The Citizen writes that urgent intervention is needed to stop loan sharks from having up to 75% of the wages of vulnerable people deducted.

A new report by the Stellenbosch University (SU) Law Clinic reveals that unscrupulous lenders use a bag of tricks to side-step the legal requirements of the emolument attachment order (garnishee order) system, which limits the amount that can be deducted from an employee’s salary to a maximum of 25%. “While garnishee orders remained a potentially lucrative and secure collection instrument, it is now considerably more difficult to issue them. Consequently, creditors turned to alternative methods to keep expanding their lucrative business enterprises by extending reckless loans while continuing to reap the benefits of wage garnishment,” said the SU Law Clinic’s Dr Stephan van der Merwe. The system allows creditors to enter into credit agreements with debtors on the basis that the loan, interest and fees will be collected from the debtor’s employer. The report also shows that unscrupulous lenders can count on indifferent or complicit employers who make deductions that are often completely disproportionate to someone’s salary. “In many instances, deductions on loans are made in favour of multiple creditors and for amounts well above 25% of the consumer’s salary. These deductions are unrestrained and shocking. In some cases, employees received zero income,” Van der Merwe reported. He called on lawmakers to develop legislation to protect vulnerable debtors against payroll deductions and unscrupulous lenders.

• Read the full original of the report in the above regard by Ina Opperman at The Citizen (subscriber access only)

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