Much has been said in the press and in meeting rooms about the so-called illegal emolument attachment orders – commonly referred to as garnishee orders. Known for their bothersome, unfair and illegal ways, these so-called ‘illegal garnishee orders’ have had the spotlight placed on this method of debt collecting for quite some time.  The recent case lodged by the Stellenbosch University’s legal aid centre with the Cape Town High Court is another case that highlights this issue.

At times, even blamed for allegedly being the root cause of the Marikana striking miner’s woes, attention has always been placed on illegally obtained emolument attachment orders, causing many to lose sight of the impact of those orders which were legally correct and granted with full knowledge and consent of the consumers who owe the debt.

‘Emolument attachment orders are actually nothing but one of the current legal methods that credit providers can implement to recoup their money from non-paying consumers,’ say Credit Ombud, Manie van Schalkwyk.

Recent reports in the press have indicated that every month, private and government institutions alike have reported the fact that they effect payment of emolument attachment orders worth an estimated R5 billion as part of their monthly payroll run. ‘Many of these orders are in fact legitimate and the correct legal processes were followed, while many consumers consented to the repayment,’ says van Schalkwyk.

‘What is important is not only to stamp out illegal activities, but we also need to start focusing on educating consumers on how to avoid being “garnished” in the first place. The festive season is already knocking on our doors and many people will unknowingly take the first step to having a portion of their salaries attached by taking on credit which they cannot afford in the long run,’ cautions van Schalkwyk.

The one important thing about the emolument attachment orders that are granted based on the consent from the consumers, is that the consumer must understand the gravity of signing the document as well as the financial implications.

‘At the end of the day, no deduction from a consumer’s salary may be made without a valid court order,’ continues van Schalkwyk. The problem is that at times, consumers give their consent to these judgments unknowingly and this causes confusion in many cases. ‘The fact that a consumer did not read the “Consent to Judgment” documents and just signed when approached by the debt collector’s agent, does not make the order illegal.  We always warn consumers against signing any documents which they have not read and understood,’ he adds. ‘If a person does not agree with the debt that is reflecting on the documents, they should not sign the consent document merely as proof of receipt. We have seen too many complaints about the issue of consumers claiming they did not agree with the contents of documents or to a judgment, but still signed it,’ explainedvanSchalkwyk.

Another way in which an emolument attachment order can be granted, is through a default judgment which is granted in court in the absence of the consumer. This would happen because the consumerdid not receive the Summons which was delivered at the address stated in the contract. Consumers often move and do not update their address or contact details, resulting in them not receiving the letters of demand, notices that they will be listed on the credit bureaus or any legal process documents, such as a Summons.

The various steps in the process as well as what to look out for is summarised in the table below:Emolument Attachment Order – via Default Judgment:
Stage
Consumer Option
Effect
Things to Note
1. Soft Collection (telephonic, sms communication)
·         Respond and make arrangements to pay

OR

• Ignore the letter at your own peril
• You can further avoid legal action
• Avoid additional collection and legal costs
• If you ignore the letter the matter will be handed over to debt collectors or attorneys to take further steps
• It is better to answer the ‘private number’ calls and respond to sms’s from the credit provider and state your case
• Always ensure that you record  any arrangement in writing and receive a response in writing

2. Letter of demand (legally known as section 129 notice)
·         Respond and make suitable arrangements to pay

OR

• Refer the matter to an ombud’s office, a debt counsellor or an alternative dispute resolution agent
• You are given a chance to seek professional help in order to bring your account up to date, and to avoid the legal process and additional costs, or to raise any  dispute you may have regarding the account
• The legal Notification letters must be sent  by the credit provider to you via registered mail, to the correct post office  – and to the address  stipulated in your credit agreement
• Consumers have a chance to make use of the services of many organisations which offer free assistance to consumers

·
3. Summons
·         If you have a valid defence, you  can respond by defending the action

OR

·         You can admit to the debt and negotiate payments

OR

• Ignore the summons at your own peril
• This is usually the last chance to stop the legal process and avoid having to pay your debt to the credit provider’.
• If you do not make an arrangement or defend the action, default judgment will be granted against you.
• Go to court and use this opportunity to state your case  to the magistrate
• You have 10 working days to respond to the summons

4. Default Judgment

• Granted by the court  when you don’t defend the case
• From this point, it will be very difficult to  reverse the process and you will be liable for all the additional legal costs which  will be added to your account
• After the default judgment, the credit grantor would usually request an emolument attachment order to be granted as well. This will  be served on the employer, who is compelled to effect the payments
•  Ensure that you obtain a copy of the actual default judgment as well as the emolument attachment order.
• See which court granted the order. Is it the court for the area where you live or work?
• Does the order have a valid court stamp and date and are the documents signed by the attorneys
• If  the order was  granted erroneously, you need to inform the attorneys and your HR immediately

Emolument Attachment Order – via admission of liability and consent to judgment:

Follows the same process as described in stage 1 and 2 above.
Stage
Consumer Option
Effect
Things to Note

3. Visit by tracing agent appointed by debt collector

• You have the right to make an affordable payment  arrangement with the attorneys who are acting on behalf of the credit provider
• You can agree to a debit order to be effected
• Once you have signed the ‘tracer pack’, you can expect a judgment against your credit profile as well as an emolument attachment order against your salary
• You should not sign any documents without reading them – you have to be given a chance to go through the documents and read them properly.
• If you need time, ask if you can make a copy and discuss with your HR consultant or someone who can interpret the legal documents for you.
• Ensure that the attorneys who instructed the tracers know that you are not refusing to sign, but that you merely want time to read the documents.
• The tracer pack normally contains court documents in terms of section 57 (admission of liability) and section 58 (Consent to judgment)

The frustrating thing about these emolument attachment orders are that for many consumers it often feels like they have paid far more than what was due but despite this, they can hardly see any reduction in the balance owing, says van Schalkwyk.

‘What most consumers do not understand is that the payments are apportioned in a specific manner: first to the accumulating interest, then collection commission (often 10% of the monthly payments plus VAT), then a monthly service fee is added. Only after paying for all these costs, does the principle debt reduce,’ says van Schalkwyk.

Having money deducted from your salary is never a pleasant thing. It takes long to pay off the debt and it is a very costly way to pay off debt” he added.   Before over- spending and agreeing to new debt over the festive season, ensure that you will always be able to keep up with your monthly payments for the duration of your credit agreement.

Consumers can make use of the free service offered by the office of the Credit Ombud’s  to assist them should they think they are paying too much for garnishee orders, are garnished incorrectly or think their balance calculations are incorrect. Contact the Credit Ombud office on 0861 66 28 37 or by emailing ombud@creditombud.org.za