Reckless Lending: Woman Gets R140 000 Debt Written Off

A credit provider was forced to write off a woman’s debt of five loans valued at over R140 000 after the Credit Ombud intervened.

The woman was about to retire from her government job.

Even though she was earning a good salary, as the sole breadwinner of her family, she had to support her adult son and parents, who all suffered with health problems.

The woman was granted five loans to the value of R76 000 over a term of seven months and could not afford her repayments. As a result, she was in trouble with her credit provider, according to Nicky Lala Mohan – the Credit Ombud.

Affordability Assessments

Last year, she approached the Credit Ombud office for help, who found her to be over-indebted. Credit providers are required to conduct proper affordability assessments before granting credit to consumers. If they do grant credit to consumers who cannot afford to repay it, this is what we call reckless lending.

The woman clearly could not afford these loans. She also presented evidence relating to her personal circumstances.

“The credit provider wrote off the five loans to the value of R140 554.63,” she said.

The Credit Ombud have handled many similar cases where the credit provider had to either write off or decrease a loan, said Deputy Ombud Reana Steyn.

“The woman was earning a good salary, but the fact that she was going to retire soon should have been taken into consideration.”

The woman’s age was factored in this time. However, it is unusual for a credit provider to completely write off a loan, said Steyn. If it were a younger person, credit providers would consider writing off the interest owed on the loan.

Women Fight Reckless Lending

The Ombud’s 2014 annual results revealed that 47% of complaints were lodged by women and this year’s results indicate the trend has continued.

“It seems women are becoming more aware of our office and are using our services, requesting assistance with disputes ranging from credit bureau listings, non-bank credit and emolument attachment orders.”