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The Supreme Court clarified practical consumer credit issues

20.01.2009

In its recent ruling, the Supreme Court provided clarification on the regulation of consumer credit agreements. The Court gave an analysis of § 416(3) of the Law of Obligations Act, according to which cancellation of the agreement by the creditor will result in reduction of the unpaid gross amount of credit by the interest and the costs calculated for the consumer for the period when the credit is not used. The Court held that the aforementioned provision regulates the prohibition to request payment of interest for the period when credit was not used, and does not regulate the consequences of a delay in credit repayment.

 The Court Chamber also analysed the extent to which the creditor may claim late payment interest for arrears from the consumer, as well as the extent to which damages exceeding the late payment interest may be claimed from the consumer. In the opinion of the Court it is not allowed, in case of a delay in repayment of consumer credit, to submit a claim for unreceived interest or other income with the purpose of preventing damages, because the creditor is guaranteed a late payment interest claim in the amount of the previously agreed interest. However, a claim for reasonable debt collection costs could be considered.

In addition, the Court Chamber gives an affirmative answer to the the question whether an agreement on contractual penalty made for the  occasion of cancellation of the consumer credit agreement should always be deemed null  and void.

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