Sunday, January 24, 2016

High Court comes to assistance of victims of reckless credit!

In Absa Bank Limited v De Beer and Others the Pretoria High Court has finally taken action against the granting of reckless credit by creditors.

In this case Absa continued to grant credit to an elderly couple even though it was evident that they would not be able to repay the loan. Absa also relied on a surety as extra security for the loan.

The court held that Absa was reckless in granting the further loans as it was evident that the consumers including the surety would not be able to repay the loan amount.
Absa mainly relied on the value of the property being secured as security.

This is not new as similar loans have been found to be reckless by other courts as well.
What is interesting of the above judgement is that the consumers, including surety, was relieved of all obligations in terms of the loan. They were therefore allowed to keep the property and the court ordered the bond to be cancelled.

It will be interesting to see if Absa will double down and refer the case to the Supreme Court of Appeal.

Read more at the link below.

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