In this week’s blog, we take an in-depth look at what is Reckless Lending. What does it mean when debt that is possibly recklessly, is granted by a credit provider.

What happens when a credit provider gives credit to a person who does not understand what is required of him/her, or who can never realistically repay their debt on time? In these cases, the court has the power to write off such debts because the debt was granted recklessly.

What can happen if a credit provider gives a consumer credit recklessly?

A magistrate’s court can decide to either make the reckless credit provider wait till after all other debts are repaid before they receive a cent, or as we have seen in many cases that received much publicity in the past few months, the court may even decide that the debt does not have to be repaid at all, in other words the debt is then written off by means of a court order. This means the creditor may not use that information on the consumer’s ITC record as the debt was found to be recklessly granted. The guilty creditor is then reported to the NCR, who has their own mandate on how to deal with those matters of registered credit providers where the NCR issued those certificates.

What is needed when you apply for a new credit facility?

When applying for a new credit agreement the creditor requires certain documents and information to do their assessment of affordability.

Can it be reckless lending when the consumer doesn’t put every single piece of information on a credit application?

Consumers are only required to fully and truthfully answer the requests for information that credit providers put to them. In other words, if credit providers don’t request certain pertinent information from consumers, there is no legal duty on consumers to disclose that information. Credit providers are experts at financial matters and their staff are very well trained. They use very sophisticated computer programs to figure out what a consumer can and can’t afford.

These are the questions that most consumers ask us at CDS about whether a credit agreement is reckless?

  1. The consumer didn’t get a quotation of what the credit will cost them.
  2. The consumer did not understand the documents shown about the credit.
  3. The consumer can’t read the language of the documents about the credit.
  4. The credit provider knew the consumer couldn’t afford to repay the credit.
  5. There are illegal requirements in the contract documents.

You must know your rights when it comes to whether any credit agreement was granted recklessly or not. Here at CDS we specialize in investigating reckless credit agreements. Our specialist legal team Liddle and Associates Mr Quintin Zimmermann http://www.liddles.co.za/ has shown the courts on many matters where the credit was in fact granted recklessly. The outcome of those court applications varied from the debt written off, debt is put on hold for further payment until all the other creditors are paid up, or zero percent interest from the date of inception and the account remained in debt review until fully paid up, or a zero percent interest going forward until the debt is fully paid up.

If you fear the possibility of reckless lending, and panic defaulting in  the monthly installment every month, please do not hesitate to go to our contact us page http://debtcentre.co.za/contact-us/ and we will make contact with you. We can help you stop the panic and sleepless nights.

The National Credit Regulator (NCR) sees this kind of lending in a very serious light. Consumers could appreciate knowing every case of reckless lending or credit is reported to the NCR.

Conclusion: Here at CDS we understand the impact reckless credit can have on an individual or the family’s disposable income when that credit agreement could not be afforded from the date the money was borrowed to the consumer. We are one of the few debt counsellors in the industry that take these matters to court. With CDS our clients do not walk alone when they are over-indebted, an in-depth overview of their financial situation covers all the aspects of being over-indebted.