19 Jan Getting More Credit on Store Card. When is it Reckless?

When is getting more store credit reckless on the part of the creditor? Is there a way to tell? And how does this benefit you? What even is reckless credit?

Many creditors finance debtors without following proper protocols. Luckily, the National Credit Act (NCA) is 100% on your side. Your Reckless Credit could be 100% written off, especially if you entered into an agreement you did not understand, or granted credit without first undergoing a qualifying affordability assessment. Section 81(3) of the act prohibits Reckless Credit, meaning the court could declare you not responsible for entering into reckless credit., or suspend your payments until such a time comes when you are financially able to finance your debt again.

What Is Reckless Credit?

Credit, the process of lending money, is considered reckless when the credit provider fails to conduct an assessment that takes steps to assist you in understanding the risks, rights, and responsibilities involved with accepting credit. They must also look at your debt repayment history, income, and bills.

If the credit provider agreed to know of the consumer’s (you) previous bad behaviour with credit, that it would over indebt you, or that you didn’t understand what you agreed to, they recklessly provided credit, which may have dire consequences for them, including the writing off of your debt.

How Does The Court Decide When Credit Is Reckless?

Remember, if the creditor gives you a loan without checking that you can afford it and fully understand the agreement, it’s reckless credit. When a judge determines whether credit is reckless, they consider how much the financial agreement the lender made with you is worth (credit limit)– that amount is how much the lender (credit facility) can harass you or take legal action against you for.

The judge also considers how much the lender promised to give you even though you didn’t have enough money to pay it back.

What Happens When The Tribunal (Court) Declares Credit Reckless?

The court could temporarily stop your payments whilst considering whether the credit granted is reckless. They’ll also further consider whether you can pay all your debt. You don’t have to make any payments during this time, and they can’t make you pay anything else, except a debt consolidation loan.
After suspension, you have to pay back the debt again, even if the court has restructured it.

They might also completely write off your debt, as written in the NCR act; “If a court declares that a credit agreement is reckless in terms of section 80( l)(a)…setting aside all or part of the consumer’s rights and obligations under that agreement, as the court determines just and reasonable in the circumstances…” If you’re way over your head in debt, they’ll probably refer you to a debt counsellor, who will make a recommendation of what to do to the court.

They might also choose to restructure your debt, to make it affordable (you might pay less), “restructuring the consumer’s obligations under any other credit agreements, in accordance with section 87.”

How To Not Fall Into Reckless Credit

The NCA says that you must, at all times, provide truthful and accurate information. If you don’t, the credit is not reckless on their part. To reiterate the points made above, we can also prevent reckless credit by making sure the lender fully assesses your credit history and obligations, though this is their responsibility, not yours.

If this all sounds like too much, our Reckless Credit professionals are here to help. You’re not alone. Get in touch with us today for help with relieving reckless credit.