A Western Cape High Court judge has ruled that the debt collecting procedure used by micro-lenders is “unconstitutional” and “an assault on human dignity”.

The application, brought by the University of Stellenbosch and the Legal Aid Clinic on behalf of 15 consumers, focused on the processes employed by micro-lenders to secure repayment of loans.

The University of Stellenbosch and the Legal Aid Clinic wanted the Emoluments Attachment Orders (EAOs) granted against the salaries of the 15 to be declared invalid. EAOs are more commonly known as garnishee orders.

“The individual applicants are a group of low income earners living in Stellenbosch, supporting themselves and their families on salaries of between R1 200 and R8 000 per month,” said Judge Siraj Desai.

“The group includes farmworkers, cleaners, and security guards. For debtors who work in low paid and vulnerable occupations, their salaries or wages are invariably their only asset and means of survival. A substantial reduction of this asset has the potential of reducing human dignity.”

He went on to say that the ability of people to earn an income and support themselves and their families is central to the right to human dignity.

According to the judgment, in terms of legislation, there is no statutory limit on the EAOs which may be granted against a debtor or the amount which may be deducted from his or her salary. However, in other countries, a limit was imposed on the amount of income that may be attached, said Desai.

He said the “depletion of a debtor’s income as a consequence of it being attached to pay a judgment debt may lead to the subsequent loss of other property such as a house or movable assets owned by the debtor”.

“The reduction of a low earning debtor’s income has a direct impact on his right to shelter, health and family life,” said Desai. News24