07/26/2013 AT 4:30 PM ET
“Prior to moving to New York, Amanda was extremely paranoid about being ‘watched,’ including at our residence,” her parents wrote in court papers released Friday.
“She would cover smoke alarms with towels, tape windows shut, and cover her car’s dashboard with cardboard and tape out of fear that cameras were watching her from inside these places.”
The former child actress, 27, is now under a 14-day psychiatric hold at a hospital just outside L.A. while a court considers whether to place her under a conservatorship similar to one used for Britney Spears.
A source close to the family tells PEOPLE that Bynes “has consistently been visited by her mom daily while hospitalized.” Though Bynes has yet to be officially diagnosed with any mental illness, she “has consented to seeing her mother, but unfortunately not her dad,” with whom she’s estranged, the source adds.
“[Amanda] is obsessed with the idea that she and others are ‘ugly.’ She talks incessantly about cosmetic surgeries that she wants to have completed. She also encourages her mother to have plastic surgery. We are concerned that the surgeries she wants to have are dangerous and detrimental to her health.”
“[Amanda] has verbally assaulted several people, including family members, through her Twitter account,” the documents add. “She called her 9-year-old niece ugly on Twitter, which was devastating to her niece and her brother, her niece’s father. She has called us ‘ugly’ on several occasions.”
Saying they believe their daughter is now essentially “homeless” and has a substance abuse problem, Rick, 68, a former dentist, and Lynn Bynes, 66, a former office manager, “are deeply concerned that Amanda poses a substantial risk to herself, to others and property based on recent events.”
But it wasn’t until a bizarre driveway-burning incident last Monday that Bynes’s parents realized they needed to take legal action to save their daughter’s life.
“Nobody in the family understood the severity of Amanda’s condition until the fire incident,” a source close to the family tells PEOPLE. “Up until then, her family hoped a conservatorship wasn’t necessary.”
The papers, which reveal that Lynn Bynes alone is seeking legal control over her daughter as well as of her finances, allege that Amanda has spent an alarming $1.2 million in a very short time from her estimated $4 million in savings.
“Based upon a review of banking information we can access, she has written approximately $63,000 in checks [within just a two-month period,] some made out to ‘cash.’”
Her parents also say they’ve received doctor’s bills for unknown services. Amanda also made two withdrawals of $100,000 this past June, “despite having no fixed living expenses.”
“We believe that a substantial amount of this money is being used to pay for marijuana and other illegal substances, and possibly for plastic surgery,” her parents wrote.
The parents add they have no idea how their daughter returned to L.A. from New York. When they asked her, she replied that she “cabbed it.”
Although Bynes is reportedly fighting to be released from the psychiatric hold – with a hospital hearing set for Friday afternoon – her parents “are relieved for now that Amanda’s in a hospital to get the help she needs.”
The source adds: “They hope in the coming weeks, Amanda’s situation will get under control. They love their daughter very much.”