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Haunted by garnishee fraud

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To demonstrate its seriousness to uproot garnishee order fraud and act rather than just advise, Summit Financial Partners has made an unusual commitment to Fin24 users to audit and challenge their garnishee documents - at no cost.

A Fin24 user says he has been affected by garnishee fraud in 2011 and 90% of his salary was being deducted after his signature was forged on court documents.

"I knew about the debt I had, however I knew nothing about the garnishee order until my employer notified me about it.

"It was 90% of my salary that was being deducted and my signature was forged on the court documents."

He said he had to fight the case with everything he had and with the help of a lawyer managed to stop the garnishee order.

However, two months ago, he received another garnishee order from the same company.

"I had to fight them before any deductions were made and they stopped the garnishee."

He said it has been a hard time because so many things have changed since taking the loan.

He would like to know what the legal process is for one to be garnished.

"Do I have to sign any documents or represent myself," he asks.

He also said that in order to get help to service debt, one is required to pay large amounts of money. "If you are struggling to settle your debt, where would you get the money to pay such an institution?" he asked.

CEO of Summit Financial Partners and 6cents.co.za Clark Gardner advises that the following process should be followed by the credit provider/debt collector/attorney before a garnishee order can be implemented:

- A letter of demand must be issued, informing the consumer of the amount in default, warning that legal action will be taken if no payment is made and advising the consumer to consult a debt counsellor or alternative dispute resolution agent if they need help managing their debt.

- The letter of demand must be send by registered mail, or by other means that allow the credit provider to prove that it was delivered personally to the relevant consumer.

- If the consumer does not respond to the letter of demand, a summons is issued via the court.

- The summons must be served by the sheriff of the court.

- If the consumer does not respond to the summons, the clerk of the court will grant default judgment to the credit provider in the consumer’s absence.

- The credit provider can then apply to the court for a garnishee order to collect on the outstanding debt.

- The consumer must be sent a notification of the pending garnishee order and must be given an opportunity to appear in court to state how much they can afford to pay.

- If the consumer does not respond to the garnishee notification, the clerk of the court will grant the garnishee order in the consumer’s absence.

- The garnishee order will then be sent to the employer who is legally obligated to pay the money accordingly.

"If the consumer has not informed the credit provider in writing of any change of address, the credit provider can use the address stated in the original loan contract to deliver all legal documents," says Gardner.

This is often why consumers are not aware of garnishee orders until they see them on their payslip.

"However, new laws require credit providers to make sure the letter of demand is personally received by the consumer."

According to Gardner, garnishee orders can be challenged.
 
"Naturally, any irregularities in the process or fees charged can be challenged and will have to be corrected," he says.

"Additionally, in terms of section 65J(6) of the Magistrate’s Court Act, a garnishee order can be challenged if the amount being deducted is excessive (the consumer should always be left with enough money to pay their basic monthly expenses)."

As for solutions for over-indebted consumers, says Gardner, debt counselling can help consumers to reduce their monthly debt instalments to an affordable amount by negotiating with their credit providers on their behalf.

"Although there are fees to be paid, these fees are paid in the first two months of debt counselling, instead of making payments to their credit providers."

Credit providers are aware of this and cannot take legal action for these missed payments, he writes.

"From the third month onwards, a PDA (Payment Distribution Agent) will deduct one single payment from the consumer’s account each month and distribute the reduced payments to all their credit providers until their debt is paid off."

"Send any relevant documentation, as well as your contact details, to info@6cents.co.za and we will gladly audit the garnishee order for you," commits Gardner.

- Fin24

Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.

Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.

Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.


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