Responsible Lending Code discussion document outlines choice between prescription certainty and benefits of flexibility

Responsible Lending Code discussion document outlines choice between prescription certainty and benefits of flexibility

By Gareth Vaughan

Having due regard for the civil rights of borrowers is among the topics raised in the Ministry of Business, Innovation & Employment's discussion document on the proposed Responsible Lending Code.

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Well, let's think about this for a second here: What happens if the debtor simply refuses to pay? The first thought would be reporting to credit. However, the credit bureau is not in the Indian reservation and, with a little legwork, could be legally compelled to remove the item for the personal credit. The next option would be a lawsuit. But where? Would any court award that amount of interest? Doubtful. To get legal relief they would have to file suit in the courts of the reservation. That would be a foreign judgment - and because it is from a sovereign nation rather than a state - it would not automatically be entitled to full faith and credit. My guess is that it would be very difficult to enforce. The third option would be that they could try hardball debt collection techniques. The good news is that letters are easy to disregard and phone calls are easy to block. I would be interested to see what happens if people like this 60 year old Navy vet simply give these Indian reservations that one-finger salute. Frankly, I have never dealt with a situation like this before in my practice and I am quite curious.