Debtors will have recourse with new credit act

Debtors will soon have recourse in instances where they were found to have been garnished unfairly, according to the new Credit Amendment Act.

Speaking at an information sharing session hosted by the Department of Trade and Industry (dti), the acting manager responsible for investigations and enforcement at the National Credit Regulator (NCR), Jacqueline Boucher, said studies have found that the short-term credit sector was the most prevalent with Emoluments Attachment Orders (EAOs) that were obtained fraudulently.

EAO’s are court orders that are granted in favour of credit providers and such orders allow for the attachment of a percentage of a consumer’s salary each month, which employers are required to pay to debt collectors or credit providers.

The National Credit Amendment Act (NCAA) came into effect on 13 March and requires credit providers to secure three months’ payslips before granting a person a loan among others.

“The Act will also ensure the automatic removal of adverse consumer information after judgements have been paid up. It will also prohibit the sale and collection of prescribed debt,” she said.

Boucher said changes instituted within the NCR governance structure will lead to quick decision-making processes.

Edward Ramolefe, from the Johannesburg Magistrates Court, said what was commonly termed Garnishee Order within public service was in fact an Emoluments Attachment Order.

“What usually happens is that a judgement creditor may cause an order to be issued from the court of the district in which the employer of the judgement debtor resides, carries on business or is employed. It is then that the judgement creditor approaches the employer to institute an EAO against the employee as ordered by the court,” said Ramolefe.

He said it was in fact the employer that was being garnished and not the employee.

“What the employer simply has to do is to comply with the order after satisfying certain verification and authentication measures,” added Ramolefe.

An EAO is preceded by a letter of demand or summons demanding payment as well as compliance with provisions of the National Credit Act.

“Upon receipt of the letter of demand the plaintiff can choose to ignore the letter, consent to the judgement, make payment arrangements or elect to defend against the order,” he said.

Ramolefe said in an instance where one is facing the reality of an EAO being instituted against them, it was best to approach a law clinic for legal advice or a clerk of the court to advice on procedure.

The purpose of the session was to share knowledge on the EAO or Garnishee Order judgements instituted against individuals.