According to a recent report by the University of Pretoria Law Clinic, approximately half a million South Africans employed in the private sector currently have emolument attachment orders, more commonly known as garnishee orders against them.
Kevin Hurwitz, Chief Executive Officer of Wonga.com South Africa, believes consumers should speak to their credit providers when in danger of defaulting on a repayment, rather than falling into arrears and hoping the debt will go away altogether, often resulting in a garnishee order being implemented.
“Credit providers understand that circumstances can change and that there are often valid reasons for consumers not being able to stick to their repayment commitments. It is vital for consumers to contact their credit providers and together agree on a repayment arrangement, rather than trying to avoid the credit provider completely,” he points out.
A garnishee order is a court ordered instruction that requires employees to deduct money owed to a creditor from an employee’s salary before it is paid out. Recent reports of widespread abuse of this type of debt collection have fuelled debate about the legality and enforcement of these orders.
“We believe a garnishee order should be considered as a last resort rather than the go-to tool for debt collection,” says Hurwitz and adds that Wonga consistently tries to contact the consumer from the day of default via email, SMS and telephone.
“We also urge the consumer to get in touch and to speak to us, so that we can discuss the options available to them. Only when a customer refuses to acknowledge their debt and disputes our collection attempt at the bank will an emolument attachment order, via court order, be used to collect any outstanding debt, as this is the only route available to recoup the debt in these circumstances.”
“It has to be said though that we only see a very small percentage of customers falling into arrears, with only a tiny percentage of these who we are unable to reach agreement with,” says Hurwitz. “In addition, short term credit providers such as Wonga are reluctant to use this as a means of recouping debt due to the lengthy process to institute a garnishee order and will often try and work with the consumer to find an alternative means of repayment.”
Responsible lending is a two-way street, it is still the consumer’s responsibility to ensure that they stay up to date with their repayments or commitment to pay back the debt over a period of time, he says.
“Communication is essential. If things change, consumers need to make sure that they let their credit providers know. Avoiding the debt can often make the problem worse,” concludes Hurwitz.