> the numbers suggest most of the people affected probably didn't have enough income to even service their debt.
Consider the analogue of the UK, where the banks have a duty to consider the ability of a persons ability to service a debt before letting them take out the loan.
Failure to do so will let the person who have taken out the loan get the debt stricken off, as the bank will have broken the law...
In that light this doesn't seem terribly shocking to me.
I'm not aware of any situation where a debt has been struck out because of this law.
Debts are usually struck out because of errors in contracts, statutory procedures, and other paperwork.
But courts usually seem to assume that a simple credit check counts as due diligence, and it's the borrower's responsibility to repay debt even if it's offered on an unrealistic basis - e.g. a credit card with a limit equal to a year's income, and an exploding interest rate of 50% or more if a borrower misses a payment or two.
Which is not unrealistic, btw. I know of one credit card company offering rates up to 99.9% compound to individuals with poor credit ratings.
Obviously they know most borrowers will default - and that seems to be the basis of their business model.
Here is an example where Lloyds TSB offered to strike off a 100k debt after it became clear they had likely broken the banking code (the banking code is voluntary, but it does not go much further than legal requirements), and it is by no means the only time UK banks have written off loans because they were wrongly given out to people who could not afford them:
Consider the analogue of the UK, where the banks have a duty to consider the ability of a persons ability to service a debt before letting them take out the loan.
Failure to do so will let the person who have taken out the loan get the debt stricken off, as the bank will have broken the law...
In that light this doesn't seem terribly shocking to me.