Reckless Credit Application
What is a reckless credit application?
Your credit application will be deemed reckless if, at the time when the credit agreement
was granted or increased.
A reckless credit application does not apply to
- The credit provider failed to conduct a comprehensive affordability assessment of your financial means, prospects, obligations and debt repayment history.
- You weren’t presented with a pre-agreement and a copy of the agreement.
- You did not understand the risks or costs involved, or your rights or obligations as a consumer at the time.
- Entering into that credit agreement put you into a state of over-indebtedness.
- Second party or guarantor information was used without having been fully verified.
- Cases where you were dishonest in or only partly disclosed information requested by the credit provider, as part of the affordability assessment. BUT Remember, you are only expected to present information if it was requested. Accidentally providing incorrect figures does not mean you were fraudulent. However, providing purposely dishonest information is illegal.
- If you become over-indebted after taking out a credit agreement, due to a change in circumstances i.e. losing your job, it is not reckless lending. You can still seek debt counselling to help restructure your finances if you are struggling. Nation Debt Advisors (NDA) can help you with this.
- Agreements made before June 2007
- Juristic persons
- School or student loans
- Public interest credit agreements
- Pawn transactions
- Incidental credit agreements
- Temporary increases in credit limit
What happens next?
Once your NDA debt counsellor decides that a reckless credit application was in fact made, they will present the matter to the court or tribunal, who will decide whether or not the credit agreement should be suspended, restructured or set aside.