What is an emolument attachment order?

An emolument attachment order (EAO) is a court order instructing your employer to deduct money owed to your creditor(s) and to pay this over to the creditor or their attorneys.

The order is granted in terms of Section 65J of the Magistrates’ Courts Act, and your employer must comply.

EAO vs garnishee order

A garnishee order is similar, but involves the attachment of debts owed to you by a third party. It allows a creditor to collect money owed to them without attaching your salary. For example, if there is a court order and if the proper procedures are followed, the judgment creditor could attach your bank account and freeze it, ordering your bank to pay the judgment debt.

How to avoid an EAO

The best way is to prevent the matter from going to court. Make arrangements with your creditors to repay your debt, or seek debt review.

You can also apply for a debt administration court order, in which case a court-appointed debt administrator will manage your finances. This is subject to your total debt not exceeding the limits set from time to time. The debt administrator will receive your monthly salary, deduct your living expenses, and then distribute the remainder equally among your creditors.

Debt administrators are allowed, in terms of the Magistrates’ Court Act, to charge a fee up to 12,5 percent of the amount paid to your creditors.

The lead up to an EAO application

Once a judgment is entered against you, you must pay the outstanding debt. If you do not comply, the sheriff of the court may serve a warrant of execution, allowing them to attach your movable property and sell it to settle the judgment debt.

The judgment debt, subject to the specific court order, includes both the debt to the creditor and the costs of debt collection, which includes legal and debt collector fees.

The creditor may also apply for an EAO or garnishee order under Sections 65J and 72 respectively of the Magistrates’ Courts Act. This must be done in the court nearest to where you work, operate your business, or are employed.

Application process

• You must consent in writing to the granting of the EAO or it must be authorised by the court. If you don’t consent, the creditor must prove that they sent you a registered letter indicating the outstanding balance, and a warning that unless it is settled within ten days of the posting date, they will apply for an EAO.
  
  
• The creditor must submit an affidavit detailing the outstanding debt, payments received, and accumulated costs.
  
  
• There will be an inquiry into your financial situation, and you will need to submit a statement of assets and liabilities and income and expenditure.
  
  
• The court will assess the situation and determines a repayment amount.
  
  
• If the magistrate believes the order is reasonable and the amount is appropriate, the court may grant an EAO.
  
  

Employer executes the EAO

The EAO is served on your employer, who is responsible for deducting the specified amount each month from your salary and paying it to the creditor, or their attorney. They may recover a commission from the judgment creditor, of up to five percent of all amounts deducted.

Your employer may request a statement from the creditor detailing the balance owing and the history of payments received.

Your employer may not dismiss you due to an EAO being granted. This would constitute an offence punishable by a fine or imprisonment.

Notify creditors if you change employers

If you change jobs, notify your creditor so that they can serve a copy of the EAO on your new employer, along with an affidavit detailing the payments received since the EAO was issued, costs incurred, and the outstanding balance. Your new employer will now be bound by the EAO. If you become self-employed, you must still comply with the EAO.

Your rights

If an EAO is granted, ensure that it is both legal and valid. When the order is delivered to your employer, the sheriff of the court must also present the original order. The document must include the case number, all the debtor’s details, and be signed by the magistrate and stamped by the clerk of the court.

You are entitled to view a copy of the EAO at any time by asking your employer.

The creditor must also provide you with a free quarterly statement outlining the amount owed and repayment history.

An ombud can help

Your rights are protected under the National Credit Act. If you have any doubts about the EAO, approach the Credit Ombud, who will be able to confirm its validity. If the Ombud finds that the order was obtained illegally against you, they can request the creditor’s attorneys to have the order rescinded at their own expense.

 
Cancellation or amendment of EAO

The Magistrates’ Court Act also protects you if the EAO leaves you unable to maintain yourself or your dependents. You will need to prove your income and expenditure, and the court will decide whether to suspend, amend, or cancel the order.

Once your debt has been repaid, the creditor must notify your employer to stop the deductions. If they do not do this, you may take legal action and approach the court to prove that the debt has been paid.