Repossession is the final stage of legal action and is most commonly seen with assets accounts (house, vehicle or furniture). If there has been a deviation from the required credit agreement, credit providers have the right to proceed with legal action to allow them to recuperate the outstanding debt.
7 August 2013
A garnishee order (also known as an Emolument Attachment Order), is a court order instructing an employer to make deductions from an employee’s salary, often the result of the individual no longer being able to make debt repayments. Before getting into bad debt and facing the consequences of a garnishee order, here is what you can do!
What is a garnishee order?
A garnishee order is associated with individuals who can no longer afford their debt, cannot meet their debt repayments and are unable to come up with the means to settle their debt due to a lack of assets.
Most commonly, garnishee orders are requested from Credit Providers who are owed loan repayments from consumers who have defaulted on their contractual obligations to repay the loan.
Occasionally, individuals struggling with debt will be instructed to apply for a debt administration order at The Magistrate’s court. Once the administration order is granted by the court, a debt administrator will be appointed in order to institute a garnishee order against the over indebted individual.
The garnishee order provides the over indebted individual’s employer with the legal means to deduct a certain amount of money from the individuals salary each month, which is given to the debt administrator in order to settle the individual’s debt.
Through the process of debt administration, The Magistrate’s Court Act allows the debt administrator to deduct 12,5% of the total amount deducted, before paying the individuals credit providers. Garnishee orders guarantees that the credit provider will be paid back and provided with a monthly instalment.
Is a garnishee order the best method for a consumer to eradicate debt?
Although garnishee orders are effective and assist the credit provider with receiving funds, does the process have the consumers best interest at heart? Often, debt administrators who are not regulated by the National Credit Regulator take advantage of individuals who are not aware of their rights as a consumer and charge escalated debt administration fees. Garnishee orders also do not have a specified time frame in which they may run and can therefore last for an extended period of time. But most importantly, garnishee orders can leave consumers with insufficient funds for daily living expenses, as the consumer will not have cash in hand to spend before paying the creditor.
How to avoid a garnishee order?
Once the Magistrates Court has decided to garnishee you, it is already too late and cannot be avoided. The only way to avoid a garnishee order is to prevent the matter from going to court in the first place. This can be done through the process of debt counselling or by contacting your credit providers to renegotiate your debt repayment plan.
What is debt counselling?
Debt counselling was introduced by the National Credit Act in 2007 and is regulated by the National Credit Regulator. It is the perfect debt solution if you cannot afford to meet your monthly debt repayments, as it takes your affordability into account before anything else. Under debt counselling, credit providers cannot take legal action against you and debt collectors are not allowed to hassle you.
In order to make sure that you do not slip further into debt, when under debt counselling you are unable to access any further credit, however a registered debt counsellor will restructure your debt repayment plan and draw up a new monthly budget, ensuring you have the means to live. Debt counselling functions similarly to debt consolidation whereby all your debt repayments are combined into one amount, but without a loan.
Debt counselling will also enable the debt repayment terms to be extended and a debt counsellor will negotiate with your credit providers in order to reduce your current interest rates. Debt counselling also allows you pay off your debt at a faster rate, should you come into more money, but you are not allowed to pay off your debt any slower than the already extended repayment terms.
Once debt free, a clearance certificate will be issued and your credit report will be updated.
For more information on debt counselling, contact Debtbusters South Africa’s leading and largest debt management company on 086 999 0606. DebtBusters provides debt counselling, as well as a number of other debt solutions, which can assist you with eradicating your debt.
Make sure that you sign up for debt counselling with a registered debt counsellor, which can be found by visiting NCR Website or dialing 0860 627 627. Registered debt counsellors at DebtBusters will be able to assist you with sorting out your debt situation and ensure that a garnishee order is not the result of getting into debt.