Landmark judgement over unsecured lending?

By Staff Writer
Earlier this year, the Stellenbosch Legal Aid Clinic (LAC) brought a court action against 13 credit providers and the law firm, Flemix & Associates in the Western Cape High Court.

LAC was seeking to have certain sections of the Magistrate Court’s Act (MAC), relating to Emolument Attachment Orders (EAOs), declared as unconstitutional. 

The decision of which will be heard in the High Court tomorrow (Wednesday, 8 July).

The LAC also reportedly wants some EAOs already in force made null and void, as well as to create more clarity around the law.

“The confusion in law; every court and every magistrate in the court applies the law and interprets the law differently, that creates confusion, and [so the] credit industry –when they do approach a court for relief – what the requirements are.
Because everyone interpreters in differently. And that is why we approached the court, to get clarity,” said Marius Jonker, CEO of the Association of Debt Recovery Agents (ARDA).

Jonker said that the main purpose of the case is to have legal clarity.

“But the legal uncertainly is the reason why credit providers make use of a consent to jurisdiction as they prefer to go through the courts where they know what the requirements are,” he said.

Credit providers obtain the debt owed to them by attaching an EAO to a customer’s salary, having that portion of the money automatically taken from them each month.

Not enough man power

Another one of LAC’s arguments is that clerks of court should not be allowed to process EAOs, as their role doesn’t require them to do this.

However, Jonker doesn’t agree, stating that there just aren’t enough magistrates to accept every EAO case.

“We believe that legally a clerk of the court as the department of justice also believes, and as the current amendments state that the clerk of the court with special training should be allowed to grant such a judgment and EAO orders. It is just not practical if they insist on a magistrate granting such a judgment, the whole judicial system would come to a standstill, because they just do not have the capacity; it would be impossible,” said Jonker.  

Judgement is set to be passed tomorrow morning, and some commentators claim that it could drastically change the way debt is collected in South Africa. 

Recent Articles

Featured What happens to the interest on your tax-free savings?

You may be interested in investing your savings in a tax-free savings account (TFSA). However, the amount you’re allowed to save in this kind of account is capped. So, what does this means for any interest you earn above the limit?

What does financial emigration entail?

Over the last couple of years, you’ve slowly been saving to move abroad. You’ve learned a new language, and mapped out all the places you plan to see. But should you take all your wealth with you?

6 Clever ways to spend your tax refund

After submitting your tax calculations to SARS, you may receive a tax refund. This is a tax break offered by SARS based on certain expenses. But what should you do with it? We have a look at six productive ways you can spend this money.

When to trade in your old car for a new one

You may have noticed that your car isn’t running as smoothly as it used to. This is particularly concerning if you’re hoping to sell it at a reasonable price, and buy yourself a modern alternative.

Deals

Full Body Massage at Meraki Beauty & Wellness Centre

Price: R99
When: Mondays to Thursdays
Where: Umhlanga

Archery and Drift Triking with Adventure Freaks

Price: R149
When: Mondays to Sundays
Where: Hartbeespoort

E-Bike Stellenbosch Wine Farm Tour and Wine Tasting

Price: R899
When: Tuesdays to Sundays
Where: Stellenbosch


Latest Guide

Guide to debt rehabilitation solutions