The link between reckless credit and emolument attachment orders.

Abstract

South Africa has experienced significant levels of reckless credit thus leading to over-indebtedness of consumers. Furthermore, research conducted in 2008 and 2013 by the University of Pretoria indicated that there were abuses prevalent in emolument attachment orders (EAOs). An interesting aspect of the research was that credit providers were particularly interested in employed consumers, as their wages or salaries were deemed to be a form of security. The aim of this dissertation is to examine the link between reckless credit and EAOs. The main research problem revolves around the fact that credit providers do not conduct thorough pre-agreement assessments and have a tendency to subscribe to the tick box approach to compliance. Moreover, these pre-agreement assessments do not make provision for the inclusion of external market factors, which is essential to safeguard consumers against economic events. This dissertation argues that, at the point when reckless credit is granted, it is inevitable that default will occur thus leading to the culmination of an EAO. In this regard, the case of University of Stellenbosch Legal Aid Clinic and Others v Minister of Justice and Correctional Services and Others; Association of Debt Recovery Agents NPC v University of Stellenbosch Legal Aid Clinic and Others; Mavava Trading 279 (Pty) Ltd and Others v University of Stellenbosch Legal Aid Clinic and Others (CCT127/15) [2016] ZACC 32 is important. The judgement illustrates how vulnerable consumers fell prey to unscrupulous credit providers who then took advantage of their salaries. An important aspect about the judgement was that section 65J of the Magistrates Court Act has now been amended through a joint interpretative mechanism of severance and reading in. The Constitutional Court’s order now requires judicial supervision in the EAO process, whereby a magistrate issues the EAO. This dissertation examines the effect of this and how EAOs are currently regulated. It also discusses whether judicial supervision is the solution to ameliorating the law on EAOs. Qualitative research methods were utilised such as legislation, case law, textbooks and journal articles. While there are no statistics to prove the link, anecdotal evidence proves the link between reckless credit and EAOs.