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Ask the Mental Health Expert Archives 2001-2004

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Mentally Ill with a Credit Card

Q. Do you think it is ethical for a bank to market credit cards to mentally ill individuals? My sister-in-law is a 51-year-old schizophrenic. She has not been able to work regularly in 30 years. A telemarketer talked her into accepting a credit card (without our knowledge). Now she has run up $3000 of debt. What can we do? She co-owns a small home (value of $50,000; equity of $20,000) along with her brother. Can she be held liable? Are there any laws, lawsuits, etc. that you are aware of that could help us?

A. First of all, a disclaimer--I am not a lawyer, and can't provide you with legal advice. That said, I can tell you that there is no law, to my knowledge, that prohibits telemarketers from marketing their wares to individuals who have psychiatric disorders. This is probably the case for a good reason: having a mental illness does NOT inherently render one incompetent to make business transactions, carry on financial affairs, etc.--though, of course, sometimes people with serious mental illness are so incapacitated.

However, the law and the judicial system presumes that EVERY individual is mentally competent--even those with diagnosed psychiatric disorders--until proved otherwise! This means that your sister-in-law would not be automatically assumed to be incompetent to manage her finances, simply by virtue of her having this illness. Indeed, many patients with serious mental disorders, when properly treated, can carry on their financial and business activities quite competently. And competence is ultimately a judicial determination--it is certainly not something a telemarketer or bank could be expected to assess.

That said--there may well be general consumer protection regulations that could be invoked as a means of nullifying the agreement your sister-in-law made with the telemarketer or bank. For example, if all the issues were not sufficiently or accurately explained to your sister-in-law, or were presented in a fraudulent or misleading way, you may have some legal recourse, independent of your sister-in-law's mental illness. However, to the best of my knowledge, your sister would otherwise be held liable for any debts incurred, unless and until a court declared her incompetent to manage her financial affairs--and even then, I'm not at all sure that could be used retroactively to nullify her debts. (The situation may be different if your sister-in-law already had a legal guardian, empowered to make all financial decisions or having "power of attorney"--but this is really a question for a lawyer).

My suggestion is that you consider a few options: 1. Hire a good lawyer for your sister-in-law. 2. Try talking to the bank customer service representative and argue that your sister-in-law was unfairly taken advantage of (if that's what you believe). 3. Contact your local chapter of the Alliance for the Mentally Ill (national hotline number is 1-800-950-NAMI) and explain the situation to them; they are often very helpful in providing advocacy for those with mental illness; 4. Contact the Bazelon Center of Mental Health Law (http://www.bazelon.org/) or The Center for Patient Advocacy (800-846-7444) and ask them for advice.

I hope you and your sister-in-law are able to resolve this unfortunate matter.

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February 2002

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