When applying for credit, the credit provider must conduct a proper assessment of the consumer’s ability to be able to pay his  obligations, take reasonable steps to investigate and evaluate the consumer’s:

  • understanding and appreciation of the obligations of the proposed agreement; and 
  • ability to meet those obligations in a timely manner.                                                                                                                 

The credit provider must not enter into a reckless credit agreement.

An agreement is reckless if:

  1. the credit provider fails to conduct a proper evaluation, or
  2. after having conducted it, still enters into an agreement with a consumer, despite the fact that the available information to the credit provider indicated that the consumer did not appreciate or understand the nature of the obligations, or could not afford to pay them.

But, if it is proven that the consumer failed to fully and truthfully answer any question when providing information, the credit agreement will not be deemed to be reckless.

If a Court finds that an agreement was reckless it may suspend the agreement. A suspended agreement remains in force, but cannot be enforced until the consumer is able to afford it.