The number of borrowers refusing to pay interest on loans held by Bendigo and Adelaide Bank and written by insolvent agribusiness Great Southern is growing as lawyers acting on their behalf move to have the debts set aside.The refusal to pay loan obligations may escalate from hundreds of borrowers to thousands and cause a material rise in the Bendigo and Adelaide Bank's delinquent debts.Borrowers who want their loans set aside will have to prove that there was a failure by Great Southern to disclose material information which would have stopped them from investing had they known about it.Momentum for a loan payment strike is building, despite the bank's threats of legal action against borrowers who do not pay.The continuing uncertainty over the future of the Great Southern managed investment schemes is not helping. It is likely most of the 45 managed investment schemes will be wound up.Instead of throwing good money after bad, Great Southern investor growers are opting for legal action to remove a liability and recover money already paid.At least four law firms are known to be acting on behalf of almost 1000 clients owing money to Bendigo and Adelaide Bank. The following firms are on the case: Slater and Gordon, Macpherson & Kelley Lawyers, ERA Legal and Dennis & Company. There are 8000 potential clients with loans averaging $75,000 each.One law firm is advising clients not to pay interest and another has called on the bank to agree to a moratorium on loan payments while the matter is investigated.Business Spectator last week highlighted the potential problems with the $615 million Bendigo and Adelaide Bank exposure to the Great Southern insolvency.Since then, evidence has emerged that there were unusual aspects to the assignment of loans from Great Southern Finance to Bendigo and Adelaide Bank.Bendigo and Adelaide Bank had a long standing arrangement to either purchase loans from GSF or have GSF originate loans on its behalf via a subsidiary, ABL Nominees.Each loan written by GSF included a power of attorney that enabled the Great Southern directors to assign the loan to Bendigo and Adelaide Bank at their discretion.Business Spectator understands that many clients were never told when their loan was assigned from GSF to Bendigo and Adelaide Bank as required under the contract. They were never given notice in writing.Lawyers advising the borrowers have come up with many examples of loans that were written in 2008 but not assigned to Bendigo and Adelaide Bank until shortly before the company went into administration.Some were never told by their accountant that they had given Great Southern directors the power to assign the loan to any party they chose.One borrower told Business Spectator he would never have taken out the loan if he knew it would end up with a bank. His accountant never explained the importance of signing a power of attorney in favour of Great Southern directors.The legality of having a loan set aside could be tested in the NSW Supreme Court in a case brought by Dennis &