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Microlenders Challenged

Business Day reported on 12 October about a court challenge to what it terms “dodgy micro lending.”

In an unprecedented legal challenge, the University of Stellenbosch’s Legal Aid Clinic (LAC) is taking on the justice and trade and industry ministers, the National Credit Regulator, 13 micro lenders and a law firm in a case that could overturn the micro lending system that has crippled thousands of consumers.

The case against the legality of emoluments attachment orders (EAOs), served against the 15 clients the LAC represents, includes challenging the constitutionality of sections of the Magistrates’ Courts Act, which allows an indebted consumer’s salary to be attached without adequate court oversight. If the LAC is successful, the days of unscrupulous microlenders and debt collectors may be numbered.

EAOs are commonly but incorrectly referred to as garnishee orders.

The article quotes Kruger van der Walt, director of the Stellenbosch Legal Aid Clinic, as saying that the evidence showed “a pattern of credit being advanced recklessly to indebted and desperate low-income consumers, the use of intimidation, duress and other coercive measures to induce the applicants into signing documents consenting to jurisdiction of courts in distant towns the applicants have no hope of approaching for relief”.

The 13 credit providers that are respondents in the case are Mavava Trading 279, Onecor, Amplisol, Triple Advanced Investments 40, Bridge Debt, Las Manos Investments 174, Polkadots Properties 172, Money Box Investments 232, Maravadi Credit Solutions, Icom, Villa des Roses 168, Money Box Investments 251 and Triple Advanced Investments 99.

Flemix & Associates, a firm of attorneys previously known as Coombe & Associates, is also cited as a respondent.

Werksmans is acting for all 14 respondents.

Please click on this link to read the full Business Day article:

http://www.bdlive.co.za/businesstimes/2014/10/12/court-challenge-to-dodgy-microlending.

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