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Ask Paul: Our elderly relative is running up credit card debt
By Paul Clitheroe Published on September 27, 2023
Dear Paul,
How do we protect an elderly family member from financial ruin? She is on the age pension, owns her own unit (money was bequeathed to fund it) but has little to no savings.
While she's led a basic life to date, by necessity, her mental state has been diminishing in recent years, which unfortunately has led to an increase in erratic behaviour and spending.
We believe she's taken out multiple credit cards, purchased a variety of items on store credit, not paid her council rates for years, and had work completed at the unit by numerous trades, but has no intention or ability to pay the amounts owing.
We've tried speaking to her about it all and get told it's none of our business.
The family have bailed her out a number of times already, but are unable to continue to do so.
Is there a way to notify national credit agencies, or freeze her credit, so no new debts can be accumulated?
We're also concerned she'll turn to secondary (less forgiving) lenders and she'll lose the unit. Is there a way to protect that too? - Colin
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Crikey, Colin, this is a tough one. All I can do is to tell you what I would do in this situation.
Mental capacity is a really complex issue and a family member losing control of money is rarely happy to be told about this. As you say, it leads to conflict and much angst.
So, I'd be meeting a solicitor experienced in this issue.
Clearly, as the family has "bailed her out" a few times and will not do so anymore, things are out of control. A solicitor may talk to you about your state's or territory's trustee and guardian and things like a financial management order.
Obviously, any family would prefer to help their own with a power of attorney and so on, but it seems this is not working.
Please talk to a solicitor. These situations simply never get better unless strong action is taken.
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Warning. If doctors, Social Workers, or other officials decide that a person is unfit to care for themselves (physically, financially or in other ways) and there is no-one willing or able to care for them (Power of Attorney etc), a person can be placed into care. This will probably involve the sale of any property or assets. Cleaners will get the place ready for sale, and any personal items or pets will probably go. The person may never see their home again, and family will have no further say in their care. The Public Trustee in each state, lawyers, or other management companies may take over, but there is no guarantee that they will do what the family or the person themselves would wish. Research them thoroughly. Don't forget that Centrelink must be advised of any changes within 14 days. Talk to a solicitor who specialises in such matters – as suggested by Paul.
Just wondering how an aged pensioner can get multiple credit cards? Most retired people are not approved for a credit card no matter how much money they have in the bank or in Super, so I suspect her new credit cards would have been obtained fraudulently, which opens a whole new can of worms.