According to “Personal Finance”, there are almost 9 million South Africans who are over-indebted and the reason may not be reckless spending, but reckless lending. According to the National Credit Regulator’s statistics as of December 2009, 10.16 million credit accounts had been in arrears for three months.
One of the problems for such an over-indebted population is the reckless lending of money by financial service providers. Creditors are giving away
debt without their clients meeting the requirements for debt, and thus are not equipped to repay. If such is the case with you, and your creditor was reckless with your loan, you may be able to have a credit agreement set aside.
To prove that you have been given credit recklessly, you will need to show that you were unable to pay for the credit at the time of the application. Following this, you should get the assistance of an attorney who will take the case up. This cost (even if you under debt review) is the cost of the debtor.
Before granting credit, each creditor must check your bank statements carefully to determine if you have disposable income after all your expenses are paid off. If you have nothing left after your obligations are paid, you cannot apply for credit. If you are reapplying for credit, the creditor must check your current application with the previous one. If they expenses have not changed over a year, then the application cannot be considered valid.
The creditor is also under obligation to explain in plain language, normally the applicant’s mother tongue, the risks associated with taking out credit. Failure to do this and to perform a full credit check or assessment, could indicate that your creditor is lending recklessly.