Nicolette Dirk, finance writer, justmoney.co.za
According to a recent report by the University of Pretoria Law Clinic, approximately half a million South Africans employed in the private sector currently have emolument attachment orders (more commonly known as garnishee orders) against them.
More than 12 000 South African consumers are seeking debt review every month which is a 40% increase from last year. According to Paul Slot, president of the Debt Counsellors Association of South Africa, debt appears to be the leading cause of consumers being awarded garnishee orders.
“The average person has 3, 5 credit agreements and people in serious financial trouble usually have up to 13 credit agreements,” said Slot.
Face the problem head-on
Kevin Hurwitz, chief executive officer of Wonga.com South Africa, said consumers should speak to their credit providers when in danger of defaulting on a repayment, rather than falling into arrears and hoping the debt will go away altogether. This often results in a garnishee order being implemented.
“Credit providers understand that circumstances can change and that there are often valid reasons for consumers not being able to stick to their repayment commitments. It is vital for consumers to contact their credit providers and together agree on a repayment arrangement, rather than trying to avoid the credit provider completely,” he said.
What is a garnishee order?
A garnishee order is a court ordered instruction that requires employees to deduct money owed to a creditor from an employee’s salary before it is paid out. Recent reports of widespread abuse of this type of debt collection have fuelled debate about the legality and enforcement of these orders.
Slot said the problem with garnishee orders is that when it is issued, no affordability assessment is done by the magistrate before the order is signed.
He added that the cost stipulated on this order is also usually inflated.
“Garnishee orders should be considered as a last resort rather than the go-to tool for debt collection,” says Hurwitz.
What can consumers do?
Slot added that consumers should act fast when it comes to garnishee orders and speak to a debt counsellor who can arrange the payment.
“Deal with the matter by getting a copy of the garnishee order and discuss it with an expert. If needs be you can also re-approach the court. Many work places have employee wellness programs to assist with such situations,” said Slot.
Hurwitz said responsible lending is a two-way street and it is still the consumer’s responsibility to ensure that they stay up to date with their repayments or commitment to pay back the debt over a period of time.
“Communication is essential. If things change, consumers need to make sure that they let their credit providers know. Avoiding the debt can often make the problem worse,” said Hurwitz.