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.