For quite some time now, many South Africans have struggled with debt. Whether it’s scrambling to keep up with repayments or continually falling down the rabbit hole of incurring more arrears, there is a reason why our country ranks as one of the most indebted nations in the world. Not to mention, according to a 2020 Financial Stability review by the South African Reserve Bank, households are spending about 9.4% of their disposable income on servicing debt. And yes, while that is alarming, it’s, of course, great that South Africans are being proactive about paying off debt. Still, it’s all about finding an affordable way to do so and not letting it accumulate, which might force creditors to seek legal action. One such option for them is a court-mandated deduction from your salary (yes, that is a possibility!). Let’s take a closer look at garnishee orders in South Africa.
Covering the basics: what is a garnishee order or emoluments attachment order?
Simply put, a garnishee order, which is also known as an emoluments attachment order (EAO), is a court order that is served by the sheriff (or messenger) of the court that instructs an employer to deduct money from an employee’s salary or wages to pay off and settle the debt owed. To help regulate these orders, the Banking Association along with numerous local credit providers created a National Industry Steering Committee to establish a Code of Conduct and help deal with illegal garnishee orders in South Africa (we’ll look into those later). It’s important to note that credit providers aren’t the only parties that can obtain garnishee orders against someone: a parent can get one if the other parent is behind with maintenance or spousal support, and even someone who agrees to lend money privately can obtain one if the borrowed money isn’t paid back.
How to obtain garnishee orders in South Africa?
If a person or company wants to get an emoluments attachment order for debt repayments, their first stop would be the Magistrates Court. The court must be in the same area that the person who owes the money lives or works in. The application for a garnishee order in South Africa must include:
- The relevant application form;
- an affidavit that states who the debtor (the person who owes the money) is;
- confirmation of the judgement made in favour of the creditor (the person or company who wants to be paid back); and
- the full outstanding amount of debt and how much will be deducted every month
The garnishee and the debtor must be informed about the garnishee order in writing and receive copies, and the debtor must be given the opportunity to appear in court to show whether or not the debt is, in fact, legal. And if it is, how much they can afford to pay towards servicing the debt.
Take note: legally, the amount deducted from the debtor’s earnings cannot exceed 25% of their gross salary or wages, and they must be left with enough income to survive.
Is there a way of checking if a garnishee order is legal and valid?
Yes, absolutely. When the messenger of the court delivers a copy of the garnishee order to your employer, they must present the original order at the same time. Both the original and the copy must include a case number, a stamp from the clerk of the court, a signature from an attorney and all the debtor’s details (name, ID number and employee number). You are legally entitled to ask your employer to see the copy of the emoluments attachment order at any time.
Approach the Credit Ombuds to double-check if everything is in order.
In addition to requesting the information from your employer, be sure to take those details to the Credit Ombuds. They will tell you if the order is in line with the Credit Act, if the correct interest rates and fees are being charged, if the order is affordable; and if the garnishee order was issued by the proper court. It’s important to know that even legally issued orders can result in incorrect amounts owed or fees charged. The Credit Ombuds would be able to get a full statement to check that everything is accurate.
Should they find that the order was illegally obtained against you, the Credit Ombuds does have the authority to negotiate with the attorneys involved to have the order rescinded at their own cost.
Legal tip: If the garnishee order has not been issued by the correct court, it is automatically rendered null and void. What’s more, you are entitled to recover the full amount you’ve paid, plus interest, if the order is deemed invalid.
Can you challenge or dispute garnishee orders in South Africa?
Employees are not without rights and can challenge a garnishee order at the court where it was issued. According to the law, you dispute the amount if it appears incorrect or more than 25% of your earnings. Even if the amount deducted is legal, it can still be challenged and potentially reduced if you are struggling to stay financially afloat or unable to pay maintenance, for instance. You also have the right to receive a statement that contains all the details of the payments, i.e. how much has been received and what is still owed.
There have also been cases of unethical lenders who bypass the Magistrates Court and get clerks of the court to issue garnishee orders in South Africa. Because of this, the amount owed, fees charged and deductions are not in compliance with the law. These orders are often taken out in courts that are not in the area where the borrower lives or works, which makes it difficult for the debtor to challenge. What’s more, even if the debt is fully repaid, the garnishee order isn’t cancelled by the lender.
Note: if a garnishee order against you has been issued by the clerk of the court, it is deemed unconstitutional and cannot be enforced.
Other than the salary deductions, are there any other costs involved?
Because this is a legal process, yes, there are other legal costs involved, and often commission is paid to a debt collector. However, it is important to note that these additional legal costs cannot exceed the total amount of debt you owe. For example, if you owe R10 000 and the charges are R12 000, you are only allowed to be charged R10 000.
Can a garnishee order be cancelled or set aside?
It’s quite a process, but it is definitely possible. Firstly, the debtor can bring an application to the Court for the order to be set aside if you can justify it with “good reasons”, as included in the Magistrate’s Court Act. These would include: the debt has been paid in full, a big portion of the debt has been paid and, therefore, the amount claimed is too high or you never incurred the debt in the first place. Alternatively, the creditor would inform your employer to stop the garnishee order, once the debt has been paid. Remember, if the creditors do not inform your employer and they continue to take money off your salary, you can take legal action.
How to prevent a Garnishee Order from being issued in the first place.
As always- prevention is better than cure. So, it is all about managing your debt more efficiently. We know that garnishee orders are the last resort for most creditors, so being consistent with debt repayments is key. LAW FOR ALL understands that South Africans are under a financial strain, so we’ve put together some Savvy Legal Tips to Help You Combat Debt.
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Be sure to get in touch with us for legal advice about debt, garnishee orders or legal assistance with setting up debt repayment plans with your creditors.