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Reckless Lending

If you suspect that you have been a victim of reckless lending, our accredited debt counsellors and specialist attorneys can assist you. They will assess all of your credit agreements to see whether any of them can be classified as reckless lending.

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What is reckless lending?

Reckless lending is defined as when a creditor fails to conduct a detailed credit assessment as required by the National Credit Act (NCA) and still offers the consumer credit.

If the consumer does not understand the risks, costs and obligations created by the proposed credit agreement, such credit agreement is considered as reckless lending.  If the credit provider conducts an assessment and conclude that entering into the proposed credit agreement would cause the potential consumer to become over-indebted, but still enters into the credit agreement with the consumer, such credit agreement is classified as reckless lending.

Credit providers have a statutory obligation to actively prevent reckless credit in terms of Section 48A and 81 (3) of the Act.

Consumers are required to fully and truthfully answer the requests for information that creditors put to them. Creditors on the other hand are experts at financial matters and they use very sophisticated computer programs to figure out what the consumer can and cannot afford so they must be certain about the consumer’s financial status before they offer credit.

When is a credit agreement deemed as reckless lending? 

  • The consumer didn’t get a quotation of what the credit will cost them.
  • The consumer did not understand the documents shown about the credit.
  • The consumer cannot read the language of the documents about the credit.
  • The credit provider knew the consumer couldn’t afford to repay the credit and still offers the consumer credit.

How are reckless lending cases dealt with at the courts?

Our specialist attorneys will approach the courts on your behalf.  A court can decide to either make the reckless credit provider wait till after all other debt is repaid before they receive a cent or the debt can be written off.

If reckless lending has been identified, it can assist over-indebted consumers that is why it is necessary to identify reckless lending. It is necessary to identify reckless lending as it is in line with the purposes of the Act.

 

 

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