# Regulatory Compliance Category > National Credit Act Forum >  Special Plea: Reckless Credit

## Citizen X

*Special Plea: Reckless Credit

*


*Scenario:* I have a debt. It *is not* prescribed. I have being served a summons. I cannot raise a special plea of prescription nor can I raise a special plea of jurisdiction, but I am convinced that the loan, finance etc granted to me was indeed reckless.



What do I now do??



*Simple*
You raise a special plea of reckless credit. In doing so, you do have a bona fide defence and the court may make an order *(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;*
*For this to work in practice*, you must be in a situation where you were granted credit and you never really had the means to pay back as you were over indebted. There must be a lot of substance and detail to your special plea of reckless credit..



The point of departure is section 83 of the National Credit Act..



*Court may suspend reckless credit agreement*
83. (1) Despite any provision of law or agreement to the contrary, in any court
proceedings in which a credit agreement is being considered, the court may declare that
the credit agreement is reckless, as determined in accordance with this Part.
(2) If a court declares that a credit agreement is reckless in terms of section 80( l)(a) 
or 80(l)(b)(i), *the court may make an order-*
*(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;*
*or*
(b) suspending the force and effect of that credit agreement in accordance with 
subsection (3)(b)(i).
(3) If a court declares that a credit agreement is reckless in terms of section 80( l)(b)(ii), the court
(a) must further consider whether the consumer is over-indebted at the time of
those court proceedings; and
(b) if the court concludes that the consumer is over-indebted, the court may make an order-
80( l)(b)(ii), the court(i) suspending the force and effect of that credit agreement until a date
determined by the Court when making the order of suspension; and
(ii) restructuring the consumers obligations under any other credit agreements, in accordance with section 87.
(4) Before making an order in terms of subsection (3), the court must consider-
(a) the consumers current means and ability to pay the consumers current
financial obligations that existed at the time the agreement was made; and
(b) the expected date when any such obligation under a credit agreement will be
fully satisfied, assuming the consumer makes all required payments in accordance with any proposed order. 




    See attached for illustration..

Find attached a particulars of claim and a responding Special Plea of Reckless Credit..

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AndyD (22-May-14), Dave A (22-May-14)

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## Dave A

A really useful post, Vanash. 

I think there are at least a couple of additional things people reading this should bear in mind, though.

1. The reckless credit provision relates only to credit agreements. It does not apply to incidental credit agreements. To understand the difference:
Credit card debt (as used in Vanash's example) is a form of credit agreement, and the reckless credit protection given by the NCA applies.

When you call in a plumber, or electrician etc. to perform a service and you now owe them money because you failed to pay their bill, that debt is not a credit agreement, and the reckless credit protection does not apply.

2. I see you have covered both bases as to whether there was a credit application or not. I'd expect in many (even most) instances there would be some form of credit application on record. Something to bear in mind is that if any of the information provided by the consumer in that credit application is less than entirely truthful, the consumer essentially loses the right to protection from the reckless credit provisions of the NCA. 

I'm sure if there is anything else, we can rely on the other members of TFSA to bring them up  :Smile:

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AndyD (22-May-14), Citizen X (22-May-14)

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## Blurock

I personally have a problem with people who do not pay their debts.

There also seems to be an abundance of lawyers willing to defend these people and find loopholes in the law so that they can get away with their criminal acts. The law provides little protection to the lender  or creditor and a judgement is now only valid for 5 years. A favourite tactic is to frustrate the courts and the creditors by delaying matters and playing for time. The longer it takes to collect a debt, the harder it gets. No wonder we now have criminals who enter into credit agreements with no intention to ever repay the debt!

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## Houses4Rent

I fully agree with Blurock. If you cnanot affor dit do not ask for the loan, period. Don't cry later the lending was reckless. Nobody can be reckless lender if this party was never asled for a loan in the first place.
I had to write of R90k plus as the bugger now died.

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## Citizen X

All valid points! This speacial plea isw for a very unique situation where a bank, or credit provider approved a loan or such other credit when the debtor could not really afford it! So my point of departure is what the NCA says about reckless lending and what a huge problem this is in SA currently...just my thoughts.. in any event this special plea must have merit, it's either you in the situation or you are not!

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## Houses4Rent

So are you saying that dispite the NCA and its regulations about reckless lending that institutions ignore all that and lend reckless anyway? Otherwise why would it be such a huge problem?

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## Citizen X

> So are you saying that dispite the NCA and its regulations about reckless lending that institutions ignore all that and lend reckless anyway? Otherwise why would it be such a huge problem?


That one train of thought as millions of South African's are debt. My point is that if you are really in this predicament, you were lent beyond your repayment means. Then and only then will this special plea assist the debtor/defendant, there must be merit..

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## Houses4Rent

I think we misunderstood each other. I know that many are in debt, but that should mostly be responsible debt from the lenders and responsible debt requested from the user. So reckless lending should be the exception and not such a big problem.

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## PatrickZ

Vansh is right and I salute her, this is a very good ground of defence for someone who's overindebted nd can't pay their debts anymore when faced with sommonses. I personlly have used it and the court ruled in my favour

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