Friday, December 11, 2020

Canceling a revolving credit: the standard letters of Consumer Credit

Revolving credit or revolving credit is a form of consumer credit that consists of a banking organization in making available to the borrower a certain amount of money, usable freely. Subscribed for one year, this credit is renewed every year by tacit agreement. When can we cancel it? Which standard mail should be sent?

When to initiate the termination of revolving credit?


The lending organization which granted the revolving credit must send to the borrower three months before the anniversary date an information document allowing him to manage his contract, specifying the valid conditions in the event of renewal and the terms of termination. Before 2005, the revolving credit could not be canceled until this anniversary date, by initiating the procedures at least three weeks in advance.

However, since the Châtel law was voted, revolving credit can now be canceled at any time, by sending the following standard letter by registered letter with acknowledgment of receipt. The borrower must then repay all of the sums used according to the rules defined in the loan contract.

In addition, you should know that in the event of inactivity for more than two consecutive years, the revolving credit is automatically terminated by the organization. On the other hand, if the borrower does not use the reserve of money for one year, the revolving credit is simply suspended, but can always be reactivated at his request during the following year.

The standard letter to terminate a revolving credit


I have taken out a revolving credit with your organization on (specify the date of signing the loan contract).

In accordance with the Châtel law of January 28, 2005, I wish to put an end to this revolving credit and I ask you to terminate my contract from (specify the desired end date of credit).

As the law provides, I agree to reimburse the amount of credit already used under the conditions provided in the loan contract, and I renounce to dispose of the loan amount unused.


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