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?

You can only get POA if the person is able and willing to agree to it and has capacity to do so. If a person does not have capacity then you cant get it and it's far more complicated so I would suggest you do this now.
POA remains in place if the person becomes incapacitated.

Ive helped someone in a similar position albeit this was a tenancy guarantor, but this person let it go to court. We argued against unfair terms in consumer contracts, the judge saw merit enough in the argument to let the case run and eventually the claim was struck out as the claimant didn't follow up. If you were willing to a) take that risk and b) put the research in, it could just go your way. If the guarantor agreement wasn't executed as a deed, and your Mum not given a chance to seek legal advice independently, it could be worth doing some reading.

Has the Aunt got children? If so speak to them and see if they can pay for their Mother's loan

@StartingGrid - she definitely didn't get independent legal advice! I've got tomorrow off so I'll do some research then.

@FourDecades - my aunt has 5 grown DC but none of them have the means to lend her that amount or act as guarantor. I doubt they'd help her pay it back. Most of them complain about being skint when I speak to them.

@TealAndTurquoise you could (if she agreed) put all her savings in a joint account which would need both your signatures to transfer any large sums of money - that would be the best preventative measure in these circumstances imo.

@TealAndTurquoise if you get free legal advice with any of your insurances, I'd start there. If they felt you may be onto something, Consumer Action Group, Moneysavingexpert, and Legal beagles forums were very useful resources. It took days of research but literally saved thousands. Wishing you luck, whether it's with that, or just sorting the awful aunt out.

POA very simple, so long as you know someone who can confirm that your DM is of sound mind

https://www.gov.uk/power-of-attorney

I'd be inclined to sort that, in order to prevent any recurrences.

[quote TealAndTurquoise]@StartingGrid - she definitely didn't get independent legal advice! I've got tomorrow off so I'll do some research then.

@FourDecades - my aunt has 5 grown DC but none of them have the means to lend her that amount or act as guarantor. I doubt they'd help her pay it back. Most of them complain about being skint when I speak to them.[/quote]
As there's 5 of them, they can all pay a bit towards it. I think you may have to involve the wider family to get anywhere.

Or if your Mum doesn't want to "upset" anyone, do as others have said and tell her that you don't want to hear about it.

@Dinosauraddict @StartingGrid @FinallyHere - thanks for the advice and links.

@FourDecades - I have told DM that if she refuses to accept advice and help from me and Dsis or let us confront our aunt and involve the wider family then I never want to hear about this again.

@Hepcat75

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'.

So?

The mother agreed to pay any defaulted payments.

Do people on this thread not understand how guarantees work?

@Fairenuff - legally, my aunt has done nothing wrong as DM agreed to be the guarantor but I know she pressured DM to do it by asking over and over until she gave in and she's defaulted on two payments already so morally she's been a complete cunt. I understand how guarantees work, which is why I'd never agree to do it for anyone, but I feel sorry for DM and I just want to do what I can to help her as I'm sure anyone on here would do if their DM were in the same situation.

*So?

The mother agreed to pay any defaulted payments.

Do people on this thread not understand how guarantees work?*

whatever 🙄

I think you've missed the nuances of this situation @Fairenuff.

Surprised you have not-

Confronted your aunt and
got the ball rolling for power of attorney.

Just to add,

It is best you apply for POA NOW when your mum has capacity. If you wait and it's deemed your mum does not have capacity, then it's a lot more difficult to sort and the local authority have to take over.

It is really important you get this sorted ASAP, your mum does sound financially vulnerable.

I would have thought that if there was a case that she signed under duress this could be overturned- you need a solicitor to comment

Does paying the loan off quicker nullify the extra charges? Better to be £4K down than £9.5K

The problem with confrontation is

• your aunt doesn’t have any cash probably and is bad with money
• even if she agrees to start monthly repayments, she will most likely default somewhere down the line.

I think best best is to repay back as much and as quick as you can so you are paying off as little interest as possible. Then get aunt to pay your mum in instalments - paying less back as your mum won’t charge the interest.

There’s something to be said about the extortionate charges from this loan company too.

Clearly, Fairenuff has a string of Amigo loans she's getting some poor bastard to pay . . .

So? So - you said that the aunt has done nothing wrong. Not so, treacle.

Yes, I do know what it means to be a guarantor, thanks - I'm fearfully clever. Those of us not being arseholes on this thread are suggesting some strategies for getting the aunt to pay back the monies she has received. None of us has said OP's mum isn't liable.

Does paying the loan off quicker nullify the extra charges? Better to be £4K down than £9.5K

It should do, because the £9.5k is the interest is charged over the full 5 years, so if the loan is paid off early, the amount will be a lot less as they're only allowed to charge interest until the date that the loan is paid off, plus a couple of months.

There was a consumer action thing a good few years ago where people or someone like Moneysavingexpert challenged this because loan companies were charging interest over the whole period even when loans were paid off early and it mainly affected people like the OPs demand Aunt who were being trapped in high interest loans they could do nothing about.

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?

My DM is similar. She got sucked into a dating scam a couple of years ago and was fleeced out of £12k. She's mentally capable, but just gullible. My DB and I persuaded her to let us have POA and access to her bank accounts to monitor what she was spending. The POA doesn't come into effect though unless she loses capacity so it isn't an immediate solution. Form memory I think it cost around £450 to set up with a solicitor and register it.

You really must blow up at the aunt. She needs to think if I ever pressure teals dm again for money or a guarantee I’m going to have teal and her sister shouting at me and telling the world what a defrauding nasty piece of work I am and that was really uncomfortable, I had better not ask her. (For those debating legal definitions, I doubt the aunt genuinely entered into the contract intending to pay which makes it fraud, but completely entirely unprovable)

My sil was able to speak to her elderly dad's bank manager to stop his gf from making wild withdrawals with his card.
Is there any way your mum could inform her bank that any large payment/ withdrawal/guarantee arrangement needs to be vetted by you or your sister?

I’d agree with having a word with your aunt but I’d try and do it in a respectful discussion about the way forward. The problem with shouting matches is the other side stops listening and start being defensive.

You know your family but who knows if the aunt is under a lot of pressure and stress financially. It’s one thing being frivolous but she might have real issues and I’d worry about her mental health somewhat.

Is there anyone on your aunts side who can help by talking to her - eg her children? They might be able to help.

@DivisionBelles mainly for the benefit of the OP and others on this thread considering it, you may/may not know that you don't need to pay a solicitor to get PoA. It can all be done yourself and is very easy, so you'd only have to pay the Office of Public Guardian fee, and no extra costs.

@Dinosauraddict I found this out after we had done it. My DM was insistent that it was done 'properly' and needed some other advice/will updating at the same time so it all sort of got caught up together. I did think £450 was pretty steep for what was essentially a bit of form filling and admin, but there you go.

Did the company carry out proper affordability check? There is a website called debtcamel which has a good section on complaining about guarantor loans being miss sold, and a successful complaint can sometimes remove a guarantors liability. You would usually need to do a SAR and a proper formal complaint so not a quick process.