n response to public concerns regarding the granting of loans to persons with disabilities, particularly those with mental health conditions, the Consumer Rights Protection Centre (CRPC) reiterates that creditworthiness assessment concerns the evaluation of a person’s income and financial obligations in order to determine their ability to fulfil contractual commitments. Legal capacity and a person’s health condition affecting decision-making ability, on the other hand, relate to the legal validity of entering into a transaction.
To date, CRPC has not identified systemic problems related to irresponsible lending to legally incapacitated or socially vulnerable persons.
Legal Capacity Is the Determining Factor
Under the Civil Law, every adult person is presumed to have legal capacity unless a court has ruled otherwise. CRPC emphasises that:
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A credit agreement concluded by a person whose legal capacity has been restricted by a court is invalid, and such an agreement may result in losses for the lender;
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The mere existence of a disability or medical diagnosis does not in itself restrict a person’s right to enter into contracts;
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A credit agreement concluded by a legally capable person who did not understand the meaning of their actions or was unable to control them is invalid;
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Subjective assumptions about a person’s ability to understand their obligations, without a legal basis, may constitute discrimination.
The lender’s obligation is to assess the client’s objective creditworthiness — the stability and amount of income and existing financial obligations — rather than make decisions based on health status or disability. Refusing credit solely on the basis of a diagnosis or assumptions about health is not legally justified.
Social Benefits as Income
Regular state social benefits and disability pensions constitute predictable and stable income and must be taken into account in the lender’s creditworthiness assessment, regardless of their source.
Lenders are not interested in entering into agreements with persons whose legal capacity is restricted, as such agreements are deemed invalid and may result in financial losses.
CRPC Guidelines and Creditworthiness Assessment Methodology
CRPC has developed guidelines for creditworthiness assessment, establishing debt-service-to-income (DSTI) limits of 10–40% depending on income level. This approach ensures that consumers with lower income levels can undertake proportionate and sustainable credit payments.
By contrast, the credit risk regulations of Latvijas Banka do not differentiate DSTI levels according to income level and provide for a maximum DSTI of 40% for any type and amount of income.
CRPC’s priority is to supervise market practices to ensure that loans are granted responsibly, objectively and fairly, while guaranteeing equal opportunities for all consumers.
CRPC encourages consumers to report cases where credit has been granted to a person with restricted legal capacity or without a proper assessment of creditworthiness.