Rid yourself of financial woes

Outstanding debt is easier to sweep under the carpet than to deal with. Initially, you might find some solace in pretending, however, as time progresses, that bulge under the carpet will eventually become stress bulges that run down your neck and keep you up at night. Eventually the sound of a phone ringing will bring about anxiety, as it could possibly be one of your creditors following up or threatening to take legal action against you. That’s not even the worst of it all. The worst phase to enter is the one where you simply lose hope.

“Hope is like the sun, which, as we journey toward it, casts the shadow of our burden behind us.” Samuel Smiles

If you are having serious trouble repaying your debts and if you are ready to embark on the road to financial freedom, we at Legal Hero have the perfect solution: debt review. We do not offer this service personally, but have truly been inspired by Karin Augustyn from Cape Debt Clinic and her team to whom we refer all our financially distressed enquiries. Karin and her team’s compassion is beyond anything we have ever experienced in the overpopulated debt review industry. *

Debt review vs being placed under administration?

Debt review is often preferred to being placed under administration. Why?

Debt review offers greater consumer protection as the fees to the debt counsellor are strictly regulated by the National Credit Regulator. A debt counsellor will assess your state of indebtedness, offer sound financial advice and facilitate a debt rearrangement with your creditors. Should your creditors not agree to the debt rearrangement one may apply to court for an order confirming same. The debt counsellor will then manage all your payments from a central distribution agency on a monthly basis on your behalf.

Administration is more expensive and the fees to the administrator managing the payments are higher. A court order is required and the debt may not total more than R50 000. There have been many reports of irregularities in that the fees to the administrator are not properly regulated and there is no central distribution agency involved. In most cases the distributions to credit providers only occur every three months and are handled by the administrators themselves.

How long does debt review take?

Nothing is a short-term fix. You will need to commit. The goal is to get you debt-free within a period of 3-5 years. Depending on your circumstances, this could happen much sooner. For a detailed timeline elaborating on what happens from day 1 – the day of your financial freedom, visit this link:

http://www.capedebtclinic.co.za/Debt_Review_timeline.html

Visit this link for answers to other frequently asked questions regarding debt review:

http://www.capedebtclinic.co.za/Debt_Review_FAQ.html

Contact Cape Debt Clinic (not limited to the Western Cape) on 021 828 2658 for a free first consultation to assess your needs.



* Please note that Legal Hero does not receive commission/ referral fees for referrals to Cape Debt Clinic.

Emolument Attachment Orders in South Africa and Yesterday's Western Cape High Court Ruling

South Africans are drowning in debt! According to the National Credit regulator, debt counsellors have assisted over indebted consumers with repayment plans worth up to R18 BILLION in total. Statistics show that by 2013, about 240 034 government employees and about 120 000 private sector employees had emolument attachment orders against their salaries.

During the month of July 2015, in celebration of Mandela Day, Legal Hero and Cape Debt Clinic, one of our trusted partners, are here to answer your money/ debt/ debt review questions free of charge. Please submit your question/s to capedebtclinic@legalhero.co.za. Policyholders may contact their hero directly.

WHAT IS AN EMOLUMENT ATTACHMENT ORDER (EAO)? 

Often incorrectly referred to as a garnishee, an EAO orders the employer of the debtor to religiously deduct money directly from the debtor’s salary each month in order to ensure prompt payment to the credit provider. 

HOW DOES IT HAPPEN? 

• When the consumer/ debtor breaches the terms and conditions of the loan agreement by failing to pay in terms thereof, 
• the creditor can take action by sending letters of demand, summons, obtaining a court order against the debtor, and then lastly using the court order to enforce payment by applying for an EAO or warrant of execution...

OR 

• The creditor can ask the debtor to sign a consent to judgment form, in terms of which the debtor consents to the judgment debt and agrees to the EAO against his/ her salary; 
• Section 58 of the Magistrate’s Court Act 32 of 1994 deals with consent to judgment applications; 
• In the year 2010 it was decided by the court in African Bank Limited v Additional Magistrate Myambo that section 58 of the Magistrate’s Court Act remains unaffected by the National Credit Act (which offers protection to consumers). The court ruled that credit providers may continue to make use of consent to judgment applications in terms of section 58; 
• Note that it is unlawful for the creditor to request a signed consent to judgment form prior to granting you a loan/ you falling into arrears. Therefore, always remember to check the dates. 

IMPLICATIONS OF YESTERDAY’S WESTERN CAPE HIGH COURT RULING BY JUDGE SIRAJ DESAI (08/07/2015): 

• Certain sections of the Magistrate’s Court Act regarding emolument attachment orders have been declared unconstitutional. We applaud the University of Stellenbosch’s Legal Aid Clinic who brought this application on behalf of 15 financially distressed low-income consumers; 
• However, remember that Constitutional invalidity needs to be confirmed by the Constitutional Court; 
• Should the Constitutional Court confirm this order: 

a) Credit providers may no longer obtain an EAO against the debtor’s salary by way of the debtor merely signing a consent to judgment form! 

b) Judicial oversight will be required. In other words, the Magistrate needs to consider the financial implications of the garnishee against the debtor first;

c) Judge Desai furthermore pointed out that consumers/ debtors may not be coerced into agreeing to a Magistrate’s Court in the jurisdiction/ area outside of where the consumer lives or works. This is often done as it is convenient for a credit provider to rather make use of the Magistrate's Court in its own area.

Please remember that you may send any further legal questions on the above/ debt/ debt review to capedebtclinic@legalhero.co.za during the month of July 2015. 

Cape Debt Clinic represents a network of registered Debt Counsellors and trusted partners, able to provide over-indebted consumers with debt solutions uniquely tailored to your personal circumstances and all the supporting services you need, in complete confidence. www.capedebtclinic.co.za. 021 828 2658.

Wills: Five Frequently Asked Questions

This weekend might be a great time to get your ducks in a row and write a Will!

DIY Wills are, however, dangerous and can be declared invalid. If you are a Legal Hero policyholder, rather contact your hero and ask for professional assistance.

5 FAQ's answered: 

1. What are the basic formalities?

a) Write/ type (and print out) your Will and sign at the end of the document;

b) Initial every other page if your Will is longer than a page;

c) Confirm your signature in the presence of two competent witnesses not younger than 14 years;

d) Ask your witnesses to sign the Will at the end of the document in the presence of each other and you (the testator);

e) If you are unable to sign the Will, a mark (such as an “x”) would suffice if the Will is executed (signed and witnessed) in the presence of a Commissioner of Oaths who will then attend to certify the Will as soon as possible.


2. Could a Will without a date be declared invalid?

A Will without a date is not necessarily invalid, but a date would make it easier to interpret your wishes should there be more than one will. Note: a new will does not necessarily revoke our previous Will/s. Wills are read in conjunction with one another as far as possible, unless you explicitly say ‘this Will revokes all previous Wills…’


3. Is it necessary for my two witnesses to actually read my Will?

No, it is not a requirement. The witnesses merely sign to advise that it is in fact your signature on the document/ they saw you sign the document.


4. Can my parents or spouse witness my Will?

Yes, BUT if they do, they will be unable to inherit in terms of the will. A beneficiary to your will may NOT sign as witness. If they do, they will be disqualified from inheriting. You should, however, inform your parents/ spouse/ attorney/ trusted party of your Will and where it is kept. He/she would need to supply the Will when notifying the Master of the High Court of your passing (the deceased estate must be reported within 14 days).


5. Explain to me why I need to appoint an executor in my Will?

The Executor is responsible for administering the estate. Duties include paying creditors of the estate (your debts), receiving claims (if you had debtors), pay the heirs to the estate, etc. whilst in constant communication with the Master of the High Court. If you do not nominate an Executor, the Master of the High Court may appoint an executor. An Executor may also not sign the Will as a witness. If so, he/ she may not act as the appointed Executor. An Executor may, however, inherit in terms of the Will.



Note: a will is presumed to be valid until the invalidity thereof has been proven on a balance of probabilities by the person alleging same. It is strongly advised that you seek professional assistance.

How do I claim unpaid salaries from my employer?

Question received via freeadvice@legalhero.co.za: 

Hi, Im working for a construction company as a manager.
The company owes me december,january, march and april salaries.
I lost because of not paying my debts. Can you please advise me on what steps to take so that i dnt lose the money im being owed and must the company pay me interest because of late payment?

Dear writer

We are awfully sorry to learn of your misfortune and are happy to offer some basic advice on what can be done to secure your salary and receive your dues.

1)      Department of Labour and not the CCMA/ Bargaining Counsel:

Many people make the mistake of taking the matter up with the CCMA or their Bargaining Counsel. However, as a general rule, all money related matters such as unpaid salary, overtime pay, leave pay, etc. are referred to the Department of Labour.

This is your best option as the Department of Labour offers assistance free of charge. The aforesaid is, however, not an option available to you if you are in senior management and/ or earn more than R205 443.30 per year. This monetary threshold is revised from time to time by the Minister of Labour and published in the Government Gazette.

Should you qualify, the Department of Labour will appoint an Inspector to investigate your complaint of nonpayment, contact your employer and possibly issue your employer with a compliance order ordering payment plus interest by a certain date. In terms of section 70 of the Basic Conditions of Employment Act, you need to inform the Department of Labour of your unpaid salary/ salaries within 12 months.

2)      Going to Court:

Employees can also claim an unpaid salary via the Small Claims Court provided the outstanding salary does not exceed R15 000. The Small Claims Court is free of charge, no legal representation is allowed and the authority of its order is equal to that of a Magistrate’s Court. Visit the Magistrate’s Court in your area and speak to the Clerk regarding the Small Claims Court and a Section 29 Letter of Demand, as each Magistrate’s Court also acts as a Small Claims Court. Going to Court is also the route to take if you were an independent contractor (and not an employee).

Should the monies plus interest owed to you be in excess of R15 000, the matter must be heard by the Magistrate’s Court. You will, however, need a lawyer to assist you with the relevant court documents and procedures.

Your lawyer could also decide to take the matter to the Labour Court. Your employer will receive notice of this application and may decide to oppose the matter or not. Once the Labour Court is convinced of your case, it can issue an order instructing your employer to pay all outstanding monies to you before a certain deadline.

For some the battle does not end here. Should your employer fail to pay in terms of the court order, one needs to go back to court! What often happens next is that the Sheriff will come knocking to draw up a list of all the employer’s assets to be sold in execution in order to cover your unpaid monies.

3)      Interest:

In terms of section 75 of the Basic Conditions of Employment Act, an employer must pay interest on any amount due in terms of the Prescribed Rate of Interest Act. The aforesaid act has recently been amended. Prior to 1 August 2014 the interest rate was 15.5% per year but this has now been changed to 9%.

Remember that an employer only has a grace period of 7 days to pay employees in terms of section 32(3) of the Basic Conditions of Employment Act. Once your salary is more than 7 days late, we advise employees to take the matter up internally by filing a grievance and discussing the matter with senior management.

Should the aforesaid fail, you next step would be to either file a complaint of nonpayment at the Department of Labour should you qualify, alternatively, contact a private attorney/ your legal cost insurance company to get the ball rolling with regards to letters of demand in order to pursue a Civil case.

Lastly, but very importantly, remember that a Civil claim (money claim) prescribes/ expires/ becomes invalid within 3 years since payment/ acknowledgement of the debt provided no legal action was instituted. This means that your unpaid December 2014 salary will prescribe in December 2017. After December 2017 your employer can raise the defense of prescription and you will lose the December money owed to you! We therefore advise that you take action as soon as possible.

We hope this helps and sincerely wish you all the best with this endeavour.

Kind regards,

Legal Hero

www.legalhero.co.za

Choosing a Matrimonial Property Regime

Love is wonderful but every so often it can seduce us into acting hastily and making bad life decisions. One such a decision is choosing the wrong matrimonial property regime.

What is a matrimonial property regime?
A matrimonial property regime is a big word for the financial arrangement between you and your spouse. You could either be married:
· IN community of property
· OUT of community of property; or
· OUT of community of property WITH the accrual system.

Very important:
If you are fail to register an ante-nuptial agreement BEFORE you tie the knot, you are automatically married in community of property. This means that everything your spouse OWES and OWNS also belong to you (and vice versa).

Consequences of being married in community of property:

1. This regime means that you and your spouse share everything, including that car YOU bought before you two got married;

2. There is a common estate, therefore debt incurred by your husband or wife will also become your debt;

3. If your husband or wife is then unable to pay the debt, YOUR name will ALSO be listed on ITC (in other words, you will be blacklisted);

4. If the creditors then take judgment and ask for an attachment of property order, that car you bought before you got married can be confiscated to cover your spouse’s debt!;

5. If your spouse’s spending habits lead to sequestration or debt review, you will also form part of the sequestration or debt review.


Many couples, however, prefer South Africa’s default matrimonial property regime. It may work well for women or men who choose to stay at home and raise the kids. Your spouse’s salary is then also your salary and should you decide to go your separate ways and divorce, you will receive half of everything.

TV License Fees NEVER Prescribe

Did you know? Fees owing to the SABC in terms of your TV license NEVER prescribe/ become invalid! This is significant as most debts may prescribe after 3, 6, 15 or 30 years. 

In terms of the Broadcasting Act and Television License Regulations, licenses are payable in advance and unpaid license fees will NOT constitute debt. Therefore neither the National Credit Act nor the Prescription Act applies. 

www.legalhero.co.za. 

Mission statement

Legal Hero steps up to secure justice in an uncertain world where legal threats are likely, skills are scarce and only a minority can afford the law. Determined to leave this world a better place, Legal Hero endeavours to not only provide quality legal assistance at an affordable monthly premium, but also legal education, so that everyone, in time, may become their own hero.

Debts have expiry dates too

Similar to the sell by dates found on your milk carton, debts have expiry dates too! This is for legal certainty and to protect debtors against old and inflated debts.

A creditor only has 3 years’ time to institute legal action against a debtor (since the last date of payment/ acknowledgment of debt). After the 3 year period the debtor may raise the special defence of prescription in court.

To avoid the debt’s ‘expiry date’ the creditor needs to:
a) convince the debtor to acknowledge the debt or make a payment towards the debt (this will cause the 3 year period to start running afresh) OR
b) take the matter to court before the ‘expiry date’ to request a judgment against the debtor (as a judgment debt is binding/ lasts for 30 years!).

We often see creditors take advantage of the debtor’s ignorance and demand immediate payment when in actual fact the debtor is able to raise the special defence of prescription in court. Technically only a court can confirm your special defence of prescription, however, most creditors will stop calling/ sending legal letters once you have correctly pointed out prescription. Should the creditors still decide to take you to court, remember to ask for a cost order against them (meaning that they should be held liable for your legal fees should your defence succeed).

Very important is that the defence of prescription is not something the magistrate/judge will bring up in court on behalf of the debtor. If you are unaware of this special defence, chances are you will end up with a court judgment against your name.

Please note that debts owed to the State in terms of taxation and/or levies are different and only prescribe in 30 years’ time (without the State having to go to court to obtain judgment against you). This means that the State has a full 30 years to claim from you debts resulting from municipal bills, TV licences and traffic fines.

Knowledge is power.  

Legal Hero.

www.legalhero.co.za

Legal Hero endeavours to not only provide quality legal assistance at an affordable monthly premium, but also legal education, so that everyone, in time, may become their own hero.