Consumer Terms for Clued-up Credit Users

Educating yourself on all of the consumer terms used in the credit industry and consumer law is a smart measure to take, in order to protect yourself against predatory lenders, reckless credit providers, loan sharks and other financial fiends.

Thus, you should always stay up to date with the relevant legislature and legal terminology, as well as acquaint yourself with your consumer rights under the National Credit Act, to avoid becoming a victim of financial injustice and so that you can get financial redress if you are ever taken advantage of.

The following consumer terms are some of the most important, so we advise you to familiarise yourself with these, in order to become a switched-on, eagle-eyed credit user. Just remember, it’s a precarious economic jungle out there, seething with predators on the prowl for vulnerable, desperate prey. So don’t sign contracts or take out any loans, until you’re fully clued-up on all of the relevant consumer terms and your rights!

GARNISHEE ORDER

• An order against a person who can’t pay a debt which they owe.

• If you haven’t been paid the money (judgement debt) that a court has ordered a debtor to pay to you, you can apply to a magistrate to have their income, money or property attached, even if these are in the possession of another person.

• If the debtor’s money is held by a third party (the garnishee), they might be instructed to pay it to the court, and the debtor will no longer own this money.

• E.g. If you were to fall into arrears as a taxpayer, SARS would obtain a garnishee order diverting all or part of your income, until these arrears have been paid.

• This can involve a once-off deduction or a certain amount will be deducted monthly until the debt is paid off.

EMOLUMENT ATTACHMENT ORDER (EAO)

• A garnishee order involving a salary or income.

• Credit providers collect debt that you owe them by obtaining an EAO that requires a portion of your salary be attached to your debt each month.

• An EOA is served on your employer (the garnishee), who is required to deduct this debt from your salary each month.

• A credit provider can obtain an EAO, once you receive a default judgment or sign a consent to judgment, ordering you to repay the outstanding debt. Don’t sign any documents that contain consumer terms you don’t understand!

• The Magistrate’s Court Act regulates EAOs.

 DEBT REVIEW

• One of the most important consumer terms, also referred to as debt restructuring or debt counselling. You can approach a debt counsellor and ask to go under debt review, if you are struggling to keep up with your monthly instalments.

• Your debt counsellor will negotiate with your credit providers to have your interest and monthly instalments reduced, and to extend the term, in which you’ll pay them back.

• You can only receive debt counselling if the credit you took out was granted under the National Credit Act (NCA). This could be a home loan, vehicle finance or an unsecured loan.

• Once your credit providers agree to the new payment plan, your debt counsellor will take steps to obtain a consent order in a magistrates’ court or through the National Consumer Tribunal.

• If your credit providers reject the new payment plan, your debt counsellor will refer the matter to the magistrates’ court to get a final decision.