Court ends exorbitant fees charged through garnishees

Johannesburg - Anglo American Platinum (Amplats) locomotive driver, Sarah Motuku, 44, who was trapped in a cycle of debt because of garnishee orders against her monthly salary, on Friday welcomed a court ruling that emolument orders were invalid.
Amplats took debt administrator Hannetjie van der Merwe and the HVDM administrator to court for charging exorbitant fees, which had impacted the finances of its employees.
Western Cape High Court Judge Siraj Desai on Wednesday declared that deductions that had been made by debt collectors were “invalid” and “unlawful”. In his judgment, Desai found that Flemix & Associates were obtaining judgments against the applicants in courts far from places of work and in places where they could not hope to reach.
Their right to approach the court was jeopardised if not effectively denied.
150 000 cases
Flemix & Associates does debt collection for 45 credit providers countrywide.
According to court papers, the firm has 150 000 active cases, and is trying to recover R1.6 billion in outstanding debt for credit providers.
Judge Desai ruled that the Law Society of the Northern Cape should investigate whether Flemix & Associates had breached their ethical duties relating to the securing of emolument attachment orders.
A garnishee order allows a creditor to secure repayment of a debt directly from the wages of the indebted individual. Before a garnishee order can be granted, the borrower has to have defaulted on repayments or appeared in court to admit liability for the debt. The court will then agree on a repayment schedule with the borrower and the lender and will grant a garnishee order on this basis.
Amplats spokesperson Mpumi Sithole, said the company hoped to clarify the law regulating administrators, and to hold accountable administrators that it considered to have overstepped the bounds of the law, or to be exploiting ambiguity in respect of their entitlements.
Over-indebtedness among mineworkers was one of the underlying issues that led to the wildcat strike at Lonmin’s Marikana mine in mid-August 2012 and to the killing of more than 40 people.
Motuku, a mother of three, said of her R8 000 monthly salary, she used to take home around R2 000. “My payslip would show that the garnishee orders people got to my money before I touched it. I was sick. I went to doctors and psychologists because there was no happiness in my life,” said Motuku. She said Amplats had helped her cut down debt repayments.
Amplats launched a programme to help employees with affordable debt repayment plans. It has helped employees cut debt repayments to 26 percent, giving employees an extra 27 percent of their net income.
South Africans are struggling with crippling debt, as the country was ranked as having the world’s biggest borrowers according to the World Bank’s 2014 Global Findex Database study.