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Black Sash happy with EAOs ruling

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Social rights group Black Sash have hailed a momentous ruling by the Western Cape High Court, which has nullified emolument attachment orders (EAO) issued against 15 farmworkers. Wednesday’s ruling, made by Judge Seraj Desai, is expected to set a precedent which could help curb the abuse of EAO’s by loan companies.

An EAO is an order issued by courts in favour of creditors seeking to reacquire money loaned to debtors, in particular those who have defaulted on their loan agreements. Creditors seeking to get back their money are required by law to apply for the order, which would allow them to force either the indebted individual, or their employer to cough up.

According to Black Sash national advocacy manager, Elroy Paulus, Desai’s ruling would help close many loopholes in this process.

In the case of the 15 farmworkers who ply their trade in the Paarl/Stellenbosch area, each had defaulted on loan agreements set at around 60%. This meant that an individual borrowing R1000, would at the end of the year be required to pack back R1600.

“People in South Africa are so indebted, but particularly poor people. They are being abused by loan sharks and predatory companies that bamboozle them, and don’t explain what the implications are of the agreement they are getting,” he said.

Paulus noted that the companies at the centre of the controversy, particularly Flemix and Associates, were also found guilty of a practice known as ‘forum shopping’.

“This is basically when instead of the magistrate applying his or her mind to attach the order; they make the clerk of the court sign. Not all the courts did that, so they (the accused) went shopping for the easy courts to get those orders signed,” he explained.

He added that the companies had been found guilty of seeking orders as far as the Free State, in full knowledge that the farmworkers would be unable to visit those court to defend themselves.

With Sassa beneficiaries already victim to a spate of unlawful deductions on their accounts, there was some fear that a similar situation could affect grant recipients. But Black Sash has expressed satisfaction that the ruling will have a direct bearing, in favour of millions of grant beneficiaries. VOC (Mubeen Banderker)

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