There’s evidence that many South Africans are failing to responsibly manage their debt – and some credit providers aren’t doing their job properly in assessing how much credit you can afford. Whatever the reasons, when you miss several payments or stop paying what you owe, credit providers can go to court to get a judgment against that debt. This could result in them seizing your assets – literally walking into your home and taking your car, fridge or TV – to sell to recuperate what you owe. Or they might take out a garnishee order on the debt.
How does a R1000 loan turn into almost R15 000 owing?? This is a real example of a real debtor experiencing gouging legal fees on the collection of a personal debt. We sometimes see these fees come into play in garnishees. A garnishee is an informal name for an emolument attachment order (EAO). This is a court order served on your employer, compelling them to pay the creditor directly out of your paycheque. These are notorious in South Africa for abuse and mismanagement such as faked consent forms, too much interest being applied, and extortionist fees being added on. And they can trigger a catastrophic debt trap for the credit consumer which keeps them locked in debt for decades.
There are millions of active garnishee orders in South Africa today, but no one knows exactly how many. It could be as high as five million. Although a recent ConCourt ruling (and subsequent changes to law) has tightened up the legal procedures around garnishees, significant loopholes remain that are still being abused today.