In this week’s blog, the Founder of Consumer Debt Support (CDS), Annienne Nel will be sharing an in-depth look into Reckless lending with the readers, and how it should be dealt with, related to a credit application, and the legal aspects thereof.
In life, we need products and services which make life easier and faster. Parents need to care for the family and the education of their children. The high demands thereof, have its own stress and often it becomes an unbearable financial burden.
It may lead to urgent credit and the best option then is to apply for more. During the process of such application, there is a legal obligation from the creditor to the applicant, to inform and advise all aspects of the relevant legalities, and also the possible aspect of being over indebted.
The first action on any application by a creditor is to load and capture all the necessary income and expenses data on the credit system. With confidential consent of the applicant alone, a credit report is drawn to determine the listed debt status. The income and current debt, with expenses declared will upon calculation, with the credit report status, determine the outcome of the application.
What is Reckless lending?
When the creditor approves the loan regardless the fact that the applicant cannot afford the repayment instalments on the credit agreement.
The creditors have an obligation as per the National Credit Act – Amendment bill of 15 March 2015 to ensure they do not oversee any information to conduct a full assessment. In order for the consumer to afford the debt repayment plan, for the full duration of the credit agreement terms until the debt is fully paid up. If the record shows that the applicant would not be able to afford the instalments for the full term, the credit should not be approved and should be explained with the relevant legal reasons, such as over indebtedness.
When can a credit application be seen as recklessly granted?
- If the creditor excludes basic living cost totals less than R5000.00 from his calculations. (For example, If the consumer declares R400 for groceries expenses, and R100 for electricity per month) The creditor should see the red lights and ask questions instead of applying amendments so that the total expenses fit to qualify the applicant.
- If the applicant is employed on a limited one-year contract, and the creditor does not consider the risk of affordability to repay the debt after the contract has expired or not renewed?
- If a consumer uses a rental agreement as proof of income to qualify for a personal loan or vehicle finance, and the creditor discard the guarantee whether the monthly repayments for the full term of the credit agreement, would be covered.
- If the consumer was married in community of property, and the creditor did not confirm or include the spouse’s income, or consent to proceed with the application or quotation.
- If the creditor excludes existing credit agreements that should be included to ensure affordability.
- If being married out of community of property and the spouse’s income forms part of the household expenses, and it was not declared or confirmed by the creditor, it can lead to reckless credit.
- When the spouse is no longer employed and the creditor grants the debt, knowing the spouse is no longer employed as it was declared by the applicant.
- When a consumer is already on a debt review program, and the creditor grants a new personal loan. The debt of the new loan most likely is reckless as the client was flagged being under debt review and should not be given more credit as the consumer already is over-indebted and could not afford the new debt repayments.
“When a consumer can’t afford to repay a credit agreement due to reckless lending or not reckless lending, it causes panic, fear and stress that spills over into the workplace and family home, which leads to depression that effect the individuals very day activities.”
Consumer Debt Support (CDS), can save your name
We are adamant to help you, the consumer, to clear your name and we pride ourselves in the successful engagements of previous cases like this.
Some of the matters we represented in court were found that the debt was granted recklessly. Every suspected case of reckless lending undergoes a proper audit and the Reckless lending allegation and findings form part of the debt review process. The creditor in question receives notice of the Reckless credit investigation, and must forward the original assessment finding, and all the documents that was obtained to grant the consumer the loan. The consumer also has an important task* to ensure the debt counselor receives the information to conclude their findings that can support the outcome of the calculations as being recklessly granted.
This matter is not a general inquiry, the findings of the outcome should it be finding reckless, must be referred to a Magistrates Court to oversee the process, and the arguments to be heard before judgement can be delivered. There are no short cuts.
What you should do If you suspect your debt was recklessly granted.
Contact us at Consumer Debt Support on 083 459 3056 or whatsapp, or call our office on 021 930 5790 to speak to one of our agents.
- Send us all the relevant documents plus your ID document, 3 months bank statements, 3 months proof of income, copy of the contract of loan etc. If you have a copy of proof of address.
- Our agent will assist you by forwarding you the documents to your phone, or email address, where you can download and print, sign and return it back to our office from your smart phone.
- You can also download the Cam Scan App on your smart phone if possible, this will enable you to scan and email your completed application pack with all the attachments back to our office.
- You will receive copies of the documents and correspondences between us and your creditors, for your records, proof that you have applied for a debt review and our registered debt counsellor to investigate your over-indebtedness and reckless lending application in question.
Addressing reckless lending outside debt review, must be heard in the High Court, which could become very costly. Reckless lending matters, can only be referred to a Magistrates Court by a registered debt counselor who is the applicant before the court. Consumers must ensure they deal with Registered Debt Counselors only, we are daily confronted with sad stories of clients that’s caught in the web of unregistered persons interested in the consumers money for their own profit and gain. Only a registered debt counselor can restructure debt into one affordable payment plan.
When dealing with debt and you suspect it was granted recklessly, it is best to make contact with our debt centre http://www.debtcentre.co.za/contact-us/ for the proper advice and assistance in dealing with the problem. We advise all our consumers to make sure you understand the terms and conditions of your loan agreements, always ask for the credentials of the debt counsellor firm before you require their services.
Message from the author
Start of 2019 on a positive note. We have entered a new year with new hope and promises. Do not allow fear of creditors or the lack of necessary information regarding your debt, stop you from seeking help at Consumer Debt Support (CDS) in time, before the problems become unmanageable. I will always put myself available to help those in debt to ease their burdens.
I wish you well and God’s favour on your families.