Termination Clause In Loan Agreement

Declarations of termination apply only to secured loans for which certain assets are mortgaged as collateral. For unsecured loans, such as credit cards or personal lines of credit, declarations of termination are not required. If the credit has not been used by the borrower, that is, he has not provided money by the bank, the termination of the loan agreement entails the cancellation of the borrower`s right to the payment of the loan. In this situation, interest is not due to the bank, as the borrower did not use the bank`s resources on the loan. Credit quality is the ability to repay the credit contracted at the same time as the interest on the dates set out in the contract with the Bank. The loss of credit is therefore a situation in which the borrower has lost such financial possibilities. The credit quality is checked by the Bank before lending. For the purposes of this study, the borrower is required to provide, at the request of the bank, the documents and information necessary to assess creditworthiness. For example, mortgages are required to file declarations of termination as soon as the balance of the mortgage has been paid by the owner. This statement is important because it allows the owner to prove that he now owns his house freely and clearly. The termination of the contract with the consumer should be on a durable medium.

Here you will find the answer to the question of what a sustainable medium is: “Consumer rights before the conclusion of a consumer credit agreement”. The period for termination of a revolving credit agreement by a bank mentioned in the credit agreement may not be less than two months. The bank is obliged to inform the consumer of the reasons for termination at the latest before the expiry of the notice period. By borrowing from the bank as a borrower, we undertake to use it under the terms of the credit agreement. During the term of this agreement, the Bank has the right to monitor compliance with these conditions on the borrower`s side. Failure by the borrower to comply with the conditions (clauses) contained in the loan agreement does not meet the conditions for granting the loan. Therefore, the infringement must not concern only the essential or most important provisions of this Agreement. It does not matter that the borrower is not responsible for not having fulfilled the conditions of the credit agreement.

Remember that the bank has the right to terminate the loan agreement in case of violation of the conditions for granting the loan, unless it is written elsewhere in favor of the borrower in the loan agreement. It is for the Bank to assess and determine whether there are circumstances that lead to the termination of the contract. However, that assessment should be based on objective reasons. If the borrower considers that the termination of the credit agreement by the bank is unfounded, he can bring a civil action against the bank in court. However, the bank cannot terminate the credit agreement due to the borrower`s loss of solvency or the risk of bankruptcy if he has agreed to implement the repair program by the borrower. He cannot do this for the duration of the repair program unless he finds that the program is not properly implemented by the borrower. The recovery plan will be an action plan agreed with the bank, which the borrower should implement in order to improve his financial situation and avoid a bankruptcy that threatens him. On 10 October 27, 2014, the Dutch Supreme Court confirmed that a bank could invoke a contractually agreed termination clause, unless this was not acceptable according to the criteria of adequacy and fairness (de eisen van redelijkheid & billijkheid). 4 Until now, a bank could only terminate a credit agreement in imperative circumstances (even if the credit agreement contained a termination clause). . .

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