I really can’t cope with the rising cost of goods – especially petrol and food! It feels like we simply can’t afford to exist anymore. R90 for a bottle of fish oil and nearly R1000 per litre of petrol (LOL) really makes me question how ordinary citizens are supposed to survive, much less thrive!
To cope, more and more consumers are turning to loans and other forms of credit. Whether we are taking goods “on the boekie” from the corner Spaza shop- or accessing formal credit – the bottom line is – os’ lewe op skuld!
With formal credit, National Credit Act prohibits creditors from giving credit to consumers who can’t afford to pay it back, but this definitely still happens. This is referred to as “reckless credit”/ “reckless lending”
Here are some Q+A’s that can help you understand the concept of reckless lending better.
Q: When is credit regarded as reckless lending?
- If a credit provider didn’t do a proper assessment on your income and expenses to check if you could afford to in repay credit which they granted to you – then that would be considered reckless lending. That is irrespective of what the outcome of the assessment would have been. So even if you were likely to have passed the affordability assessment – if no assessment was done, or even if only a partial assessment was done – then the credit is seen as being granted recklessly.
- If a creditor did not check your credit report when you made an application for credit
- If you had an adverse listing and/or judgement against you when they granted you the credit
- If the creditor didn’t disclose all the risks and costs of the credit agreement to you.
If a creditor takes legal action against you, and you put forward reckless lending as a defence – then the creditor will have to produce a copy of the affordability assessment – which should include a copy of your credit report as the time of your application.
Q: Who do you approach if you think you might be a victim of reckless lending?
Only a court or the National Consumer Tribunal (NCT) has the power to declare a credit agreement “reckless”. If you don’t have a debt counsellor, you can approach the courts yourself, hire an attorney, approach Legal Aid, or refer the matter to the NCT.
If you apply for debt review, your debt counsellor should do an assessment of your finances and investigate for reckless lending.
Q: Can you be a victim of reckless lending you lied on your application?
Noooooooooo! If you overstated your income or understated your expenses or debt repayments and were granted a personal loan, credit card or any other kind of credit which you cannot afford, then you can’t ask for the credit agreement to be declared reckless.
Seriously – you can’t be that thick skinned! LOL! Or as we like to say it on the Cape Flats – “Mens kan mossie soe DIKVEL wees nie! “