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Does it make sense to sue banks?


Source: Banki.UA

Borrowers or depositors often appear as parties to lawsuits with banks if they have justifiable legal causes.

2008-2009 marked the peak of lawsuits against banks. Financial downturn caused more frequent non-return of deposits by banks, the banks unilaterally change the terms of demand deposits, borrowers go into default, and banks are reluctant to set-off counter claims on loans and deposits at the clients’ requests.

«First of all, banks are sued by borrowers, who do not repay timely either loans or loan interest. Borrowers often expect the court to take into account their difficult financial situation and reduce arrears or extend period of repayment, says Oleksandr Vygovskyy, attorney at law of Ilyashev & Partners Law Firm.

– Another category of defaulting borrowers seeks invalidation of loan agreement in court hoping that they will be awarded to return loan amount, but not to pay interest for loan disbursement. In addition, depositors frequently sue banks for late return of deposits or breach of bank deposit agreements (e.g. due to unilateral reduction of interest of demand deposit envisaged in the agreement)».

The question is: does it make sense to sue a bank? It is very likely that the court will find in favor of the bank. Experts argue that it makes sense to sue the bank only if there are specific legal grounds for a more just restatement of the amount payable under the loan agreement.

«In some cases banks charge excessive commissions, overestimate loan interest, impose insurance and charge penalties not in compliance with the provisions of loan agreement, comments Oleksandr Vygovskyy.

– In addition, if a borrower proves his attempts to amicably settle debt with the bank before resorting to the court (e.g. that he had asked for a postponement and the bank ignored his request), and his temporary financial hardship (job loss, long-term disability, etc.), the court may choose to accommodate the borrower, which happens quite often in practice. However, if a borrower had information on loan terms and knowingly accepted such conditions, the court may consider his claims unreasonable».

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