Moves to cap predatory garnishing orders

Some would say amendments to the 1944 Magistrates’ Court Act 32 to curb predatory wage garnishee orders, also commonly referred to as emolument attachment orders (EAOs), to 25% of a person’s monthly salary is long overdue. However, the National Assembly announced that it is deliberating over this matter.

While most countries boast a limitation on the percentage or amount that creditors can garnish from your account, South Africa currently has no limit in place.

“Due to little regulation surrounding garnishees, consumers at times would see the majority of their salaries going towards debt repayments. Securing a garnishee is a legal process and consumers who have garnishees have no control over payments as amounts are deducted by employers prior to receiving their salaries. At times, consumers can have multiple garnishees attached to their salaries, leaving them with very little or no money at the end of the month.

“According to DebtBusters’ Quarter 1 Debtometer Report, debt counselling (over-indebted) clients required 101% of their net income to service their debt, meaning clients were left with no money every month after paying their monthly debt obligations,” stated Kupiwa Gozo, EAO specialist at DebtBusters.

For many this has resulted in them being unable to recover financially.

“In January this year, we received almost 1000 enquiries from consumers with judgments or EAO’s. In one case, at the time of enquiry, we saw a consumer earning less than R6000 a month and potentially having nine garnishee orders attached to their salary, leaving them financially vulnerable every month,” stated Gozo.

The considered legislation would allow for wage garnishments to be limited to a maximum of 25% of the individual’s salary. It would further benefit the individual by restricting creditors to only filing EAO’s in the local court, where the individual lives.

Whether or not this is a reasonable percentage would be relative the individual’s salary.

“Introducing a cap on garnishees/EAO’s would provide much needed relief for consumers. Although introducing the cap may extend the payment terms for these consumers, they will still be receiving most of their monthly salary and hopefully will be able to afford basic living necessities,” Gozo added.

In addition creditors would now be required to inform both the individual and the employer before filing an EAO.

They will reportedly further have to “provide a free monthly statement of the amount of debt remaining. Employers will be required to end wage garnishments once the debt has been paid off. The bill will also provide for rescinding or abandoning court orders without incurring prohibitive legal costs.”

The bill is currently before the Justice and Correctional Service Committee, but a date has not yet been secured for the committee to consider the bill. This will only be done after the municipal elections, when Parliament resumes.

However, more can still be done in Gozo’s view. “Although 25% still constitutes a chunk of the individuals salary, it is a good start,” he stated.

  Handy tip: If you are struggling to afford repayments and manage your debt, why not consult a debt counsellor for assistance.