Chapter 13
Problem 8: Granting credit recklessly
Ms Adams has just finished her studies to become a teacher and still has some student loans to pay. To get a good job she wants to make a favourable impression during her interviews, so she wants to buy some smart new clothes. She goes to the clothing store and asks them if she can open an account. The customer service department gives her a form to fill in which asks for her personal details as well as how much she earns. She explains that she does not have a job yet. However, the customer service department tells her not to worry as she will be sure to get a job within the month and then will be able to pay the monthly instalments.
Even though Ms Adams knows she will have no money if she does not get a job, she decides to take a small loan from the store and open the account. She buys clothes for R1 000. After three months, Ms Adams still does not have a job. She now has her study loan and a clothing account to pay and she is very worried. She goes to an advice office to see what she can do.
WHAT DOES THE LAW SAY?
Under the National Credit Act, credit providers have a responsibility to make sure that a consumer can afford to pay back the new debt. If not, then credit may have been granted ‘recklessly’. (See Reckless lending)
WHAT CAN YOU DO?
You believe that Ms Adams was granted credit recklessly because she had clearly explained to the store that she did not yet have a job. You explain what this means to her and give her the name of a registered debt counsellor to contact. counselling)