Help! How can I help my DM to get out of being a guarantor on a loan?

[TealAndTurquoise]

I've just found out that my aunt persuaded my DM to act as a guarantor on a loan several months ago. The loan is for £4,000 and repayments are £158 a month over 5 years so you end up paying back £9,500!

I've been furious ever since I found out. I'm angry with my mum for agreeing and angry with my aunt for asking in the first place. Even worse, she persuaded my mum to keep it a secret from me and my DSis. DM said she said no several times but my aunt kept on at her and wore her down by promising faithfully to keep up with the repayments.

Rather predictably, my aunt has now missed 2 payments. The loan company took July's payment out of DM's bank account and has tried to take August's but were unsuccessful as DM didn't have enough money in there. They're now really hassling her by phone and text message.

A bit of background - my aunt has always been terrible with money. She's always behind with bills, spends money she doesn't have on designer handbags and tat from QVC, goes on several holidays abroad a year and spends a lot on socialising. She works part time and sometimes earns extra doing overtime. She owes me several hundred pounds from years ago and I let it go as she's family and I didn't want to fall out with her but I vowed never to give her money again.

My DM is a retired widow and my parents worked hard and saved so she could have a comfortable retirement. She's certainly not loaded and lives very frugally. I can't remember the last time she bought something nice for herself or went on holiday. She is very kind and will help people when she can. She's extremely naive and always thinks the best of people. She's lent money to people before and was not paid back. It's well known in the family that DM is a soft touch and that if you ask enough you'll eventually get what you want from her.

I really feel like my aunt has massively taken advantage and it has taken all my willpower not to call her and give her a piece of my mind since I found out. What can I do to help my DM get out of being a guarantor? Has anyone ever been in the same situation?

I also think you should consider blowing the lid on this so everyone in your family knows about it. Keeping quiet only protects those who take advantage of others. Your poor mum has done nothing wrong and your cousins have a right to know what their mum did.
This^^!! I completely agree with what @Nikori has said. Hopefully your cousins can then shame your aunt into doing the right thing. And I'd do so every single time your mother lets herself be taken advantage of like this.

Hopefully your mother will learn also to protect herself a bit too. Coming to you complaining after the event but tying your hands on dealing with the situation is not only frustrating and only helps the people duping her.

Your dm would need to agree to you having power of attorney.
Yes to this. My brother and I have POA for my elderly mother for if/when the time comes that we may need it.
Here's a link to read up on it.
https://www.gov.uk/power-of-attorney/register

Hope you can sort this out OP: but your mother needs to take responsibility for her actions also, or she'll keep ending up in this position. Good luck! 🌹

This is such a sad situation. Unfortunately, your mum really fucked up in signing for this loan.

My course of action would be to go after your aunt with guns fucking blazing. Fuck her and don't give a shit about any "happy families" bullshit. I would every person who will listen know what she's done to your mother.

Is it possible to repay the loan in full now so that it doesn't accrue interest? If so, your mum should do that and then try and reclaim the money from your aunt.

If I were you I'd be very clear and direct with your aunt and also contact your cousins. You say you are close to them so hopefully you can have an honest conversation with them.

Your aunt has behaved appallingly but your mother is an adult with the right to refuse. I get that your aunt pressurised your mum but the loan company isn't going to care about that.

I would ignore your mother and go round her house with your sister. Really tell her off and tell her every time she misses a payment you ll go round there. That should make her think twice about non payment.

Stepchange or perhaps citizens advice for some more information and help? If nothing else it might help to lower the debt burden as what independent advice did the debt company require before your mother signed up?

Is it possible to repay the loan in full now so that it doesn't accrue interest? If so, your mum should do that and then try and reclaim the money from your aunt.

If your mum has the money somewhere, this could be the best solution.

Negotiate full repayment of the loan and see if the interest paid could be reduced.

THEN set about your aunt with all guns blazing.

Tell anyone who'll listen what a cowbag she is, chase after her through the courts, the works.

If you don't make this known, your aunt could try this crap (and possibly succeed) again.

It has to be made known that this bitch has burnt her bridges with your side of the family and she can't approach your mother again.

*The aunt has done nothing wrong. She asked and the mother said yes.

It's the DM who is at fault here because she agreed to a debt which she is now unable to repay.*

You joking???

I'd say DM has been massively naive and foolish and is indeed liable for the money but
" the aunt has done nothing wrong". Well OP should just let it go then ....

Aunt is coercive and took massive advantage of her sister. And tried to keep it secret. And defaulted. And has left her with a massive debt.

As with her debt to you OP it is the secrecy which is enabling this pattern of behaviour. She needs to be called out on this. It is a huge amount of money which your DM is now liable for. I'd be furious with her. She needs to make those payments. She would have more incentive if she knew others were onto her. She knows she can flannel your DM.

It sounds like your aunt is all about keeping up appearances. Is your aunt someone who would respond to the threat of bailiffs at the door, public discussions on the doorstep of what of her posessions can be sold. All done loud enough for the neighbours to hear.

I'd be aiming for a family meeting with your mum, your aunts, cousins etc. Say this has occurred and it needs to stop. No one to ask to borrow from DM and no one is to lend to DA. A good dose of humility for everyone. And shame for your aunt.

Definitely ask for a settlement figure for the loan and your DM pay it off with savings if she can or a cheaper loan if she doesn't have enough savings. That should save a large portion of the massive interest charge.

Then you can try to get the aunt to repay your DM, but that would take a huge change in her mindset, which is easier said than done. People's attitude to money and spending seems to be pretty ingrained. If she won't repay or change her ways, then it's likely to severely sour their relationship due to the aunt's selfish and reckless behaviour but it sounds like that point has already been passed.

Can you negotiate with the loan company and pay it off early using DM's money , hopefully with less interest to pay....otherwise this will go on and on over years as DAunt defaults on payments. Causing years of stress.

Otherwise move the money in your mother's savings account to a new savings account/isa where you can't access the money for a year or without x months wait. So she knows the money is not available to give away. It is locked down. Then make sure she understands this so is less likely to be guarantor again.
This is pointless to get stressed over. Your DM wants to be 'nice' to her sis. That's her choice.

I’m not sure if this helps but I think she may be able to get out of the agreement if it was clear when your aunt took out the loan that she may not have been able to afford to repay it without getting into further debt?

debtcamel.co.uk/how-to-complain-guarantor-loan/

Can you get some of the designer handbags to sell to get some money towards it?

Morning everyone, thanks for all the replies overnight.

@Happynow001 - that's why I wanted to look into POA as DM seems genuinely incapable of saying no to people even when it's to her detriment.

@EmmaGrundyForPM - DM can afford to pay it off in full if necessary. Seeing as I don't have a magic wand to wave to get her out of being guarantor, that is certainly a better option than letting this drag on for the full 5 year term of the loan.

@Beautiful3 - unfortunately, I don't live in my home town anymore (I'm in the NW, they're all in the SE) so i can't just go round to my aunt's. DSis is there though so she can.

@GnomeDePlume - public shaming would definitely embarrass her. I'm not sure she has a lot for the bailiffs to take and sell as she rents her TV and doesn't have anything expensive apart from some handbags. She has spent all her money over the years on tat, holidays and socialising.

@BarbaraofSeville - it's definitely soured my relationship with my aunt now. I knew she was feckless but I never thought she'd screw DM over like this.

@Patrickstarr - thanks for the link. From talking to DM, it sounds like they did do the affordability checks on DM so they know she has the means to repay if my aunt defaults. DM said my aunt sat next to her while DM was talking to the loan company which is where I feel the coercion came in but ultimately DM made the decision to do it.

I've got to log on for work in 20 minutes, which is going to fun after 4 hours' sleep! I've got the day off tomorrow so Dsis and I are going to have a long chat and agree a plan of action.

Thanks so much again for all your replies. You've definitely given me a lot to think about.

There's no point in looking at POA's if your mum won't be willing to sign one & give you all her bank stuff.

She does sound as if she needs protecting from herself though!

I'm not getting the impression that the DM is elderly or in any way vulnerable. She's just a foolish woman. She is an adult and agreed to guarantee a loan, knowing full well that if the borrower defaulted she would have to pay. That, after all, is the whole point of a guarantor.

All the aunt did was nag. She's done nothing illegal. The mother agreed to pay, she should pay.

Aunt did nothing illegal. Mum is liable.

But Aunt shat on her sister. Knowingly. And when does "nag" turn into coercion? Please be clear @Fairenuff

I may be wrong but doesn't POA only work if your DM becomes mentally incapable of making decisions, not just because someone's taken advantage? I don't think you'd be allowed to stop her whilst she got her faculties but I may be wrong.

There's a marked difference between 'Aunt did nothing illegal' and 'Aunt did nothing wrong'. She's already missed two payments not even a year into the loan. That's patently 'wrong'.

@Grrrpredictivetex

I may be wrong but doesn't POA only work if your DM becomes mentally incapable of making decisions, not just because someone's taken advantage? I don't think you'd be allowed to stop her whilst she got her faculties but I may be wrong.

You have to have capacity to agree to a POA but I think that they can come into force immediately-obviously only with the agreement of the person making it.

@diddl - DM might agree to POA if I can get her to understand why it's necessary. She tends to avoid difficult conversations or topics she finds uncomfortable to discuss. It's infuriating as I'd rather have a full and frank discussion and get it all out there so it can be resolved. I still need to do more research as to what is possible.

Does anyone have any experience of getting a POA in these circumstances where someone isn't technically mentally incapable (not medically diagnosed as such anyway) but they keep making shit decisions and you just want to protect them from predatory people who know they're weak-minded and prey on them?

Yes I have experience with PoAs in weird circumstances. For finance (not health and welfare) as long as DM agrees there's a box to tick which basically says it comes into force immediately and you don't have to wait until they lose capacity. However they also still retain joint control until that point, so if she would still agree to things behind your back it would be limited preventative use. Would mean that loan companies etc would be able to speak to you about her accounts and everything though and gives you more power of negotiation.

@Dinosauraddict - so I wouldn't be able to stop her from agreeing to a loan or withdrawing or transferring large sums from her bank account if she agreed to a POA?