Section 74 of the Magistrate’s Court Act allows people with no tangible assets and debts of up to R50 000 to apply to the courts for an administration order. The, order temporarily protects debtors (consumers) from their creditors and enforces a repayment plan that enables borrowers to repay their debts and still have some money for living expenses.
An administration order is a valuable option to protect and assist consumers to repay their debts orderly and affordably and enable them to re-enter the economy with dignity on discharge.
It places the management of their financial affairs in the hands of debt administrators. The administrator receives your income and, after deducting an amount to cover your living expenses, distributes the rest proportionately among your creditors.
Consumers should be aware that it is a costly alternative because it could cost up to R1 200 to obtain the administration order. Administrators then take 12.5 % of the monthly payments for their services while the employers take another 5% “management fee” because they must pay the administrator the designated sum every month.