What legal recourse exists if my step-grandmother sues my mother for fraud?

Full question:

After taking out student loans with my father as co-signer, my mother informed me last night that she had taken out another loan. This loan was also to finance my education and my step-grandmother had agreed to be the co-signer. Apparently, my father refused to sign for any more loans after he and my mother divorced. I graduated three years ago from an Ivy League school in New York State. After graduation, I worked for a well known non-profit, but it did not pay well. Therefore, many of my loans are in forbearance. Apparently, when my step-grandmother agreed to co-sign the loan that my mother had applied for, she did not want to deal with any of the subsequent paperwork and therefore verbally gave my mother permission to use her name and personal and financial information to apply for the loan while having all of the paperwork sent to my mother's address. Recently, according to my mother, the loan company figured out that they were not communicating with my step-grandmother and therefore began sending my step-grandmother any loan-related paperwork and communicating exclusively with her. When we could not make payments on this loan because of my low salary and the cost of living in New York, we decided to put it into forbearance as well. When my mother informed my step-grandmother that she needed to sign a forbearance form in order to delay our payments, she said she didn't understand and refused. My mother says that my step-grandmother is beginning to show signs of paranoia and dementia. My mother tried to explain forbearance to her, and the loan company tried to explain it to her as well. My step-grandmother became increasingly upset and eventually refused to speak to, or communicate with, the loan company at all. The loan company advised my mother that since they were not allowed to communicate any loan information to her because of privacy issues that she should let the loan go to a collection agency that would then be willing to speak with her, rather than my step-grandmother. The collection agency would then be able to formulate a plan with my mother in order to arrange a repayment schedule. Of course, the fact that the loan has gone to a collection agency has now been noted on my step-grandmother's credit report and she is threatening to sue my mother and wants to send her to prison for fraud. Would we have any recourse should my step-grandmother attempt to sue my mother for fraud? What is a typical sentence for this type of crime? We are going to visit my step-grandmother this weekend to try and reason with her. Due to her deteriorating mental health and the fact that she may forget that she agreed not to pursue legal action against my mother (we hope), would there be any legal action we could take against her (in other words, did my step-grandmother also commit fraud by allowing us to use her name, financial and personal information, and to sign documents as such?)? Applicable information:My mother lives in South Carolina, my step-grandmother lives in Florida, and I attended school in New York, but now live in South Carolina.This is a private loan totaling between $67,544 - $79,698, depending on interest. My step-grandmother wants this default off of her credit report. The loan specialist at the collection agency says that this might be possible if we pay off the loan right away. We do not have $70,000 and do not know anyone (banks included) who could loan us this kind of money.My step-grandmother's mental health is deteriorating to the point where my mother wonders if she might be in the early stages of Alzheimer's disease and may potentially make threats and/or promises - hostile or friendly - that she will not remember the next day/week/month. She is increasingly unreasonable and erratic in her behavior.

• Category: Fraud
• Date: 04/07/2025
• State: South Carolina

Answer:

Courts allow a party to rescind a contract for reasons like fraud, incapacity, duress, undue influence, or material breach. To prove fraud, you must show that the defendant intended to deceive. If someone was misled into relying on a false promise and suffered harm, they may recover damages. Fraud can also occur through omissions or failure to disclose important facts.

If a person knows about the fraudulent nature of another's actions, they cannot claim to be a victim of that fraud, as their awareness prevents them from being deceived. Consulting a local attorney to review your situation and documents is advisable.

A legal action for breach of contract occurs when one party fails to meet the contract's terms, causing harm to the other party. Remedies for breach include money damages, restitution, rescission, reformation, and specific performance. Money damages compensate for financial losses, while restitution aims to return the injured party to their original position before the contract. Rescission ends the contractual obligations of both parties.

In cases of fraud or breach, a court may rescind the contract or award damages. Specific performance may compel a party to fulfill their contractual duties if money damages are insufficient.

Promissory estoppel may apply if someone relied on a promise that induced action, making it unfair not to enforce the agreement. Detrimental reliance must be reasonable and result in harm.

In South Carolina, obtaining a signature or property by false pretenses can be a felony, with penalties including fines and imprisonment depending on the value involved (S.C. Code § 16-13-240).

Overall, it will be up to the court to determine if there was fraud or a material breach based on the specific facts of your case.