What is reckless credit and how can it be identified?
When you apply for a loan or a credit facility, the credit provider need to assess your financial repayment ability with proven information supplied by yourself. These steps are very important and must be done by the credit provider. This assess whether the applicant for credit, will be able to afford the new debt and even more important, whether this might be cause for the applicant to be overindebted.
When these steps are not taken correctly, the agreement with the credit provider will be classified as reckless lending.
Some key indicators for reckless credit:
- The consumer didn’t receive a quotation of total cost of the credit agreement.
- The credit provider could clearly see that the consumer would not be able to repay the credit given
- The consumer did not understand the language written in the agreement.
Why is this important?
When the court confirms act of reckless credit, the credit agreement can possible be waived with the debt to be written off.
We hope that the above article assisted you.
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