What is a garnishee order and how does it work?
When you are in financial trouble, debt counselling can provide you with a solution that can help you find your way back to financial stability and with a Constitutional Court’s ruling earlier this year, the garnishee order as we know it could be a thing of the past.
Zak: I’m Zak King from Debt Review TV and I’m here in the studio with Seb Alexanderson, debt counsellor from the company NDA. Thank you very much for joining us in studio today.
Seb: Thanks for having me Zak
Zak: We are very interested in the topic of garnishee orders. Recently there has been a lot of talk about a big constitutional court case that has been happening and we wanted to get your input on it. First of all Seb, What is a garnishee order, how does it work?
Seb: When you lend somebody money and that person doesn’t pay you back and then fails to negotiate any repayment plan, you’ve got the right to take that person to court in order to make an application to attach or deduct money directly through the employer.
Zak: Okay, so I get my salary check, but some of the money is gone now to someone I owe money to?
Zak: So now, there is another word that people use, an emolument attachment order which is also about attaching money out of your salary. Is this the same kind of thing we are talking about?
Seb: Absolutely! In the EAO, commonly referred to as a Garnishee order are exactly the same thing.
Zack: Great, so the two are the same. But what happens before someone ends up with a garnishee order? What’s kind of the steps that are followed? You mentioned some of them briefly but how do I go from being a consumer who is paying my debt to suddenly having a garnishee order?
Seb: Well look, these days it’s difficult to get a garnishee order but in the past what would happen is the consumer would borrow money from the creditor and then fail to make the repayments. So the creditor has a legal right to peruse that consumer in order to get their money back. So the first thing that’s going to happen is the creditor is going to peruse the consumer through debt collection purposes, failing to collect the money that way, the creditor will then peruse the consumer through the courts, issuing summons, if the consumer doesn’t show up to court, then we get a default judgment which will then allow the sheriff to go over to the house to see if they can attach any moveable goods. Failing to do that, they will go back to court and approach the employer to pay the creditor directly from the consumers’ salary.
Zak: So quite scary stuff? Is there any way to avoid the garnishee order?
Seb: Absolutely. The first thing you should do is try to negotiate with your creditors and try to work out some kind of payment plan. With that, debt review is the best medium to negotiate your way out of that.
Zak: Okay so you are a debt counsellor, can debt review help in this?
Seb: 100%. Debt review is about negotiating repayment terms that are affordable and applicable to the individual consumer.
Zak: So does that mean normally you would pay less than you were before? When you couldn’t pay everyone their money?
Seb: Absolutely. I mean every case is different. You know, we look at every consumer’s case on a case by case basis. But yes, in 99% of the circumstances you will pay a reduced amount back to your creditors.
Zak: So if I’ve got a garnishee order against me and money is coming out of my salary every month, things are out of control, is debt review still an option for me?
Seb: 100% Zak. If you’ve got a garnishee order in place, that garnishee order is going to stand but what we can do is help you with the rest of your debts to avoid any further garnishee orders.
Zak: Okay, so we want to go back to this constitutional court case that we mentioned. A group of farm workers in the Western Cape, they were really struggling to make ends meet as all this money was disappearing off their salary; a lot like what happened in Marikana. They went to the Stellenbosch Legal Aid clinic asked for some assistance; they went to the high court in the Western Cape and the court case wen in their favour. And in fact in that court case they said these garnishee orders might not be constitutional. So they made their way to constitutional court and what happened there Seb?
Seb: Huge win for the Legal Aid Clinic and the people of South Africa. Three main points came out of that court case. First involvement, before the court case, a clerk of the court was able and capable of rubber stamping these garnishee orders. So no due diligence was being done, people were just receiving garnishee orders at the mercy of the clerk of the court. Now a magistrate has to oversee it. Secondly, affordability. Affordability factors and due diligence must be done before to make sure the consumer is not left with nothing after the paycheck.
Zak: So that sounds like a massive change. So basically in the past you could never get to the court where you want to defend yourself. They would just take whatever amount they wanted off and there was someone in the back room just stamping these things and getting a bottle of whiskey at the end of the month; who knows.
Zak: So that’s a massive victory for the South African consumer.
Seb: It should make garnishee orders a thing of the past.
Zak: Is that the end of garnishee orders? Are they gone, are they done?
Seb: Zak, you know; I believe so. I think it should be almost impossible now for anyone to get a garnishee order. You have every option available to you, debt review is there to help you every step of the way and with these new affordability structures and putting emphasis on magistrates to be able to make the right decision; nobody should be getting a garnishee order anymore.
Zak: So let’s say I am a consumer and every month I’ve got to decide, well I’m going to pay this guy…I can’t afford to pay him, and I keep swapping and changing whoever phones me the most or chases me the most; I promise them and I pay them. What advise would you give me?
Seb: Zak that’s exactly why we are here. Whether you think you are over indebted or not, one of the best things you could do is to sit down with a debt counsellor and go through a financial statement. Look at your income, look at your expenditure, try to look at your affordability and compare it to what you are paying your creditors. See if you are living a normal standard of living. It doesn’t cost you anything, and any good debt counsellor will help you out.
Zak: So this is a big change in the world of collections. Garnishee orders have had to really shift and change and as constitutional court plays a massive roll in that. Seb I just want to say thank you very much for explaining it to us other options that people have, we really appreciate your time.
Seb: Thank you Zak