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As an indebted employee, a wage garnishment or garnishee order can leave you with insufficient monthly funds and added financial stress. It’s possible to stop a wage garnishment by finding alternative ways to repay your debt, including undergoing debt counselling. Here we explain what is wage garnishment and how to stop it.

Wage garnishment and debt

If you have already defaulted on several debt repayments or struggle to pay the instalments as agreed in the original loan terms, the creditor is likely to seek legal action to collect the debt. If you’ve taken a secured loan, a property mortgage or vehicle finance, the creditor can start proceedings to repossess your assets and sell them to pay the debt.

Similarly, wage garnishments ensure creditors get their granted loans repaid in full. A wage garnishment, known as an Emoluments Attachment Order (EAO), is a court order mandating that part of an indebted employee’s income be diverted to one or more creditors to service debt until it is fully paid.

The garnishment court judgment instructs the employer to withhold a percentage of the employee’s salary at the legal request of the debt collector, lender or creditor. The deducted money serves to pay off various types of loans, from consumer debts to student loans, medical bills or child support.

According to the amended South African Magistrates’ Courts Act of 2017, the deducted amount should not exceed more than 25% of the basic monthly income, finally giving some relief to over-indebted employees. Prior to this ruling, there was no limit to the amount deducted via wage garnishment, a boon for debt collectors but a grim prospect for heavily indebted employees. You can view the amended law here: https://www.gov.za/documents/courts-law-amendment-act-7-2017-english-afrikaans-2-aug-2017-0000

Still, any forceful income deductions resulted from wage garnishment leave many employees in deep financial trouble and incapable of making ends meet after the fact. Therefore, it’s important to know how to prevent and stop wage garnishments.

What to do when you receive a wage garnishment

If the Magistrates’ Court already ordered a wage garnishment on your income, you can take the following steps to ensure its lawfulness, prevent creditor abuse, and even challenge or dispute the judgment.

Verify the facts. Check that the wage garnishment order was issued and signed by a judge or magistrate (not the court clerk) located within the region where you live or work. Otherwise, the charge is invalid. The court proximity is indicative of being able to appear in court and state your case, proof of income needs and debt circumstances.
Check the lender and credit agreement. The creditor should be registered under the National Credit Act (NCA) and extend a lawful credit agreement based on your credit history, credit score and affordability. Unregistered lenders and overextended agreements will invalidate the garnishee order.
Follow the money trail. As a debtor, it’s in your advantage to check the amount deducted from your account (maximum 25%), the credit balances, and the fees charged (interest and legal costs) due to defaulting on payments. Any calculation errors, overcharges, and discrepancies between the amount deducted and the amount debt collectors pay to creditors can void the wage garnishment ruling.
Know your rights. Any indebted employee receiving a wage garnishment order is entitled to explain to the court why the order should be reversed, citing personal financial circumstances. You can try to negotiate with the creditors and settle on repayment alternatives. You can also lodge a complaint with the Credit Ombud office on suspicion of overcharges and irregularities.

How to stop wage garnishment

As an employed debtor, you have several options to stop a wage garnishment from proceeding or to ensure you won’t receive a garnishee order in case of unpaid debt.

Negotiate with creditors. If you’re regularly missing debt repayments or unable to afford your monthly instalments, the first step is to work out an alternative plan with your creditors. Try to reach a new agreement before any damaging legal actions, such as wage garnishment and asset repossession, occur. If in doubt, consult a financial or debt advisor to assist with the negotiations.
Challenge the judgment (review the steps above). Based on your personal and financial situation, it is worthwhile to see if you can have the wage garnishment order reversed, annulled, or at least decreased in your favour to accommodate a limited monthly budget. You will have to state your case and produce evidence of your net income and regular expenses.
File for bankruptcy. You can stop wage garnishment in its tracks by declaring immediate bankruptcy, but this is an extreme option that requires careful consideration (unless you have exhausted the other avenues). You should always consult a financial advisor, lawyer or debt counsellor before taking such a drastic step.
Review your debt. Another way to stop wage garnishment is to consolidate debt (combine multiple debts into one) or refinance debt (take a new loan to replace all your existing loans). The goal is to develop a new debt repayment plan accepted by creditors and affordable to you, an excellent way to continue payments and stop wage garnishment.

If you’re way over your head in debt, going through a formal debt review or debt consolidation process with a professional debt counsellor is your best chance to reassess debt repayment plans and receive more favourable terms with unhappy creditors.

The debt counsellor will negotiate the loan terms and formalise procedures for the consolidated debt on your behalf. You will need to stick with the plan until you’ve paid the debt in full, thus avoiding any prospect of wage garnishment.

For more information on wage garnishment and debt review or debt consolidation, consult an ezDebt counsellor today. ezDebt advisers help you stay on track with debt repayments through affordable debt counselling. All our debt counsellors are registered with the National Credit Regulator (NCR). Get in touch at www.ezdebt.co.za.

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