an interest rate of between 16% to 20% (she won’t show me the paperwork so I don’t have accurate figures) from her bank. My mother, who is a pensioner, has agreed to pay the loan off over two years at £100 a month. Although she can afford to pay off the loan, I can’t make her understand that there’s no point setting up savings plans when she’s paying an extortionate amount of interest on this loan.

To pay off a debt demanded by the council for repairs to my mother’s block of flats, I took out a mortgage on the property which I now jointly own with my mother. Although we are disputing the amount, we will have to pay a substantial amount of money for the major works.

Although my mother doesn’t pay the mortgage, I understand that I am financially tied to her. My concern is that if my mother gets into financial trouble, will I be liable to pay off her debts? I know £2000 isn’t a large amount of money but I am worried that she hasn’t told me the truth about her financial situation. Even if it’s a personal unsecured loan, could bailiffs, for example, come to the house and take my property? Any information will be much appreciated, this is really worrying me especially as my hope, when the credit crunch is over, is to sell the flat and move to a house in a chepar areas where we can have more space. Under the circumstances, I don't know if I can afford to become even more financially tied to my mother.

MrsTinks

No you are not liable to her debt - however it CAN affect YOUR credit rating because you have joint financial products - in this case the mortgage. Should bailiffs come to the property they can only remove your mothers property - but proving what is mine and thine could be interesting and the bailiffs might remove something of yours which you then have to fight them to recover.
Before bailiffs get involved things have to get pretty serious - they come either for council tax, fines or unpaid CCJs. They can't come for unsecured debt (a CCJ changes this so if there is a CCJ involved you need to make sure she sticks to the payment terms).
There is no "more or less" financially tied - either you are financially linked or you are not. Just remember only debt with your name on it (either sole or joint) can be made your responcibility.

freeasabird

MrsTine wrote: »

No you are not liable to her debt - however it CAN affect YOUR credit rating because you have joint financial products - in this case the mortgage. Should bailiffs come to the property they can only remove your mothers property - but proving what is mine and thine could be interesting and the bailiffs might remove something of yours which you then have to fight them to recover.
Before bailiffs get involved things have to get pretty serious - they come either for council tax, fines or unpaid CCJs. They can't come for unsecured debt (a CCJ changes this so if there is a CCJ involved you need to make sure she sticks to the payment terms).
There is no "more or less" financially tied - either you are financially linked or you are not. Just remember only debt with your name on it (either sole or joint) can be made your responcibility.

I should have thought about this more carefully before I entered into any financial arrangements with my mother but what's done is done. Thank you MrsTine, you've put my mind at rest.

freeasabird

The council has sent a final demand for major works to my mother's blocks of flats. We are hoping to go to a tribunal but it looks as if we may have to pay perhaps up to £40,000. I've taken out a mortgage to cover this but I have some concerns about my mother's unwillingness to deal properly with financial matters.

My mother doesn't want to sell the flat so I have no guarantee that this situation will not occurr again. She didn't tell me about an outstanding loan (see earliers emails above).

I still have the oppportunity to give back the mortgage money and let the council take the money that's owed when the property is sold or more realistically when my mother dies. I believe interest will be taken into account so there may not be much money left after the flat is sold and the council are paid.

She acts as if she is the sole occupier of the property and doesn't understand that I now jointly own the property. What can I do to ensure that I am not financially burned by her irresponsible attitutude to money?

arthur_dent_2

I am sorry but I don't understand how £2000 has just jumped to £40,000. If it is a block of flats and the cost is per flat then that is a huge repair bill.

MrsTinks

it hasn't just jumped - she mentioned the mortgage in her original post arthur.
The £2000 was a loan she found out her mother had taken out - that is a seperate thing.
OP - get out of the mortgage if you can - otherwise you need to point out to your mum that the two of you are now joint owners of this flat - that means if she messes up she's taking you down with her!