Changes as a result of a landmark garnishee ruling

The law that has enabled credit providers to access wages and salaries for money owed to them was challenged in the Constitutional Court in a case brought by the Stellenbosch University’s Legal Aid Clinic on behalf of 15 farmworkers who had up to 80% of their salaries deducted through garnishee orders (EAOs) each month, leaving them with virtually no money to survive.  As a result of this case, the following changes have been enforced:

  • While the law hasn’t been scrapped, it has got a lot harder for lenders and credit providers to gain easy access to the income streams of their clients.
  • As per the ruling, only a magistrate can issue an EAO (garnishee order) after being satisfied that the order is just and equitable, and that the amount to be deducted from the customer’s salary is appropriate.  This has been taken out of the hands of clerks, who can no longer make the decision to attach salaries.
  • Another ruling to stop corrupt clerks purposefully using courts far from the customer’s residence, the ruling states that an EAO can only be granted by a court close to where the consumer works or lives, irrespective of what the consumer has signed.
  • The ruling will only apply to EAOs issued from the date of the ruling (September 2016) and cannot be used retrospectively.
  • Lenders can still use a garnishee order to ensure they get their money back but will have to re-examine how they assess risk when granting credit and it will hopefully curb reckless spending.
  • While the judgment has been hailed as a victory for indebted people, it does not absolve them of their debt rather introduces fair and equitable steps to ensure they are able to pay their debt.

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