I think I have been the victim of reckless lending. Do I have any legal recourse?
To understand reckless lending one must first understand what is meant by the term reckless lending under the law.
The National Credit Act of 2007 lays out quite clearly what can be termed as reckless lending which only pertains to credit agreements entered into after June of 2007.
A credit agreement can be termed as reckless lending if:
- When the agreement was entered into, the credit lender did not do a proper credit affordability assessment.
- A lender decided to extent credit knowing, even after having conducted a credit assessment that the person would be unable to afford to pay off the amount leading him to becoming legally over indebted.
- Knowing that the consumer did not know or did not understand the terms, risks or onerous obligations of the agreement.
Reckless lending is easily identified as follows:
- A person’s net income after paying his existing debt obligations at the time of the agreement was entered into, was less than the amount needed to repay his increased debt obligations
- There was no fraudulent activity by the client in attempting to secure the loan or goods, i.e. the consumer provided the correct information at the time of the application for credit.
- A person is unable to afford the loan or the goods where his financial circumstances have not altered since being extended the credit.
Where a Debt-911 counsellor suspects that a person was extended a loan under these circumstances, we recommend that the debt stressed consumer take the lender to court where a magistrate will make a judgement on the circumstances under which credit was extended and will then rule on the legality of the matter.
The following loans or circumstances are exempt from being classified reckless lending:
- Incidental credit agreements
- Pawn transactions
- Emergency Loans
- School or student loans
If you are experiencing financial problems and feel you may have been the victim of unscrupulous credit lending, feel free to contact a Debt-911 counsellor who will assess your financial situation and advise you accordingly.
If you find yourself thinking about how you are going to service your monthly debt commitments, whether or not you are married in community of property, simply call us, SMS Help to 40935 or fill out the form alongside and one of our trained debt counselors will call you to assess your personal situation and give you free advice.