Elderly person's debt

Treehoger1

Elderly person has a account with overdraft, which is constantly in a massive overdraft paying around £400 interest per month. There is another account where pensions and benefits go in, which is also using overdraft. Power of attorney is in place, and there were attempts to sort it out, interest frozen for awhile with some arrangement to pay in place. But after awhile (I believe after over the overdraft amount was settled), bank would put standard terms back on it.

Account owner has very low disposable income, but if the interest on the overdraft account was frozen, and only small amount paid to tis bank, this would help a lot.

The problem is, that person has no ID, so will not be able to open account with different bank, so that this account can be defaulted.

Person is home owner, with small mortgage, home bound with carers coming in.

Are there any options that could be considered?

Treehoger1

Thank you, so did you not have to open another bank account to receive pensions? In our situation the person is a home owner, so this may be slightly different?

RAS

Hi, presumably this person is on the electoral register? Evidence like Council Tax paid over the years? And has bills going out in their name? Do they have a bus pass?

Do they currently have any debts with the Co-op or Coventry? As their basic bank account may be opened with similar AML documents.

Assuming they aren't a current client, I'd suggest going in and asking at the counter what evidence is required to meet their requirements. Generally they have a more inclusive attitude that doesn't require a passport or driving licence. They may even accept statements from the O/D accounts.

A basic account does not permit the client to go overdrawn however and they may terminate if that happens. The opening appointment will probably have to be attended by the client and you'd register the POA at the same time.

Keep_pedalling

If the debt was to disappear would their income meet their expenditure? If not the problem is only going to build up again and you really should be looking at a something like equity release to clear the debt get rid of the mortgage and make life more comfortable for the donor.

Regarding a new bank account, Is it not possible for attorney to open a basic bank account on behalf of the donor?

Is the person getting all the benefits they are entitled to? At minimum they should be getting attendance allowance.

Treehoger1

Hello, thank you for your responses so far.

RAS, yes, I am pretty sure they are on electoral register, council tax and some other bills in their name. But not sure about bus pass. Thank you for suggesting these two banks. Problem is, they won't be able to attend a visit. They are house bound with carers helping with majority of help (person is about 90 and in poor health)

Keep_pedalling, yes, if this debt disappeared, the situation would be stable and manageable. I am not sure if I have great understanding of equity release, but I thought that would increase mortgage, unless you are referring to some firms that pay the owner the equity and letting them live in the house until death. The firm the takes ownership of the house? It would be good if attorney was able to open basic bank account, will check this. I think person gets all the benefits already.

Keep_pedalling

Equity release is like a mortgage but with no payments and the loan company gets their money back plus built up interest when the house is sold after the death of the owner or if they move into permanent care. There is no real downside for the owner it just reduces the value of their estate for the beneficiaries.

Treehoger1

Thank you Keep_pedalling, do you know of any good companies for this, or is it high street banks?

Keep_pedalling

I don’t have any personal experience and it may not be the best option in this case. I think the next step for the attorney is to talk to one of the dept charities (such as Stepchange) for advice on the overdrafts.

BikingBud

The starting point should be to verify income v outgoings to ensure that the cause is the interest and not other spending.

An invoked LPA would absolutely be acting in the best interests of the donor to address and resolve this but clarity of understanding should be achieved as part of that process.

Equity release might relieve the debt but is the POA holder also a potential beneficiary and might resist what is the immediate best course of action for the donor?

sourcrates

Or you can first write to the bank, ask them to stop charging interest on the account where the benefits are paid, explain the situation, they are a vulnerable person etc, 90 years old, and not in good health, once a credit balance exits, remove the OD facility, so it cannot go overdrawn, and continue using the account.

As for the account paying £400 per month in interest, do the same thing, write to bank and explain situation, ask them to write off the debt due to customers age, circumstances and ill health etc.

You cannot expect a 90 year old, who is perhaps not of sound mind to understand equity release, do the above, its a much more common sense approach, that`s easier and simpler, and quite likely to succeed.

elsien

I would like to clarify whether the older person still has capacity around bigger financial decisions? If they do, and if the power of attorney allows, you can only still take action on their behalf with their informed consent.

Which I’m sure you know, but it is in a response to an earlier comment with regards to best interests which only applies if the person has lost capacity .