Helping a vulnerable single mother

Fromply

My mother was a foster carer, now retired. She (and I) are still in (distant) contact with some of her foster children, now grown up and continue to help them where we can. One of them, with special needs, low intelligence and vulnerable, a 27 year old single mother with 3 year old child who is not able to work and lives on disability benefits has recently been scammed into handing over gift cards to scammers who contacted her on Facebook over a number of months for over £1,700. This has left her with a large bank overdraft (over £1,000) and a £600 balance on her 39.9% APR "credit rebuild" credit card (with a £500 credit limit). This only came to light when I picked up on it through her credit reference file (which I monitor, with her support and knowledge, for her protection). It turns out that both her and her child were going hungry because they were unable to pay for food! We've arranged weekly food parcel deliveries for them from the local food bank, so that should no longer be an issue.

I don't have the full story (and it is difficult to get), I've asked her to share her recent bank statements with me but she is reluctant to do so because she is worried we will disapprove (and "moan") about where she is spending the money she has had (she sent me 3 months statements from March to May which showed the majority of payments to the scammers, but certain transactions were redacted). We have also filed a report with the police (Action Fraud) about the scam.

She says that she has spoken with the bank and they will be reducing her overdraft by £100 per month. I don't have any details about what has been agreed, what they are charging her or any other details, but she seems comfortable with this and no other alarm bells are ringing here.

The pressing concern is the expensive credit rebuild credit card. Her credit reference file shows 2 months of defaults (May and June) and balance of £570. The card was, we believe, at her old address - when she tried to change it when she moved a couple of years ago, she couldn't answer the security questions and eventually gave up (it wasn't a card she used). We wrote to the Credit Card company, explaining the situation openly and honestly (pretty much in line with the above) a couple of weeks ago, but we have received no response (we can understand that) but they have written to the mother instead (at her new, correct address). They have informed her that her account has been put into default in line with the 1974 Consumer Credit Act. They have given her a deadline of 23rd August to make a payment of £119.52 on an outstanding balance of £599.11 to "clear the arrears". They have not provided any statements or indication of what the breakdown on the card is between spending and charges. The lady in question does not have any idea how this breaks down.
My instinctive view is that it is unreasonable to just demand payment without providing any additional information on how the total is derived or what charges are still being made (are new charges stopped when the account is in default? If she clears the arrears, will it take the account out of default and open the door to charges being made again?). The bottom line, I'm not sure what advice to give - should I tell her to just make the repayments being demanded to clear the debt, or should I suggest that she negotiates lower monthly payments and a complete repayment plan for the total debt (as opposed to just clearing arrears). Can we argue that she doesn't have the mental capacity to enter into a contract and thus there's no validity to her contract with them and she is therefore not liable for any of the charges? Is there anything else I am missing/should think of?
In addition, they've send her a form to "add an authorised user" - presumably to give my mother authority to speak with them on her behalf. However the form/checks are a bit scary - it almost looks like they're wanting to add my mother as an additional cardholder (it doesn't specifically say that) - is there any risk that my mother can become liable for these debts if she returns that form?

sourcrates

Hi,

Difficult one for you, ok, so just to clarify, once an account defaults, that is it, the end, the relationship between you has irretrievibley broken down, and cannot be repaired, all charges stop, as does interest, the debt balance is effectivley frozen.

Can she afford the repayments ?

If she can`t, all that will happen is the card company will go through its series of collection letters with her, they may then either pass her account to a debt collector to manage, or they may assign it to a debt purchasing company instead.

Either way they will be open to an offer of payment that is affordable, so don`t worry about that.

As to the form above, its difficult to read the top section, but it looks to me like an authorised user form to be an additional cardholder, nothing to do with been able to speak on the cardholders behalf, although that would allow you to discuss the account.

The debt always remains in the name of the cardholder, it cannot be transfered or changed, the debt stays in the name of the individual who opened the account.

fatbelly

There is a line about the authorised user abiding by the 'terms and conditions of the account' - I wouldn't want to be filling that in.

She's a vulnerable person who is a victim of fraud - she should not be pushed by the bank to repay this. They should be pushed to write it off

Let them  decide what they are doing  with the account - what Sourcrates says will eventually happen.

In the meantime if she does have surplus income it would be best put into a fighting find account somewhere, not with this bank.

It doesn't sound like she will be paying off the overdraft either so let that one go down the same route as the card.

Bear in mind that the law of setoff allows a bank to dip into your account to repay any other debts with them, so to preserve her income she really needs a new bank account with  all income and essential direct debits going to the new account.

It sounds like the total owing to the bank is about the same as the fraud so for  the moment any communication from  the bank should just be met with the crime reference number. They may write this off without fuss but II wouldn't hold your breath on that.

Fromply

Thanks for responding.
I think it's good news if the relationship has "irretrievably broken down" - it's not good for her to have credit with such cards and is better if she cannot access them (for the future). It's good to hear that charges and interest are now frozen. How insistant do you feel we should be for a breakdown of how the debt were accrued and how it breaks down to spending/charges?
Can she afford the repayments? That's a difficult one to answer. As I said, for months she's been barely able to afford food (and has gone hungry), but at the same time she pays a ridiculous amount for mobile phones and Sky (there's no getting through to her on making "better" choices). The state give her good money, but she is incapable of managing it and where the state are failing her is giving her personal support (though that's not always easy). Her comprehension of the difference in value between £10 and £1,000 is limited
I appreciate the form is dificult to read (it's how it was sent to me - I don't live too local to her any more). I'm still not too sure whether to recommend my mother signs and returns the form or not. I'm not sure quite how much more we can do given the charges and fees are now frozen (which was the primary goal).

Fromply

Thanks @fatbelly
The fraud was just over £1,700 from 19 payments (on the 3 months statements I saw - there are definitely added amounts that i haven't seen, but I think I've seen the majority of it). The bank overdraft is £1,100 and the credit card is £600.
To be honest, i think the bank overdraft is largely covered. If she has arranged a £100 per month reduction to it, then it will be sorted within the year.
She doesn't really manage her money - she receives income weekly, fortnightly and 4 weekly - when money goes into her account, she goes out and spends it on what she needs (and probably what she doesn't need) until she can't get access to money any more, then she waits until the next money goes in. I wouldn't be comfortable with suggesting a new bank account and managing multiple accounts (there also needs to be an element of "tough love" with her too - just not too tough!). Having said all that, her direct debits don't tend to bounce in general (though obviously some of them are at the moment) - so I'm not quite sure how she manages that.
My general impression from what I know is that the bank have been reasonable with her, and they aren't the bad guys here.

elsien

If you are saying she doesn't have capacity to enter into such a contract, while capacity is time and decision specific you are potentially trying to get someone to say that she doesn't have capacity to manage her own money, and possibly enter into other contracts as well (as opposed to making unwise decisions which many of us do) then that has huge implications for all areas of her life. The presumption is that someone has capacity unless proved otherwise. 

Fromply

I have no doubts that she doesn't understand the implications of what she agrees to with the credit card company (or come to that, as you say, with other companies too) and there is no "meeting of minds" when she agrees the contract.
Because they had an old address for her, if it hadn't shown up to me on her credit report, she would not be aware of or dealing with this credit card debt at all, in spite of having spent on the credit card (I presume, but don't know for sure, to get food) when she had no access to money elsewhere. There was no connection for her that she was spending this money and had to then pay it back.
Her decision making goes way beyond "making unwise decisions" as the rest of us do from time to time. I don't know how far I should push this line of thought, or indeed, as you suggest, possible implications on other aspects of her life.

elsien

Is she amenable to accepting support from services?
It seems to me from what you have said that she could potentially have needs that may qualify her for help under the Care Act. She could request an assessment if she feels this would be of benefit to her but she would need to want to engage with the process. Which given her concerns about being judged she may not be willing to do. 
I do have to ask if there are any other concerns about her parenting/lifestyle  which should be referred to the local authority as a safeguarding? Letting her child go hungry, whatever the reason, shows someone who may be struggling in more area than one. 

KittyHawk

Just as an aside, I think you're super to help her out as you are. I wish every vulnerable person duped into parting with cash by these vermin, had help like this. 

Fromply

She is known to Social Services (she grew up in care). In adult life, she has received intermittent additional support. Sometimes she is amenable to it, sometimes she isn't. She is actually quite a difficult person to help and when she does receive help, she eventually gets bored of it and pushes it away. The council are clearly underresouced and I appreciate the difficulty for them.
It is recognised and accepted that she is not capable of working, and as such she receives long term disability benefits and social housing.
When her child was born, we made sure that Social Services were informed and they were fully aware and assessed things in quite some depth. They monitored things early and then decided to allow her to keep the child. We were surprised by this decision. To be fair we were also equally surprised that she does seem to have been managing things ok and relatively well.
She definitely cares immensly for her daughter. We believe she went more hungry than her daughter did. Not being local to the area any more it's difficult to be certain of much though.
The baby's father is a problem for her too. He lives very close to her, with his new girlfriend and his new child. They are openly aggressive with her. (she is trying to move). There is currently a custody/access court case between her and the father which is coming to a head. She seems to have little support in this (and no solicitor) but it sounds like it is going well for her (there are issues with the father, including, for example, a letter received from the local police about dangers from him in relation to child pornography!) Again though - we're only hearing one side of this, so it's difficult to be too confident. Bottom line - we're too far removed now to know what would be best for the child, but the authorities are involved and we have to trust that they will take the right course of action.

Fromply

Thanks @KittyHawk
Unfortunately, in relation to this scam, it's too late. The scammers probably aren't even in the UK (The police have recorded it, but are not investigating it).
I haven't seen her in about 5 years - but manage her utilities for her (to make sure she's always on a decent contract and is giving regular meter readings). I track her credit file (for situations exactly like this!). Beyond that, there's not much I can do to help and that gets frustrating. Her income is good (I would go as far as to say, generous) but it's annoying that this doesn't translate into the kind of comfort she should be able to have because of a constant stream of people (mainly boyfriends) taking advantage of her.