Writing off unsecured debt due to mental illness?

[Undercover-Elsa]

Hi Meerkatsmimm,

So sorry to hear about your Mum's problems. Good job she has you to help her

Please be assured they wouldn't "lock her up" for having suicidal thoughts in the past. They will only "section" anyone if they are considered to be a current danger to themselves or others.

These firms are despicable. You might have a good case for irresponsible lending here. Your Mum can't be held responsible for her actions if she had mental illness, so don't worry about fraud.

Take a look here: May be worth reporting her case to The Guardian Money people...

Keep your chin up

Hugs

Elsa xxxx

[Undercover-Elsa]

Hi Meerkatsmimm,

Check out 42man's and my post on this thread:

http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/212406-1st-credit-asking-medical-2.html

[Undercover-Elsa]

Meerkatsmimm,

Hi Honey

I'm stepping up my own research on irresponsible lending, I'll pass on anything that might be useful to you. If we start looking at all the different aspects and tick as many of the IL boxes as possible,in a structured way, it will help to present your mum's case, be it to the bank, the OFT, FOS, MP Guardian or whomever.

Lets get a strong argument together for you in a word file then you can fire it off to anyone who might help.

In respect of proof of illness, initially you can simply state what you feel is enough info, cite the benefits and assert that should proof be required this will happily be provided to a Judge in Court, but that you are not prepared to demean your mother by discussing her private health matters with anyone who cares to read it in their office.

Speak later,

Elsa xxxx

[Undercover-Elsa]

Hi Sweetie,

Just a quickie to say I haven't deserted you.. been on my hols and getting through a pile of office work for my OH..but have been researching Irresponsible lending and Unfair relationshps whenever possible. I'm putting together a file with notes and relevant links which I'll pass on to you.

I'll pm you with my CAG email when I'm done then we can figure which parts apply to your mum.

Take care,

Elsa xx

[Undercover-Elsa]

Hi MMM

I've finally had chance to go over the OFT Guidelines on Irresponsible lending (due for completion October 09), plus Unfair Relationships etc, with a nit comb.

I append a word file with notes and relevant links..some of which you probably already have . I've transcribed the main parts of the OFT Guidelines into word and highlighted the most likely relevant sections.

For the benefit of others who don't have time to peruse the massive word file in depth, here are the main points relevant to unfair/irresponsible lending generally, and specifically in mental health problems:

 

Irresponsible Lending

http://www.oft.gov.uk/shared_oft/consultations/oft1107con.pdf

 

4.1 Before granting credit or increasing the amount of credit, creditors should assess a prospective borrower's ability to meet repayments over the life of a loan in a sustainable manner. All such assessments of affordability should involve a consideration of the impact of the loan on the borrower's overall financial well-being. It is not sufficient to solely assess the likelihood of the borrower being to repay the loan in question – which would only constitute one aspect of such an assessment.

4.2 The OFT would regard 'in a sustainable manner' in this context as constituting:

• without undue difficulty

• within a reasonable period of time

• out of income and/or available savings, without having to realise security or assets30

• without incurring any/additional problem indebtedness

4.5 Where the assessment indicates that a borrower would not be able to meet repayments in a sustainable manner over the life of the loan being sought, it should not be made available for that amount and duration and with those terms and conditions. However, a smaller loan, over a shorter period, may be sustainable (in line with the assessment of affordability) and/or an alternative credit product might be more suitable – for example, a credit product that does not involve significant default charges.

4.7 The extent and scope of any assessment of affordability, in any particular circumstance, should be dependent upon – and proportionate to – a number of factors, including, but not necessarily limited to the following:

• The nature of the credit product.

• The amount of credit to be provided and the associated cost to the borrower.

• The borrower's financial situation

The borrower's credit history including any indications of the borrower having experienced existing or previous financial difficulty.

• The borrower's existing- and predictable future- financial commitments including any repayments due in respect of other credit products and the borrower's principal non-credit commitments.

• The impact of any reasonably foreseeable change in relevant circumstances on the borrower. This would include both changes to the borrower's own personal circumstances and, where appropriate, wider economic changes. A change in circumstances is unlikely to be considered to be 'reasonably foreseeable' unless it was known to be happening, or reasonably should have been anticipated, at the time that the assessment of affordability was undertaken. Relevant changes of circumstance would include a predictable end point of current employment due to circumstances such as retirement or the conclusion of a current employment contract with a specified finite time – either of which may lead to a fall in the borrower's disposable income.

• The vulnerability of the borrower. For example, whether the borrower has, or appears as if he may have, mental health problems which could impact on his capacity to be able to understand information and explanations and make informed decisions based on his understanding of such information and explanations.

• The borrower's actual or apparent financial capability.

4.13 Whilst the OFT would generally expect the level of scrutiny required for small sum and/or short-term loans might be somewhat less than for large sum and/or long-term loans, account should be taken of the fact that the likely impact of the loan on the borrower's overall financial well-being would be directly related to his personal financial circumstances as well as the size and nature of the loan.

Specific irresponsible lending practices

Unsatisfactory business practices and procedures

4.16 Failing to establish and implement clear and effective policies and procedures for the reasonable assessment of affordability.

4.17 Failing to undertake a reasonable assessment of affordability in individual cases.

4.18 Failing to consider sufficient appropriate information relating to the borrower's circumstances to be able to reasonably assess affordability, prior to granting credit or increasing the total amount of credit provided.

· Where applicable, failing to verify details of current income and/or expenditure by, for example, checking hard copies of payslip/contract of employment (when a borrower is in employment), accountant's letters (when a borrower is self-employed) or benefit statements (when a borrower is not in employment).

4.19 Restricting the assessment of affordability solely to an assessment of the borrower's ability to repay a single loan under circumstances in which he has other credit commitments.

(The OFT considers that such an assessment would not constitute a proper consideration of the impact of the loan on the borrower's overall financial well-being.)

4.23 Granting an application for credit when, on the basis of an affordability assessment, it is suspected or known, or reasonably ought to be suspected or known, that the credit is, or is likely to be, unaffordable.

4.25 Failing to take adequate steps, so far as is reasonable and practicable, to ensure that all information on a loan application relevant to an assessment of affordability is complete and correct.

 

!!!4.26 Providing credit to a borrower prior to having received from him, or in the absence of ever having received from him, a completed application for credit.

The OFT would not consider an application to be complete if the creditor had not received a copy of the credit agreement that had been signed by the borrower.!!!

5.4 Failing to act in the best interests of a borrower by promoting the sale of a particular credit product under circumstances in which the creditor suspects, or ought to suspect, that the product is clearly inappropriate given the borrower's needs and personal circumstances.

5.5 Providing credit to a borrower in the absence of having appropriately assessed the mental capacity of the borrower, under circumstances in which the creditor suspects, or reasonably ought to suspect, that the borrower lacks the mental capacity to comprehend the information and/or explanations provided by the creditor to inform the borrower's decision.

5.6 Giving effect to a lending decision by a borrower which is clearly not in the borrower's best interests, particularly under circumstances in which the creditor suspects, or reasonably ought to suspect, that the borrower lacks the mental capacity to comprehend the information and/or explanations provided by the creditor to inform the borrower's decision.

(a person must have some form of impairment of – or disturbance in – the functioning of the mind or the brain which results in an inability to make the specific decision at that time. Capacity should be judged in relation to a specific decision. In order to demonstrate decision making capacity, a borrower should be able to understand the information relevant to the decision, including the purpose of any proposed course of action, the main benefits, risks and alternatives. In law, a person is assumed to have capacity unless/until it is established that he lacks capacity.)

www.opsi.gov.uk/acts/acts2005/ukpga_20050009_en_1

www.opsi.gov.uk/acts/acts2005/en/ukpgaen_20050009_en_1.htm

 

5.15 Failing to act in the best interests of a borrower by promoting the sale of a particular product, for business and/or personal gain, under circumstances in which the product is clearly inappropriate given the borrower's needs and personal circumstances.

The OFT considers that creditors should take appropriate action, including alerting the borrower to the risk of an escalating debt, when/if there are signs of apparent repayment difficulties.

This is particularly important in the case of borrowers with mental health problems, especially under circumstances in which they or their representatives have specifically requested that this should be done. A symptom of some mental health problems, like bipolar disorder for example, may be that the borrower may engage in unusual spending patterns.

7.2 Failing to treat borrowers in default or arrears difficulties with understanding and due consideration.

For example, mental health problems may impair a borrower's ability to maintain repayment schedules. Borrowers with mental health problems may be unable to engage with debt repayment and should not be regarded as – or treated as – 'uncooperative' or 'won't pays'. 'Reasonable adjustments' should be made to policies and procedures for recovering debts, to the extent that it is appropriate or necessary to do so, under circumstances in which borrowers are known to be – or reasonably ought to be suspected to be – experiencing mental health problems.

The OFT would expect creditors' policies and procedures for the appropriate treatment of borrowers with mental health problems, who are experiencing problem over-indebtedness, to reflect the principles outlined in the Money Advice Liaison Group (MALG) Guidelines 'Debt Management and Debt Collection in Relation to People with Mental Health Problems'.www.moneyadvicetrust.org/download.asp

That's enough to be going on with or the page will break

Elsa x

iresplendingnotes.doc