THERE is an appalling, nightmarish quality about the affidavits filed in the case lodged by Stellenbosch University’s legal aid centre with the High Court in Cape Town. One after another tells the story of how a life can be destroyed by a loan taken out to meet an expense or buy an item that seemed affordable.

But then, for whatever reason, the repayments stop. Often it’s because the loan should not have been granted in the first place — it was a reckless loan that the borrower could not afford but both sides to the transaction pretended otherwise. And so the nightmare begins.

South Africa has a sophisticated and chillingly effective debt collection system that kicks into place as soon as a debt is deemed to be in default for 20 business days.

A toxic cocktail that includes interest charges of 60% a year, administration and initiation fees, collection fees and legal charges attracts a viciously entrepreneurial type of player to this industry. Debt is bought, sold and redeemed in a process that frequently sees the borrower repaying multiples of the original loan over many years. In that period the borrower is virtually enslaved — every week most of his or her pay is used to repay a debt that seems never to get smaller.

Essentially what is happening is that the poorest and most vulnerable in our society are not only supporting the funders of a thriving credit-granting industry, they are also supporting a debt collection industry and its army of attorneys. By one estimate, the amount that has been transferred in this manner — over and above loan repayment and interest charges — is about R5-billion.

The enabling tool in this huge redistribution of wealth from the poor to the rich is the “emoluments attachment order”. In terms of section 65 of the Magistrates’ Courts Act, an employer is obliged to attach an employee’s salary on receipt of an attachment order issued by a magistrate’s court. If the employer, who is increasingly reluctant, refuses the order, then the court comes after the employer’s assets.

South Africa has a sophisticated and chillingly effective debt collection system that kicks into place as soon as a debt is deemed to be in default for 20 business days.

The emoluments attachment order was not actually designed to enable credit providers to lend recklessly. It was designed to ensure child maintenance orders were paid.

But the wily characters in the credit-lending industry quickly realised that, with a few tweaks, the order could be used to underpin unlimited reckless lending. What better person to ensure debts are collected than the employer who pays the workers?

The few tweaks enable the debt collectors to get around various legal requirements, including: that the employee be left with sufficient funds on which to live after servicing the order; that the employee consents to the terms of the order; and; that the order be issued in a magistrate’s court close to the employee’s place of residence or employment.

Here’s what the tweaked situation looks like: one of the 15 applicants in the Stellenbosch University case, who has five children and lives and works in Stellenbosch, was left with R50 to cover living expenses after servicing an attachment order that was issued by a clerk of the magistrate’s court in Beaufort West, 500km from where he lives and works.

He was ignorant of the implications of the document he had been told to sign by a “man with polished shoes” who arrived at his workplace. He didn’t know where Beaufort West was, so there was no chance of going there to challenge the order.

None of the applicants nor the legal aid centre believe people should escape the obligation to repay their debts. But they do believe the legal system should not be used to enslave debtors.

The legal aid centre’s bold action provides an excellent opportunity to sort out a scandalous situation.

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