A shocking 72% of South African income goes to debt. That plagues over 10 million individuals in the country with many of them suffering from mental and physical stress caused by the financial burden.

A way for creditors to ensure that the debt is paid is through the legal process of charging the individual with a garnishee order.

WHAT IS A GARNISHEE ORDER?

A garnishee order is a valid notice which legally allows a creditor to seize the funds from the person in debt through their salary. The process, in which the creditor retrieves the owed money, means that a portion of the debtor’s salary is paid out to the creditor before the salary is paid to the employee. 

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How much of my salary can be deduced?

Having a portion of your salary cut off before you receive it can be a scary thought, especially if you don’t have a say in how big that portion is.

The amount which will be deducted from the salary must be written clearly in the garnishee order. The creditor is allowed to claim the full amount owed over time, including any interest that might be accrued from the outstanding balance as well as any legal costs that the creditor has had to pay to collect the funds.

With help from a debt counsellor, it is possible to negotiate the amount as well as the time frame of the garnishee order, which can lighten the financial load if you are in debt.

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TYPES OF GARNISHEE ORDER

There are two different types of garnishee orders. These are:

  • A garnishee order for wages or salaries; and
  • A garnishee order for debts.

In the case of a garnishee order for wages, the employer of the indebted individual is required to pay a portion of their salary to the creditor before paying the employee. 

A garnishee order for debts requires that a third party owing the debtor money pay the funds to the creditor instead (such as the rent for real estate), or that the financial institution holding the funds of the indebted individual pay the creditor.

HOW DOES A GARNISHEE ORDER IMPACT A BUSINESS?

In general, when employees are in debt, it can reduce the efficiency and productivity in the workplace, as the stress of finance weighs on the employee’s mind.

The threat of garnishment over an employee can also result in the resignation of an employee as a means to avoid facing a garnishee order. This can affect a business as it can lead to the costly process of training new employees. 

The concern of resignation as well as the emotional debt can impact the professional state of the employee and the operation of the business, which usually has a negative effect on the company’s workflow.

How do I stop a garnishee order?

Receiving debt counselling can help you stop, or at least negotiate, a garnishee order. If your creditors agree to the terms laid out, it is possible to participate instead in loan repayment, and not face a garnishment.

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Can a garnishee order be stopped?

Once a garnishment has been ordered, the creditor would need to apply to the court to request the order be stopped. Alternatively, the creditor can tell the employer that the garnishee order is no longer necessary, in which case the deduction of the funds will cease.

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Representative Example
Loan Repayments are full of variables and things such as rates and once-off initiation fees. These vary depending on your individual credit profile. The terms of the repayment period can range anywhere from three months to a maximum of 6 years, with varying Interest rates from creditor to creditor up to a maximum of 28% per annum (compounded monthly).

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