My mum, who's been financially abused by my dad for years, is currently penniless. (I will link the thread with the background details below). She has no assests, and her only income in a little bit of ESA. She's medically retired. She's been asking for financial help recently, and asking to help find her a job (even though she remains quite unwell). I'm in no position to support her as I was before (I have a young family and I'm a SAHM at the moment). But I managed to get her accepted for legal aid and we're proceeding with her divorce, and I just advised her that she needs to be patient and manage with her little budget until everything is settled (she has no rent or mortgage thankfully).
She has a credit card she's maxed out on (£800), and she's in her overdraft on her debit card (£400). I proposed giving her cash until her ESA payment gets paid. But while I was arranging this (I live in a different city), she takes out a 6k loan without informing anyone from a company that's is rated quite poorly on Trust Pilot, at almost 45% interest. She'll need to pay back £8700 over 4 years at around 180/mo. When I found out, I was utterly distraught.
Right now we have 2 options:
There is still a couple of days left of the grace period which allows her to withdraw from the loan within 14 days and to pay back the loan (with interest which is around £3/day) within 30 days. £1200 has gone on repaying her credit card and overdraft. My mum has spent an additional £800 (her unsustainable spending is a story for another day- she didn't used to be like this, but seems to have just given up on life). I don't have access to £2000, although I could try to raise this in 30 days.
The second option is she declares bankruptcy. This will prevent her from taking out loans in the future. Her phone DD is currently being paid by myself.
Going forward I know we need to address the spending, but in the immediate term, I would be grateful for advice about how to manage the issue of this loan.
Many thanks