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Current issues surrounding EAO's


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With all the current issues surrounding EAO's we at OVAG still believe that they are a powerful tool in a debt collector's arsenal. It also provides the consumer a fixed repayment plan that will reduce the debtor’s outstanding debt, provided it has gone through the proper channels. 

There has to be considered action by all parties involved to reduce the high levels of fraud and corruption in the granting of EAO’s. At OVAG we believe that there are steps that can be taken to improve the EAO process as well improve the public’s perception of the use of EAO’s as a debt recovery mechanism. 

The National Credit Act provides the consumer protection against illegal lending practices. It is not unusual for extremely punitive lending rates, presigning of garnishee orders and reckless lending practices (chief amongst is high interest rates) which Chief amongst these practices is the pre signing of garnishee orders by unscrupulous lenders. EAO’s make it easy for lenders to secure their payment; the failure to police the provisions within the NCA to protect consumers from such practices allows it to continue. The real issue here is not the EAO process but the lack of enforcement of the provisions within the NCA that should protect the consumer. The era of high interest rate is over, creditors utilising the EAO process should accept a lower interest rate (at the highest rate allowable in terms of the Prescribed Rate of Interest Act of 1975 from the date of the EAO) as their payments are secured by the EAO. 

The employee and employer must both be served by the sheriff personally. This will allow for the employee to employee to oppose the application. The creditor will provide both parties all information available to it, and the employer will provide a salary break down. This will stamp out the issuing of unopposed applications as well as EAO’s that attach a large portion of the employee’s salary, pushing them into a never ending debt spiral. 

Section 65J legal costs should be capped, and must bear direct correlation to the size of the debt. An EAO register should be set up, allowing creditors a view of employee’s obligations if any. 

OVAG proposes that these actions whilst not exhaustive will go a long way in rectifying the current situation for the benefit of all concerned. At OVAG we believe in the rehabilitation of debtors and work to provide a solution for the benefit of both creditor and debtor, without compromising on quality or principal. 

Date Posted: 2014-02-12
Posted By: OVAG Int. SA
Listed under these Business Listing Categories: Financial services, Business services & consultants,

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