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Govt reduces attachment orders for state workers

Personal Finance
Government, as the largest employer in South Africa, “has taken the lead” and investigated the legitimacy of more than 121 000 emoluments attachment orders (EAOs) amounting to nearly R71.5 million issued against its employees, according to the Budget Review.

“As at January 2017, government has reduced the number of EAO deductions by 35 800 and identified 7 450 orders that were irregular,” the Review says.

This means that more than 43000 government employees have been relieved of their obligations under EAOs, where balances have been found to have been exaggerated, or where there have been irregularities, such as excessive interest charges or legal fees.

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The systemic abuse of EAOs, also known as garnishee orders, has pushed many South Africans into a debt trap, the Budget Review says.

Although household indebtedness remains high, modest progress has been made, the Review says. The ratio of household debt to disposable income stood at 74 percent in September last year, down from 78 percent in 2014, and a peak of 86 percent in 2008. The Review says this was achieved by:

Regulations under the National Credit Act to curb reckless lending by setting affordability criteria for retail credit providers; and

Setting norms and standards in the national payment system to prevent debit order abuse.

The recent regulations capping the cost of credit life insurance will also help to relieve household indebtedness.

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