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My sister was diagnosed with dementia over a year ago. I brought her to live with me, after a month or two the mail was being forwarded to my address. That’s when I noticed this charge on her CC, I went to the bank and asked for assistance because I KNOW this is fraud. They did give me info as to where the money went, and that “my sister” had initiated the transition via a cell phone or a computer…….my sister has never had either! I notified the authorities and filed a complaint, but they could not do anything without further info from the bank. The bank is saying this is legitimate but have not offered up any details to convince me of that, no paperwork, no verification from the merchant, no IP address of the cell phone or computer, just that they have re-evaluated her claim and their decision has not changed. They even sent it to a collection agency, when they contacted me, I told them that she has dementia and is in Nursing home (which is the truth), they said they would no longer call me about this debt. What do I do about this? Do I wait until they try to take her to small claims court? This is a well known national bank, and they couldn’t care less about this fraud claim or my sister. Any advise would be appreciated.

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Is your sister self pay at the nursing home? Or is she on Medicaid? If she is self pay and has the ability to pay the nursing home for many years you can wait it out until they take her to court at which time you can fight your cause. I would also file a police report. If sister has plenty of money and her funds are expected to last beyond her eventual passing, the collection agency can try to collect at that time at probate. If sister is out of money, or will be soon and on Medicaid, ignore the debt collection agency. They cannot touch her income.
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If the bank handed the debt off to a collection agency, they will not be pursuing it any longer. If the collection agency said they wouldn't contact you again, that's good news and I would definitely hold them to it. I think you've done what is appropriate here but it would be a proactive step for you to get a credit report for your sister and see what else could be on there due to fraud. You can get one online with her social security number and other personal information.
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I'm basing this on supposition, but I'm not really sure that someone who's been diagnosed with dementia can be legitimately sued.  

This is an older article, but it establishes a framework for suing someone with dementia.    I don't know w/o further research what case law may have affected the rights of dementia patients and the standing of someone attempting to sue them.

https://pubmed.ncbi.nlm.nih.gov/28351448/

I found another more thorough and legal oriented application involving people with dementia and lawsuits.  It's long, scholarly, but interesting if someone wants to explore this issue in more depth.

https://pubmed.ncbi.nlm.nih.gov/28351448/ ; (download to get the full article.)

In the meantime, if your sister is sued, it would be wise to hire an elder law attorney who has specific litigation experience in challenging  "creditors' rights" suits.    In fact it wouldn't hurt to get a consultation before that, just so you know where your sister stands and you can hopefully set your mind at ease.

Who exactly told you "they" would no longer contact you?  The bank or the collection agency? Either way, I would confirm it in writing, specifically referencing the letter, date, signatory, debt and amount, etc.   You can also add that you're relying on their advice and do not anticipate any further action.

Send it certified mail so you know the bank or agency (or better yet, both) received it.

On a related issue, I'm finding it a bit confusing why the bank refuses to provide the details that would allow you to trace the charge.  That could also be a defense if they do sue.
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Is ur sister on Medicaid? If so her SS is judgement free. They can sue her all they want, but they won't get anything. Make a note of when the collections called you and the name if you got it. You are not responsible for the debt. They will have to eat it or track person down who somehow got your sister's card number. I hope the bank froze the card.
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